January 29, 2013 by Liberty
Bankruptcy is often portrayed as a depressing means of escaping “debt slavery.” They make it sound like it’s a means to encourage small business owners to take risks in business that benefit everyone in the country. I can assure you, it’s not that simple.
Bankruptcy is not here to benefit the poor. In fact, it’s just a means to steal from the majority a little more subtly.
What happens when a person, or a company decides to file government bankruptcy?
They fill out all of their forms, they get rid of most of their assets, and then they have a big flag on their credit report for x number of years that makes it difficult for them to get loans. Then they never have to pay the money that they’ve owed in the past. Their debt officially disappears. Even if they become millionaires the next day, they don’t owe their debts.
But, as I’m sure you know, the debt doesn’t actually disappear. It just gets passed onto everyone. The companies have to take a loss on the money that they’re owed because the government requires it. So, the company has to plan for a percentage claiming bankruptcy and charge more for the service.
Who Benefits More From Bankruptcy?
The more money that you start with, the more debt the banks will allow you to have, the more debt that the bank allows you to have, the more you will benefit from claiming bankruptcy.
That means, the person that has more money from the start has more potential to gain from bankruptcy.
The smaller business man cannot take out millions of dollars worth of debt to start their business. They’re often lucky to get the loan in the first place.
The more rich you are, the more you benefit from government bankruptcy.
But No One WANTS To Have To Claim Bankruptcy…
Of course, not even millionaires look at bankruptcy as a goal to achieve. They look at bankruptcy as the life boat to get them out of risky situations. Everyone has their comfort level of risk. Bankruptcy just increases that comfort level and encourages these people to take as big of risks as possible, because the worst case scenario of being a hundred million dollars in debt is not very different than the difference of being a billion dollars in debt. Both end with you losing most of your stuff. You might as well aim for the bigger risk and hence, bigger return on investment.
What About Debt Slavery?
A lot of people worry that, without bankruptcy, there is no way that we can ensure that people wont get trapped in debt for the rest of their lives. The obvious answer is that people will change their behavior if they know they could be in debt for the rest of their lives.
The less obvious answer is that companies don’t want debt slaves. Someone that has nothing to lose is not a good employee. If you don’t benefit from the work that you do then you won’t be a good employee. Morale dies. No company would want to risk giving their money to someone that couldn’t pay it back in a reasonable time.
Instead of virtually enslaving people and having to struggle to get their money back. Most companies would prefer to just let people get back on their feet to give them the chance of getting their money back later. Even with bankruptcy available, virtually every major creditor offers lower minimum payments if someone says they’re struggling to pay their bills.
On Your Student Loans
Anyone that thinks that bankruptcy is their to benefit the little guy needs to take a look at the laws of students loans. The government offers loans to just about everyone that wants to go to college. The more money you make, the less likely the government will support the loan you want. (The opposite of the free market.)
Then after giving the large loans to the people that don’t have the money to pay them back, they make sure that those that file bankruptcy can’t eliminate student loan debt. You owe your government student loans no matter what you try to do. There is no way out of it. If you’re concerned about debt slavery then this is where you should be looking.
Bankruptcy is not a system that’s meant to help the people struggling to make it to the top. It’s in place as a safety net for high income earners to take unnecessary risks without having to worry about spending the rest of their lives in debt.
While some small business owners and individuals benefit, for every $10,000 they get forgiven, there is a millionaire in line behind them getting a couple million dollars in debt forgiven. The whole equation is out of proportion. It’s just another way for the privileged to leech a dollar.