Free Software Magazine: Reducing the Risk of Risk
Sep 27, 2005, 04:00 (0 Talkback[s])
(Other stories by Terry Hancock)
"US bankruptcy law has hitherto been fairly liberal, allowing
people to restart their lives after a financial collapse by legally
eliminating debts and leaving the individual with sufficient
resources to rebuild. Entrepreneurs, finding traditional business
capital difficult to obtain during the critical seed phase when
their ideas have not really been proven, have been willing to take
that risk of personal financial failure in the name of pursuing new
and risky innovative business plans--just the kind needed in a
society whose status quo is not sustainable.
"In October, however, all of that will change: new legislation,
ostensibly to protect the credit industry from 'irresponsible
consumers,' will make this type of bankruptcy almost impossible.
The new law will require almost anyone who does go bankrupt to
liquidate assets (in many cases including their own homes), and
will also require them to live at subsistence, regardless of how
much money they make, redirecting their entire 'disposable income'
to paying off the debt for five years. Needless to say, this is
unlikely to encourage much ambition to make extra money during that
time, and the resulting micro-management of personal resources will
make any kind of business endeavor during that time