# Should insolvent debtors be able to earn a fresh start?



## Brendan Burgess (20 Nov 2009)

9.[FONT=&quot]                  [/FONT]Do you agree that a key principle of the personal insolvency regime should be that of an “earned start”? Do you agree that debt discharge should be conditional on the completion of a repayment plan by debtors? [Paragraph 5.112] 
10.[FONT=&quot]              [/FONT]Should any other obligations in addition to the making of repayments be imposed on debtors during the pre-discharge period? [Paragraph 5.116]

11.[FONT=&quot]              [/FONT]Should certain debts be excluded from discharge? Which debts should be included in this non-dischargeable category? [Paragraph 5.119]


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## Brendan Burgess (3 Jan 2010)

The whole purpose of these proposals is that someone can be relieved of their debts so that they get a fresh start. So, yes, they should get a fresh start. 

But what does a "fresh start" mean? 

I think there should be a permanent, public record that the person has participated in a debt settlement scheme. As a lender or as a potential supplier to this person's new business, I would like to know if they have availed of such a scheme in the past. I can then decide whether or not to give them credit.

If it is not a matter of public record, then they will have a clean credit history and will be in a better position than someone who has not availed of debt settlement, but is attempting to pay their bills in full, but who is in arrears. 

Successfully participating in a debt settlement scheme will be a huge benefit to the debtor and will cause a fair amount of pain to the creditors in that they will be writing off their loans. 

A debt settlement scheme should not be painless for the debtor. 
They should have to sell their home. 
They should have to make their pension scheme available.
Potential creditors should know that they have availed of the scheme in the past.


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## Timbo (14 Jan 2010)

What a crock.

If it is in the interests of the creditor to write down part of a debt then so be it.

This is between lenders and borrowers. No role for puffed up polticians and regulators and other hangers on who created this mess.

No blanket debt relief. You borrowed, you pay for it. I am already paying painfully higher tax for others' stupidity. I refuse to pay any more.


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## dtlyn (14 Jan 2010)

Timbo, if everything in life were as black and white....

I'd be interested in the protections built into such a scheme (if any or if possible) which closes down considerably the opportunity to abuse it.  

+ Could anybody avail of this scheme multiple times? 
+ What are the penalties for attempting to position oneself as bankrupt in effectively order to gain control of assets at highly discounted rates?

I'd also be interested in the obligations of those who have made a "fresh start" and considerably improved their financial position thereafter. Are they obliged to disclose this to the original creditors and/or compensate them in some way?


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## z107 (14 Jan 2010)

A couple of points:

1. What does 'fresh start' mean? - we get to pay other people's debts?

2. I'm already participating in a 'debt settlement scheme' - it's called paying back my mortgage.


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## number7 (14 Jan 2010)

How is this proposal going to be financed? Will it be by writedowns by the financial institutions or by taxpayer backed?

I would be in favour of a discharged debtor being on a database for a period of 3 years after his debt has been cleared and subject to satisfactory credit rating during the 3 years he would be removed permenantly.

If he had more financial defaults even minor ones he would remain on the database for his life.


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## Brendan Burgess (16 Jan 2010)

dtlyn said:


> + Could anybody avail of this scheme multiple times?
> + What are the penalties for attempting to position oneself as bankrupt in effectively order to gain control of assets at highly discounted rates?
> 
> I'd also be interested in the obligations of those who have made a "fresh start" and considerably improved their financial position thereafter. Are they obliged to disclose this to the original creditors and/or compensate them in some way?



These are all raised in the consultation paper. They do stress that it would only be available to people who approach the process honestly. It would not be a scheme for getting assets cheaply.

A fresh start would mean that. If you earn your fresh start after 5 years and you subsequently inherit millions you would be under no obligation to repay it. 

I think that the current proposal is that successful completion of a debt settlement scheme would not even be noted on your ICB record. Which I strongly disagree with. I think it should be part of your permanent record. future lenders can decide whether or not to grant you credit.


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## Brendan Burgess (16 Jan 2010)

number7 said:


> How is this proposal going to be financed? Will it be by writedowns by the financial institutions or by taxpayer backed?



It would  not be taxpayer backed.

It would be the creditors who would write down the amount owing. 

Different countries have different rules for tax debt. Some don't allow it to be included in debt settlement. Others do include it. 

Again, I would encourage you all to make submissions to the LRC. If you don't, the only submissions they will get will be from bankers, utilities and MABS.


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