There's no money in bankruptcy
As little as 1p in the pound, if there’s a following wind. That’s all that some creditors are getting from bankrupt debtors at the moment. You need to read our top story today to get the full details.
It means that the personal insolvency units of the firms are turning away from bankruptcy as a viable line of business. Bankruptcy simply doesn’t pay anymore.
Before anybody thinks our only interest is in the bank balances of insolvency professionals – think again. The underlying issue here is the help that some individuals will receive with their debts and, of course, the return to creditors.
If professionals are turning away from bankruptcy it leaves a much reduced set of options for those suffering under the weight of debt, however they managed to acquire it. And without a viable bankruptcy procedure there will certainly be a number of creditors who do not receive the return they might otherwise have done.
The root problem is the reduction in property values and bankrupts finding themselves without enough equity to pay of at least some of their debts. There’s some hope that might be returning, but we shouldn’t bank on a short-term return to property boom.
The worry is that this new state of affairs leaves desperate people contemplating desperate measures andbeing vulnerable to unscrupulous individuals who take over the running of their debts. It’s a very sorry state we’ve reached.
Who would have thought that the crisis would become so bad that even bankruptcy would be too expensive. There’s an irony there that is just too uncomfortable to dwell on.