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“Debt is the Slavery of the Free.”

Publilius Syrus (Roman author, 1st century B.C.).

 

Why Mass Default?

Mass Default on personal debt will bring about immediate and total freedom from debt for the individual and is an effective form of protest against the banks and the government for the millions of discontented people who wish to see real change to the way the world functions.

Continuing to repay debt validates the current neo-liberal orthodoxy and only serves to keep it in place. The financiers and the financial system that serves them so well are dependent on the belief that people will repay what they borrow. But what if this were to change…

The Mass Default Movement

Traditional protest has proven ineffective and does nothing to harm the banks or financial institutions – they just wave their banknotes at you from their towers while you march on the streets. The only way to make them listen and to bring about a rearrangement of the world order is to target their weak point and the only thing that will make them sit up and take notice: the profit margin.

“Let us unite in our non-payment and have ourselves a mass default revolution.”

Paul Livingson, The Bankruptcy Diaries, 2011

 

MASS DEFAULT MANIFESTO

 

Much of the personal debt foisted on people during the easy credit years was a hostile act on the part of the banks and is odious debt. There is no moral obligation to repay this debt.

 

People should be free and able to live their lives without having their brief time on this planet ruined by those who chase profit for their own personal gain and at the expense of other people’s happiness.

 

There is no shame to being in debt as the system is set up for you to be carrying enormous liabilities and its survival is dependent on your indebtedness to keep feeding shareholder profits and bankers’ pay packets.

 

There is no stigma in defaulting. Default should be a purely economic decision, or one based solely on your desire to live; emotions or outdated ethical positions should not come into it and certainly not while the system is so weighted against the individual.  

 

Default is a necessary act, both for personal freedom and as an act of rebellion against the dominance and power of the financial institutions. Mass default will liberate the individual at the same time as undermining the power of the banks.

 

Who am I to be recommending Mass Default?

I have lived through the dark days of debt and know how a life can be blighted by this scourge of our age. I have also come out the other side by taking the decision to default. I am free from debt and each day I reap the rewards of a life unfettered.

Yet I see a world where millions of debtors remained enslaved to banks who have been bailed-out and have returned to ‘bonuses as usual’, a world of unfairness where the people at the bottom bear the brunt of savage cuts while those at the top suffer no hardship and continue to gain assistance from governments to further increase their wealth.

I do not propose Mass Default from an obscure philosophical position – I promote such action based on very real, first-hand experience. Life without debt is a life worth living. A debt free life can be yours if you want it.

 

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Squat the lot

As New York cracks down hard on the Occupy Wall Street protesters in Zuccotti Park and the Corporation of London serve notice on the London branch of the Occupy movement at St. Paul’s, Occupy LSX has performed a smart counterattack by taking over a vacant UBS building in the city.

This is a clever move by Occupy LSX, sending a message to politicians and the masters of global finance that this movement has legs and won’t be easily crushed: the level of discontent runs too deep.

If the government and the city authorities are embarrassed by the presence of protestors on the steps of St. Paul’s and Finsbury Square, they will now be regretting ever trying to evict them; hitting the protestors with a hammer will only create smaller, more widely dispersed fragments that will be harder to clean up.

You can read details of this ‘public repossession’ on the Bank of Ideas website as well as finding details of upcoming events.

http://www.bankofideas.org.uk/2011/11/18/initial-press-release/

The levels of personal debt incurred by young people today are creating a generation of people locked out of acquiring property and other assets that previous generations have enjoyed, according to a recent CCCS report ‘Debt and the Generations’.

Young people are increasingly concerned about their debt problems

The report states that consumers are now ‘acquiring large levels of debt, especially unsecured debt, much younger’ and, that, ‘due to rising house prices and reducing incomes it seems unlikely that younger households will be able to acquire assets in the same way their parents and grandparents did.’

The report also identifies the impact of rising student loan debt on the ability of young people to acquire wealth. And it is no surprise to read in the report that those who cannot count on help from ‘the bank of mum and dad’ (or mummy and daddy), will be more affected by debt, thereby exacerbating existing inequalities.

 

Economics for the Debt Generation

Faced with such a bleak future and a system that is so weighted against them, young debtors need to take a step back and think purely in terms of self-interest and look at the cold, hard economics of the situation: would it be more financially advantageous to default on their debts and have them written off and then begin the process of saving?

