Personal insolvency

Personal bankruptcy

Nature

Personal insolvency refers to a financial situation where an individual is unable to meet their debt obligations, leading to an inability to pay creditors. This condition often arises from factors such as job loss, medical emergencies, or poor financial management. Personal insolvency can result in severe consequences, including bankruptcy, loss of assets, and damage to credit ratings. It poses significant emotional and psychological stress for individuals and can impact their families and communities. Addressing personal insolvency typically involves legal processes, financial counseling, and potential debt restructuring to regain financial stability.

Incidence

In the former Federal Republic of Germany, there were 18,000 cases of insolvency in 1985 compared to 4,222 in 1970. Bankruptcy filings by individuals in the USA increased rapidly at the start of the 1980's, reaching by 1992 an estimated 900,000 filings per year (triple the number in 1984). A 1993 report, however, suggested a marked decline in US filings, as bankruptcies were down in January 1993 by 20% (February 1993 by 11%, and March 1993 by 7%) compared to the previous year.

Claim

Personal insolvency is a critical issue that affects millions, undermining financial stability and mental well-being. It leads to devastating consequences, including loss of homes, strained relationships, and diminished quality of life. The stigma surrounding insolvency often prevents individuals from seeking help, perpetuating a cycle of debt and despair. Addressing this problem is essential for fostering a healthier economy and society, as it empowers individuals to rebuild their lives and contributes to overall community resilience.

Counter-claim

Insolvencies are part of the daily lot of any open market-economy system, where enterprises automatically take economic and financial risks which do not always pay off.