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  • Category: Miscellaneous

    How will an individual come out of debt trap if a business didn't go well?

    Generally companies are liquidated when they are unable to repay their debts. There won't be any legal implications if it has operated its business properly but the business didn't go well and debts got piled up. What is the corresponding equivalent in case of individuals, if a person, who is doing business properly in individual capacity, is not able to pay off his debts as the business didn't go well? In this kind of situations, the destiny is left to the individual and I mostly see people committing suicide in such situations. Why Government is not thinking in this direction to protect the individual? Please don't point the finger at me while addressing the issue as I have never taken loans to do business.
  • #613479
    The population of our country is more than a billion. And the business people are in millions. How can our government rescue the businessmen who are incapable of conducting good business. It is the destiny if they run into debt and suffer. Only rich friends and relatives should help that individual to come out of debt. If the business runs into debt due to death or illness of the businessman, then the relatives and friends would consider to help the individual. Otherwise, they will remain quiet and say RIP.
    No life without Sun

  • #613480
    Mr. Bhuvan: Let us think logically. Let us suppose a person took home loan for building his residence. The tenure of the loan is 15 years. However, unfortunately the man dies after 5 years or so. Then what would happen? Would the Government repay the rest amount? Why should the Government do so? Is it the duty or responsibility of the Government?

    This is similar case. A person started a business by taking loans. But unfortunately the business fails. Why should the Government repay the loan? The man may try to re-schedule the loan. The man can sell off the loss-making business, start working and repay the loan. How does the Government come into picture?

    Actually we are still not aware of the functioning of the Government. So, we are asking this type of questions.

    Beware! I question everything and everybody.

  • #613482
    But Partha sir, when a company is dissolved, total loans will not be paid. When a company is dissolved, its total assets will be calculated and the debts will be paid proportionately and not fully. For example, if the total loan from a particular bank to the company is 10 percent of company's total loans, then only 10 percent of total assets will go to that bank after liquidation. As a case, the loan from that particular bank may be Rs. 1000 and the bank may get only Rs. 100 of assets. If the companies have such flexibility, why can't an individual have such flexibility.

  • #613502
    For the individual business a person has to plan and run it in a professional way and try to earn a profit from it. If the business does not run smoothly and the future prospects are also not good he has to close down the show and start a new business or in extreme cases leave the business arena and search for a job.

    Govt has no way responsible for his failures in the business. If he has taken a loan from the bank then bank will realize that with his mortgaged property or asset.

    There are other areas like Agriculture sector which is a sector which is contributing to national GDP and the farm production is directly related to the availability of these products in market for consumption of people and Govt has a protection and shelter to this sector and their loans are waived in case of natural calamities.

    Individual business are not considered for such waiver by our Govt.

    Knowledge is power.

  • #613514
    I am not asking the Government to repay the debt but asking it to provide some protection by law if anyone goes bankrupt in business. If a company, mostly run with the help of professionals, can go bankrupt why can't an individual business go bankrupt. If a company goes bankrupt, all will lose their money including seed capitalists, venture capitalists, private equity holders, banks, common stock holders, etc. But if an individual business goes bankrupt, only the sole proprietor will lose money and not the others.

    Partha sir, buying an apartment is completely different from running a business.

  • #613516
    It is sheer luck and fate to run a business and make profit. Also, Business is related to mental ability. An individual can make up his loss in business by finding an alternate business. Some goes to an astrologer to find solutions. Some go to the temple and perform pooja to come out of debts. Someone seek the help of their friends and relatives. Some goes to the Mantrik or Tantrik to know what went wrong, whether there is some evil eye on their business. Individuals undertaking a business should be careful in planning and execution with perfection. If not, curse the luck and sit at home.
    No life without Sun

  • #613529
    Always that risk of loss is there. One has to plan his business very correctly and execute the plan properly. Otherwise what happens is business will not go well. For business, these days banks will not give the loan to a small man without collateral security. In such case, banks will get their money through the collateral security. But the individual will lose the money. So the planning and selection of business are very important. But the government can't do anything in this case. Generally, many of the business people plan the business in such a way that they can withstand the difficulties also in case of any unexpected losses. They will have a standby arrangements so that their family will not run into problems. So far I have not seen any businessman who suffered and made his family suffer because of losses in the business.
    always confident

  • #613544
    It's not possible for government to support every private venture if the buissness doesn'tt go well. If it does, every Tom, Dick and Harry in India with conventional and unmentionable business venture will start claiming funds from Government.

    There is always a risk for private employees and private employers. If there has been a fraud and the employer has shut down the unit, then there is some hope for all to get some form of compensation.
    In today's world, insurance companies are offering products that are offered in western countries
    For employees: insurance for work loss,lay off from work where in an Umemployment protection would be given if they meet the ebligibity criteria.
    For private businesses:
    There is TRADE CREDIT INSURANCE - this offers protection against clients not paying the small businesses after sales, insolvency etc. Apart from this Indian companies also offer insurance for fire,theft,property damage etc which would be useful for private businesses to have some support in handling crisis.
    If one is running a business, then they can look into some of these.

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