It's all about freedom

It would be fairly easy to sit down and work out how long it would take to pay off existing debts, as well as calculating how little could be saved during the years of debt repayments, then compare this to the amount that could be saved during the same period if there were no debts to pay. Without debts to pay it is highly likely that if an individual were so inclined, that by the time their debts would have been paid off that they could have saved enough money for a large deposit on a house. Of course, if you default then your credit rating will be bad for 6 years but it is likely to take debtors far longer than 6 years to repay their debts, so for most debtors, default will still make sound economic sense.

Above all, it is simply a financial decision, the type that big banks and financial institutions perform daily and without emotion or moral considerations clouding their judgement.

It is important to remember that not everyone is obsessed with getting on the property ladder but the same logic applies to young debtors who just want to live.

The essential question that every debtor should be asking themselves

One thing to investigate when considering default is the prospect of post-insolvency restrictions such as Income Payment Orders, but these can be avoided, principally if you happen to be unemployed at the time of your insolvency. This was how it turned out for me and is something I explained in my book. However, while I could have used the last few years to save, I preferred to invest in myself and work fewer hours in order to pursue creative projects. Whatever your goal, the question of debt always boils down to the same question: would default enable me to achieve what I want quicker than repaying my debts? This is the essential question that every debtor should be asking themselves.

Other key findings of the CCCS report:

• Increasingly first time buyers (FTBs) can only get onto the housing ladder with help from the ‘bank of mum and dad’ – 45% of all FTBs in 2010 received financial assistance, compared to 20% in 2005. For FTBs under 30, 84% require financial assistance in order to buy. This is leading to the exclusion of poorer young households from the housing market and perpetuating existing disparities in wealth within generations.

• The decade in the run up to the financial crisis saw a huge transfer of wealth from younger home buyers to older generations through the mechanism of rising property prices, and taken together the over 60s now own nearly half of all net assets in the UK. In contrast the under 30s own just 5%.

• Student loans will also impact on the ability of younger households to acquire wealth. Total student debt outstanding is expected to grow to £153 billion in real terms by 2031, with loan repayments amounting to nearly £7 billion a year. With student loan repayments reducing available income, future generations will find it difficult to save or invest in pensions until they are older, which will impact considerably on their quality of life when they reach retirement age.

Stressed Borrowing = Desperation

Today’s press is full of reports of Britain’s return to borrowing on credit cards and personal loans, however, unlike the orgy of spending during the pre-crisis years this recent spike in unsecured borrowing is a result of people being unable to pay for essentials – what is known as ‘stressed borrowing’. Some of the key facts are:

• Borrowing on cards & loans has been increasing over the last 7 months as households struggle to make ends meet.

• There was an increase in borrowing on cards & loans of £629m in September compared to the August increase of £478m. The total figure for individual borrowing now stands at nearly £1.5 trillion.

• Borrowing on cards & loans is increasing at double the rate of mortgage lending, suggesting that people are turning to credit to get through the month. This is backed up by research from Shelter

 

Stressed borrowing = desperation

I myself am no stranger to stressed borrowing, having overspent on cards and loans and then finding myself in the dreadful position where I had to resort to credit card borrowing to get through the month. This awful vicious circle – involving endless anxiety, sleepless nights and stress – where debt spirals out of control, inevitably leads to a full blown debt crisis and is something I documented in my book. Whatever the cause of your stressed borrowing it is essential to face up to the reality of the situation: borrowing on cards and loans to pay for essentials and get through the month is a sign that things are out of control and you are only compounding your situation by continuing to borrow.

 

What to do?

If you are borrowing to get through the month then clearly you have a problem and need to do something about it – your situation will not improve if you fail to confront it and do nothing. Be decisive; today is the day you are going to regain control of your life.

Can you negotiate a move favourable repayment plan with your creditors? Is this even a realistic proposition? Perhaps you are a mini-Greece and no amount of restructuring is going to help, as you would simply be delaying the inevitable and enduring miserable living conditions in the process. So investigate different forms of insolvency: Debt Relief Orders, IVA’s or Bankruptcy.

Whatever your situation, it is vital that you DO SOMETHING ABOUT IT! Your life will not improve until you do. The best thing I ever did was confront my problem and take a decision. Think about how good it is going to feel when you do hit on a solution and think about how you’ll feel on that day when you are finally debt free…

 

Help! I’m in trouble – Where to go for debt advice

If you are struggling to get through the month or worried about debt then I would suggest trying the Consumer Credit Counselling Service’s ‘Debt Remedy’ online advice facility, as well as encouraging you to look at forums on the Consumer Action Group website, specifically ‘Debt’ and ‘Banks & Credit’.

