Easy Credit And Bankruptcy

Press, Volume CVI, Issue 31339, 8 April 1967, Page 1

Easy Credit And Bankruptcy

Easy access to credit was one of the main causes of bankruptcy among persons on limited incomes, the Official Assignee in Christchurch (Mr T. A. F. Withers) said in an interview yesterday. “People entering into hirepurchase agreements or obtaining other forms of credit are not asked enough questions about their financial position,” he said. Too many persons lived above their incomes, Mr Withers said. Credit was now a way of life and an essential element in trading, but too many persons on limited in-

comes were paying all their incomes to meet instalments. “Because of that, other people such as the grocer or the butcher have to wait, and when they become sufficiently annoyed they sue.” Persuasive advertising encouraged persons to believe they must have not only a television set but a large refrigerator, an expensive washing machine, wall-to-wall carpeting, and a car. The cars were usually old, as these persons eould not afford a new one, and the repair bills required to keep the car on the road often appeared in creditors’ debts.

Liquor, too, played a part

in wage earners becoming bankrupt, Mr Withers said.

“One case comes to mind in which a bankrupt celebrated his creditors’ meeting by having a party,” he said. Capitalisation of the family benefit could also lead persons on limited incomes to bankruptcy. Having moved into a new home they then had to have new furniture, lay paths, and put up fences. When they could not meet the payments there was no family benefit to fall back on.

Mr Withers said that many small businesses were wound up because they lacked sufficient capital or books had not been kept properly, so that the person controlling the business did not know his financial position. Under-costing of contracts because of inexperience also caused bankruptcy, and a small business could be forced to wind up because payment was not received on a contract or because work done incorrectly had to be done again.

“This type of small businessman usually has a big car and other things he cannot afford,” Mr Withers said. “He has them because he does not realise his true financial position. “A few take advantage of the Act to get out of their muddles by filing in bank-ruptcy-some for second and third times.”

Much information about

persons filing in bankruptcy was not disclosed to the Official Assignee because most of the creditors did not attend creditors* meetings, he said. Information which could have been brought out then did not come out till much later, sometimes too late for anything to be done about it

“Creditors are just apathetic," he said. It was helpfid to the Official Assignee if creditors filed their proofs of debt before the meeting, as much information about the bankrupts activities could be obtained from them and he could be questioned under oath at the meeting.

In 1966 58 persons were declared bankrupt—a pensioner, 24 working for wages, 13 who employed labour, and 20 who worked on their own account

Last year three builders were declared bankrupt and it was significant that already this year four persons connected with the building trade had been declared bankrupt In the first three months of this year, 21 persons had been declared bankrupt. In the same period last year nine were declared bankrupt. “The cause is tight money,” Mr Withers said.

Two companies were wound up by the courts last year, and one company had been wound up In the first three months at this year. One of the two companies was the Credit Union of Can-

terbury Society, Ltd., which had a membership of 400 and had operated numerous creditors’ pools.

Nine members of the society had filed their personal bankruptcies to date.

As far as the society itself was concerned 184 proofs of debt amounting to £14,624 2s Id had been received.

“Besides the bankruptcies there are many people who have creditors’ pools operated for them in the city,” Mr Withers said .

Proved debts in all bankruptcies last year amounted to £136,272, and assets realised by the Official Assignee amounted to £19,184.

Debts proved against companies wound up last year amounted to £65,123, and assets realised by the Official Assignee amounted to £4918.