Bankruptcy Around the World

Wherever you go in the world, finance is a language that is spoken fluently by some, and a completely indecipherable one for others. There is such a wide range of topics connected with finance that a strong command of rules, regulations and options coupled with an ability to recognize money-making opportunities can bestow real purchase power upon an individual. However, the world of finance is so fast-moving that if you take your eye off the situation for even a moment, you can end up in serious difficulties. No matter where you are in the world, the circumstances that lead to bankruptcy exist. And where the circumstances exist, so does the practice. Just like in America, people go bankrupt all over the world. Many of the practices are much the same - but there are some differences.

In Australia, for example, the process of filing for bankruptcy is largely similar to that in the United States. You can commence proceedings yourself, or it can be the subject of a petition from a creditor looking to realize some of their asset - your bad debt - before you become a "won't pay" customer. However, a bankruptcy term in Australia is three years, but with the potential to pay it out. If, before the three-year period is up, you can pay the debts off in full the bankruptcy will be annulled. This encourages individuals to see bankruptcy as an opportunity to learn sound financial practice. It is also possible to raise an Offer of Composition, which pays each creditor a certain percentage of what they are owed. If they accept the settlement, the bankruptcy can again be annulled.

In Canada, it is possible to file a consumer proposal as an alternative to bankruptcy if your debt amounts to more than $5,000 and less than $75,000. The higher figure does not include the mortgage on the debtor's home. For debts larger than $75,000, it is necessary to file for bankruptcy under which there are additional rules and requirements, which include the appointment of a "Proposal Administrator" who is given the task of overseeing the debt to ensure that it is fully analyzed. In many cases, creditors will choose to accept the consumer proposal even though it generally entails paying a reduced amount, because they will receive less under bankruptcy rules.

In the United Kingdom the Enterprise Act of 2002 made it possible for a bankruptcy to last less than 12 months. This has led to a larger number of people filing for bankruptcy and a suspicion that many of those filing are people for whom bankruptcy is simply another financial service. However, the banks themselves are markedly reluctant to lend money to a recently bankrupt individual, and in most cases it will take six years for bankruptcy to roll off an individual's credit record, making it virtually impossible to get credit on anything resembling reasonable terms. While some lenders have begun to offer loans and credit cards at prohibitive rates of interest, individuals are strongly discouraged from taking them.

Disclaimer: This article is for informational and entertainment purposes only, and should not be construed as legal advice on any subject matter.

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