Never pay for debt advice as there are plenty of charities and forums that will give you the same information without seeking to profit from your situation.

I was recently asked by the guys from the Debtology website to write a guest post in response to an earlier article on the subject of bankruptcy (‘Bankruptcy – what IS the big deal?).

In my piece I talk about why we need our easy bankruptcy laws and also about how attitudes toward debt and bankruptcy are changing.  

If you are thinking about going bankrupt but are maybe worried about how you will be perceived, then you should definitely have a read.

The article is available here.

PS. If you are worried about debt and in need of free debt advice, then perhaps the guys from Debtology can help.

 Please do not be alarmed, I am not about to start a ‘Politician of the Week’ feature – once you’ve been ‘Clegged’ faith can never be fully restored – but I was nonetheless heartened to learn of MP Andrew Percy’s remarkably candid revelations about his own problems with debt during a Commons debate (on the Finance Bill) earlier this week. Percy revealed to the House how he had repeatedly maxed out credit cards and is still saddled with enormous repayments. The MP said:

“I certainly understand having debts to the tune of tens of thousands of pounds.

In my case, it was credit card debt, and I am not alone in that. It started at university and I went down the line of paying off one credit card by transferring it to another on 0% for a year or a number of months before conveniently forgetting that and maxing out the one that I had just cleared. I now pay about £600 a month to clear all my credit cards, which I have had to roll into a loan since my election. I understand what debt is like and I know how once someone is on the conveyer belt, it is difficult to get off, and that is just with credit card debt.”

Aside from being evidence of the extent to which debt culture has permeated all levels of society, Percy’s statement shows that we at least have some Parliamentarians with first-hand experience of the harmful effects of the debt industry; if credit, or debt (as they are one and the same), is to be more tightly controlled in order to prevent people’s lives from being ruined, then this can only be a good thing.

Leading the charge

The specific subject of the debate was a proposed amendment to Clause 11 of the Finance Bill, relating to high-cost lending: that most damaging sector of the credit industry which consists of companies who lend at extortionate rates to those who cannot get credit elsewhere, including payday and doorstep loan companies that also target the most vulnerable groups. Only this afternoon I saw a TV commercial from one of these companies, Wonga, advertising a 4,500% interest rate.


Could a doorstep loan be the answer to your problems?

 

 

Also deserving of special mention was the leading voice on the subject, Stella Creasy MP, who has been ardently campaigning for greater regulation of the high-cost credit industry for some time. Creasy told the House:

“the companies have specifically said that the lack of regulation in the UK compared with other countries makes it a target market for them.”

And,

“…in its ‘Keeping the Plates Spinning’ report, Consumer Focus estimates that payday lenders are expected to quadruple the scale of their operations in the UK in the next few years alone.”

Business as usual

Typically – in accordance with le libéralisme sauvage, which despite the crash and its fallout, shows no signs of being supplanted as the ruling ideology in Britain – those suffering most in these hard times are being pummeled for profit by the money-men and shareholders who operate these parasitic companies. Despite the best efforts of Andrew Percy, Stella Creasy and many others, the light-touch regulation mob prevailed and the motion was defeated by 273 votes to 228.

You can read the full text of the debate here.


Judge Nicholas Chambers QC has become an unlikely Bankruptcy Hero after deciding in a recent court case to write-off a customer’s £20,270 debt to MBNA, ruling that the credit card company and their debt collection minions had ‘tortured’ borrower Keith Harrison with the frequency of their phone calls.

Debtors 1 Credit Cronies 0

 Mr Harrison argued that he wasn’t sent the Terms & Conditions when he took out the credit card, and this was contrary to the Consumer Credit Regulations 1983. As MBNA could not prove that they had sent out the T & C’s, the judge ruled in Mr Harrison’s favour.

 In condemning the insidious practises of the credit industry, the Judge’s comments make for fascinating reading:

 “In my view, the Claimant rightly complains that, mainly by MBNA but also by the Defendant [debt collectors Link Financial], he was hounded by telephone calls seeking payment of what was said to be due. The calls were a form of torture oppressively frequent in amount and often without attribution to an identifiable number.”

 It seems to me that such conduct has no proper function in the recovery of consumer debt.”

