🚀 go-pugleaf

alchemy@interlog.com (Morton M. Goldmacher) wrote:

>The division of creditors into three classes is an example of the
>principle.  For instance, if a debtor has a large debt secured by a
>single sufficient asset, and few other assets, it is unlikely that an
>unsecured creditor will take the step of filing a petition.  Your
>statement regarding creditors of the same class accurately states the
>law, but in the commercial world creditors of different classes may
>affect each other.

We're talking about CSL, so that would be a consumer bankruptcy. In
those, petitioning almost never happens.  That leaves us with making
an assignment.

However, many times a consumer will file an assignment in bankruptcy
immediately following a repossession, in the mistaken belief that he
can get his goods back and screw the secured creditor.

What he does not realize is that he can only assign what he has and
owns, not something that somebody else has a prior claim to.

>Taxes owing are even less justifiably discharged by bankruptcy since
>they arise with income earned and enjoyed, yet they are absolved by
>bankruptcy.  

Quite so.  A few years back, Revenue Canada appeared to have a policy
to "clear" their backlog of tax debtors by simply pushing them into
bankruptcy.  Of course I have not seen any government memo to that
effect, but the actions were there.

>Most loans which are advanced to borrowers are for
>investment, and bankruptcy is usually a tacit declaration of the
>failure of the enterprise financed by the loan.  If a student is
>unemployed for several years after graduation, its a good bet that the
>investment isn't yielding dividends.  

Therein lies the problem.  First of all, a large portiuon of the money
advanced is used for living expenses.  So that part is already exempt
from discharge (if you succeed in separating it, which you won't).
Secondly, there appears nothing that would prevent a student from
going banko 6 months after graduation, as soon as the paymnents become
due.  "Let's clear the slate now, next month I might be working and
would have to pay it"

>Like any other entepreneur, the
>student ought to be given the opportunity put his fate in the hands of
>the  bankruptcy court.  

Not in my view.  You are not advancing this loan under the same
criteria as you would an enterpreneurial loan.  At the time of the
advance, the student has clearly no capacity at all to make the
payments.  No other type of loan will advance you any credit when you
are already unable to meet even your basic living expenses, much less
credit payments.  None.

>If the government believes that the former
>student is simply evading a responsibility that he is able to
>shoulder, they should plead their case to a judge like any other
>creditor must, rather than excercise their sweeping legislative
>powers.

Morton, while those arguments are available in law, in practice they
never succeed.  I had a guy openly admit to a judge in Supreme Court
Chambers that he has absolutely no intention of even looking for a job
as long as the bankruptcy is hanging over his head, that he simply
lived off credit for a few years and would be damned before he pays a
nickel of it back, and of course His Lordship shed crocodile tears
over this unfortunate soul, chewed me out for keeping the old darling
as an undischarged bankrupt for 5 years already and set him free.


Karl Pollak <kpollak@portal.ca>
Richmond, British Columbia