Tag Archives: bankruptcy

Morally Bankrupt

That’s what our system is at present.

It’s all about those in power making those without more powerless.

It’s about taking more from those who already don’t have and keeping them at the bottom, floundering between poverty and insolvency, barred from various roles.

It’s about public shaming, as if everyone in financial difficulty is a would-be swindler and public danger.

I refer to Britain’s sneaked in new bankruptcy rules, which are not well known. Whereas debt relief companies are as aggressive advertisers as loan firms, they rarely mention the full implications and problems with bankruptcy. Even the government’s website doesn’t mention these new rules, which cut the allowable free monthly expenditure from £50 per month to £10. These are obviously written by someone who has never been poor. What do they think £10 a month buys?! For one already struggling and under stress, this is a 3 year sentence that is likely to lead to illness and depression, or at least very deep unhappiness and ostracization. And made by people for whom £10 is barely noted when they come out of the wallet.

I am not for unbridled lending and silly borrowing, or for those who take on things they cannot repay. But the fact debt is so prevalent is because of factors to do with our society and its attitudes, more than irresponsible and feckless people.

The whole credit rating system is based on values that banks like. It stupidly looks at your address – as if who you live with or who has lived there previously is any indicator of you. It means fallings out with grown up families and houseshares who do not want to be brought down by someone under their roof with a low credit rating. It means a new occupier, a complete stranger, at an address of poor credit scores works to put that rating back. And as if moving or job changing or ad hoc income are in themselves a bad thing. It’s a system inherited from American investment markets, people who themselves have ad hoc but extortionate incomes based on very unsound and immoral factors.

In Britain – and this isn’t some thing we can call ourselves ‘great’ over – we legally allow banks to sting customers for going over their overdraft limits – sometimes a couple of quid, or even, pence. These fees can escalate to an uncapped rate. It’s over £20 per week, and many of us only get paid monthly. So this means borrowing to stop the £20 becoming £100 by the end of the month, which can then kick in again later and re-set the whole process off, even when you have paid your fees and gone back within your limit. Banks can then demand you pay the money back, even after they have automatically taken the fees and left  some cases without use of the account.

Complaints procedures can take many months,  even years, and involving the Financial Ombudsman makes the case even more laborious, who are not sympathetic or helpful. The FO says it is not a lobbying institution but claims to be impartial, yet many of its rulings by its own admission upset both sides and often fall on the side of the huge corporate greedy bank, not the poor individual.

Debt management programmes are little better. They are not keen on written contact, but want to speak to you on the phone to and then you to share very personal financial details, asking more of you than they’ll tell you about them, and hiding their true fees. The group Christians Against Poverty is a misnomer. They do nothing to reduce the poverty that debts cause; they also do not fight the customer’s corner, but get the individual to comply with the banks. No wonder then that ex Barclays CEO calls it ‘win win’ – for the debt company and the bank, yes; but there’s no going into where the debt came from, and seeing  if is really is a case of poor money management and careless spending. More likely it is about aggressive lending or unfortunate circumstances.

The British High court test case of 2009 regarding banking fees was unsuccessful, but that seems a very poor way to look at this. It involved that other pillar that needs reform, overpaid, power hungry lawyers, in whose interest it was not to open the worm can that would unhinge their fellows in the banking world. But the case started in motion the public awareness that these fees are not necessary or reasonable and that you do not have to accept them.

Around the world, we’re angry at the financial downtown and how our governments have used public purses to bail out the rich bankers who caused the problem and have not suffered its effects. In Britain, we’re facing cuts by a government we didn’t vote for because of this.

They need to be aware of how the public feels about banks and governments, and how we are no longer willing to be squeezed by faceless, uncaring machines.

 If you agree, I urge you to write to your MP and to sign my petition which is at this link


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