Bankruptcy Australia By James Reed

     I am almost too afraid to write anything about money and finance, knowing nothing much about them, and expecting the learned here to expose me for being economically challenged. Still, I do know that the ordinary people like me are suffering, and that the debt collectors just keep coming like those killer robots in the Terminator movies:

“Australians can be bankrupted over small debts
In Australia, an individual can be sued for bankruptcy for an unpaid debt of as little as $5,000. Last year, consumer advocates became increasingly alarmed by the number of clients being taken to court over relatively small debts by one company in particular — Lion Finance. They decided to do some research, analysing court lists over the past four years. Their data, released exclusively to the ABC, backed up their suspicions. "Lion Finance stands out as the debt collector using bankruptcy proceedings so much more frequently than any other debt collector in the market that it's absolutely astounding," Financial Rights Legal Centre's Karen Cox said. When it comes to the number of bankruptcy cases filed in the past financial year, Lion Finance was not far behind the Australian Tax Office (ATO). But while the ATO halved the number of people it sued for bankruptcy from 1,215 in the 2015-16 financial year to 543 in last financial year, Lion Finance increased its cases from 182 to 512 people in the same period. "Whereas most debt collectors ... have been using bankruptcy proceedings less and less, Lion Finance has been a growing user, the numbers of bankruptcies are just going through the roof," Ms Cox said. Ms Cox said bankruptcy would normally only be used if the debtor had an asset like a house. Lion Finance declined the ABC's request for an interview, but in a statement from its parent company Collection House Limited said it made every effort to avoid legal action. "We encourage customers to engage with us so we can discuss and assess their financial circumstances and avoid the legal process," it said.

The company would not comment on individual cases, but said its approach was different for vulnerable customers and "those assessed as having the capacity yet an unwillingness to engage with us to meet their financial obligations". Bankruptcy should be a 'last resort' Once an individual is made bankrupt, their assets are taken over by a trustee and sold to pay off their debts. The trustee also charges the debtor tens of thousands of dollars. "Bankruptcy proceedings should be used as a last resort, [because] the impact on the debtor of bankruptcy proceedings is profound," Ms Cox said. "They will not be able to travel overseas without the permission of the trustee. "In some cases, their employment may be limited [and in] some occupations, you are not allowed to continue as a bankrupt." In Steven and Kim's case, their home would be sold by the trustee to pay off their credit card debt. "You can't explain how frightening that is. To know that they can take something away like our house," Ms Forrest said. "Then it's embarrassing. You work hard ... and at our age we'd never be able to start again." Lion Finance said its focus was always on helping customers "rehabilitate their finances, enabling them to get back on the road to financial freedom". As well as Lion Finance, Collection House Limited owns legal practice CLH Lawyers, which prosecutes its bankruptcy claims. The company adds costs during the process, which can triple the amount owed by debtors within months."A debt of $5,000, by the time you get to creditors' petition can easily be $10-15,000, with the addition of interest and legal fees," Ms Cox said. In 2017, Collection House's half-year report described how it was "tightening up" its legal process and taking a "firmer but fair position with customers who refuse to meet their obligations". Put simply, it was going to start suing more people for bankruptcy.

According to the company, the benefits of this tactic were that it:

•    "Significantly increases the number of accounts that will be actioned"
•    "Encourages customers to take obligations and contact seriously."

     Obviously, don’t get into debt, but that is easier said than done. Apart from that, it is becoming increasingly hard for the little people like me to simply survive at the basics level, just paying rent, food and bills. This is the real chronic deficiency in purchasing power, an inability to even make ends meet, let alone buy all the consumer goods on the shelves. We have become minimalists whether we like it or not. We all know that an alternative economic system is needed, but getting there is the real challenge.

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