Bad Debt In United States
Bad debt is a serious financial problem affecting the United States. When people do not pay their debts, the economy suffers because the banks, credit card companies, doctors, utility companies, and other businesses lose money. The same applies to when businesses fail to pay their financial obligations to other businesses. However, personal bad debt and corporate bad debt is viewed differently by the government (Bankruptcy FAQ for small business. ) Corporate bad debt is easier to file bankruptcy upon than when a private person loses money.
This seems to be simply because allowing corporations to do business honestly without threat of losing their personal financial security is an important ideal to keep the economy going. A company getting rid of their bad debt through bankruptcy all but destroys their ability to stay in business. Personal bad debt, however, is treated stricter because there are by appearance more controllable factors. People are expected to feed their families and stay in a home without using credit and to not borrow more than they can afford.
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In addition, the companies and government likely fear that if people who don’t pay their bills can repeatedly file bankruptcy and keep everything they bought, there will be no incentive for them to do the right thing and live within their means. Those who honestly cannot pay their bills will not go to jail, but in the case of a business will likely lose their company and in a person’s case lose any homes or other property owned (Bankruptcy Courts. ) Otherwise, the economy would be in even worse shape if people and businesses could just run up bills, decide not to pay them, and not have any additional financial consequences.
The government’s position seems to remain that businesses have a better right and need for credit to help the economy than individual households, and this is unlikely to change anytime soon. References: Bankruptcy Basics. (2006). Retrieved March 25, 2009 from U. S. Courts: http://www. uscourts. gov/bankruptcycourts. html. Bankruptcy FAQ for small business. (2009). Retrieved March 25, 2009 from Bankruptcy in Brief: http://www. moranlaw. net/business-bankruptcy-faqs. htm.
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