 “[There] can be no excuse for conduct of which it must be supposed the sole purpose must have been to make the Claimant’s life so difficult that he would come to heel. I cannot think that in a society that is otherwise so sensitive of a consumer’s position this is conduct that should countenanced.”

By highlighting the fact that the calls were often from an ‘unidentifiable number’, the judge brings attention to the psychological effects of the money-chasers bullying methods. Hopefully this judgement can be the start of a process which sees such practices outlawed for good.

To read the full text of this excellent judgement click here – it’s very short.

The comment section of this Yahoo finance article also makes for interesting reading.

A recent article by Lisa O’Carroll highlighted the interesting phenomenon of bankruptcy tourists from Ireland heading to the UK to discharge their debts. Due to more favourable insolvency laws – a bankrupt in the UK is discharged after just twelve months, whereas in Ireland it’s a draconian twelve years – Irish debtors are doing the sensible thing and crossing the sea for a quick release from debt.

Fish 'n' Chips, Tea, Becoming Debt Free

The most fascinating revelation in the article was that, ‘as few as 29 people were made bankrupt in Ireland last year’, a staggeringly low number considering the severity of the property crash in the Republic, especially when compared to the 79,000 who went bankrupt in the UK during the same period. It’s not difficult to deduce that the UK is effectively operating as Ireland’s bankruptcy court, which is considerably more helpful to Irish citizens than another bailout loan. Although ascertaining exactly how many of the UK’s bankrupts are made up of Irish citizens would be difficult, and clearly some Irish debtors will be eloping overseas without bothering with any formal debt discharge procedures (I would love to hear from you guys).

I just hope the message is getting through to the people at the bottom. The Irish banks have had their bailout, in turn subjecting citizens to some of the most brutal cuts in Europe. Now we hear tales of Irish property speculators bailing themselves out, by utilising UK laws. I’ve already called for a ‘People’s Bailout’, and now I extend this call to the people of Ireland – don’t be the chump left with a sackful of debt whilst everyone else extricates themselves from the mess. Get yourselves over to the UK and get rid of that debt!

Update: I have found a great article with information for Irish citizens wishing to go bankrupt in the UK. If you wish to know more then click here.

Thou shalt remain in servitude

The latest insolvency statistics were released yesterday and, as usually follows such announcements, the comment threads of news sites were awash with the protestations of indignant moralisers, complaining about the unjustness of it all – at how people can simply walk away and leave a trail of bad debts. Perhaps these preachers should stop for a moment to consider the absurdity of their outdated position?

Post- economic crisis, the banks have been bailed out leaving the citizens of this country to bear the brunt of savage cuts, which are the result of a huge deficit caused by the bankers’ unchecked greed and recklessness. Yet nothing has changed – the rotten system remains unfixed, and huge bonuses are being paid out once again. Proof of a return to ‘avarice as usual’, on the part of the global elite, was confirmed by Bob Diamond, CEO of Barclays, who last month brazenly told the Treasury Select Committee that, “there was a period of remorse and apology for banks and I think that period needs to be over”.

Ten Hail Marys...

In light of the gross inequalities of a rigged system – where the rich and powerful continue to profit and the masses take the pain – crying foul over those at the bottom freeing themselves from the debt shackles handed to them by the global lever pullers, is to effectively disseminate the banks propaganda for them, helping to keep the system functioning. 

A People’s Bailout

So the bankers have had their bailout and announced that their period of penance is over, but what of the millions of indebted people who don’t have anyone coming to their rescue? The people have an escape route too – in the form of easy insolvency laws. So if you’re over-indebted then don’t think twice about opting to bail out. Certainly don’t listen to the howls of righteous indignation as you announce your decision. Grab the parachute, take the leap, and float down into the land of freedom…

Can't handle life in a cage man

With massive student protests taking place in London today I’ve noticed a lot of web chatter about potentially putting oneself through university, racking up the fees and then declaring yourself bankrupt afterwards. A very shrewd move. However, this loophole was closed years ago after a few canny students began doing this. But the idea is a good one.

Sing for Free Education!

My advice would be to pay off the student loans with personal loans and credit cards before going bankrupt. However, one needs to be very careful here. The authorities are not stupid and could either reject your bankruptcy petition, or slap with you with a restriction order that lasts a decade. For this reason I would allow a good stretch of time to pass after paying off the student loans, keep racking up as much debt as possible – have ball whilst you’re at it – and then press the bankruptcy button a year or two down the line. I’m not sure whether this would work but I’d love to see somebody try. Well, it has been a day of protest and revolt…

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