Is bankruptcy a useful and legitimate business tactic? Is declaring bankruptcy 4 times? Drumpfkins keep telling me that it is and I'm too much of a financial n00b to know.
Is bankruptcy a useful and legitimate business tactic? Is declaring bankruptcy 4 times...
Joshua Evans
Cameron Barnes
Yes it is. In various situations. But if one business for example has a lot of debts (maybe you have to pay employers, you borrowed lots of money and spend it on yourself or you simply purchased a lot of goods), while you keep the money in another one, then it can be profitable to just let the business with the debts in it go bankrupt.
This can be completely legal, but in the case of fraud it rarely gets caught.
I worked for a company that supplied aircraft parts. But something was wrong so the aircraft company wanted to sue us. Then we said we'd just go bankrupt and he wouldn't get anything at all. So they just let it slide.
Kevin Murphy
This used to be considered fraud until trump did it in the 80's to avoid paying the contractors that built his properties and the banks that financed them.
It's legal, but it usually means nobody will do business with you. Numerous articles exist about Trump's inability to get loans. People don't forget that kind of behavior.
Michael Martinez
The founders gave us a neat trick in the form of the bankruptcy clause. You should read about it.
Charles Morales
No.
And certainly not for personal, he means a business. A good business tactic is managing your debt mantence properly. Bankruptcy is for when you have a successful busniss and decide to start a second in a new field,my out form a new company, and if it doesn't work out you just chapter 11 it, or chapter 7, whatever. You aren't going to come out ahead with a bankruptcy, it's just to stopgap loses
Evan Edwards
Also don't listen to the idiot who says its a recent practice. the ability to avoid debts and state incurred taxes in one's liabilities by declaring bankruptcy was intended in the bankruptcy clause. From the 1850's onward, the practice was used constantly.
There's a reason debtor's prisons weren't a big part of U.S history compared to Great Britain
Jose Wood
>Also don't listen to the idiot who says its a recent practice
reading comprehension, moron.
bankruptcy isn't new.
bankruptcy for the sole purpose of avoiding debts you could easily pay is very new. Trump pioneered it.
Chase Reed
Bankruptcy was made as a way to avoid paying debts, there wasn't a qualification for the amount of debt incurred.
Its under your own perogative to delcare bankruptcy but you lose credit standing from the banks, you might lose some willing partners, and you still need to follow what the state prescribes on you for the terms of your bankruptcy. Its a decision between 2 bad choices, either be stuck with the debt you have or declare bankruptcy and handle the new terms. And most statlined businesses who can only go even often declare bankruptcy even when they have minimal debt as to start over. Nothing new about that.
Owen Brooks
Trump claimed in press that he went into bankruptcy as a business decision, the business was doing fine but he didn't want to pay contractors and creditors that he said did a bad job.
It's likely that this is a lie.
It's very likely that his bankruptcies were honest failures that he refused to own up to. That he couldn't admit failure. But the result was the same- bankruptcy became less stigmatized and more often viewed as a simple financial decision to not repay a debt even when one could.
this attitude Trump started bore fruit with the masses abandoning underwater loans before and after 08. It wasn't considered to be a personal failure- just a business decision like those made by Trump.
Ryder Ward
>Drumpfkins keep telling me that it is
It is totally permissible when banking behemoths that should know fucking better are fighting one-another to loan your exorbitant amounts of money with little to no oversight.
But being a frogposter I doubt Deutsche Bank or Chase is gonna be beating on your door anytime soon.
>Numerous articles exist about Trump's inability to get loans. People don't forget that kind of behavior.
Link to a well researched one? I've always wondered about his "comeback"
Caleb Campbell
>I've always wondered about his "comeback"
it's not really a comeback,
this part of Trump's career is lore from long before his political rise. As is his numerous infidelities and divorcing for reasons that in the 80's were very unpopular.
wsj.com
Ryder Diaz
>Trump claimed in press that it was a business decision to declare bankruptcy
Again, why is it an issue? Its common practice to declare bankruptcy if you want to alieviate some liabilites or switch capital. I thought this was common knowledge but apparenty not in Veeky Forums. And even if it was a failure, it was smart of him to file for bankruptcy in the first place and start over. Heck atleast he didn't went the way how tesco did it by overstating their accouts by huge leaps. What trump did (make a declarative statment after bankruptcy) was relatively tame. Heck I would do the same thing if I was in his shoes. Would be able to save the brand along with saving time and money dealing with the banks.
To the OP, there's nothing wrong with declaring bankruptcy, its a great tool to have in the management of ones accounts but you have to remember that there are negative implications to it aswell
Parker Parker
>Again, why is it an issue?
Prior to the 80's it carried huge stigma.
And Trump's claims were (rightly) viewed as fraud. If you can pay a creditor you have a legal obligation to do so. And most likely he lied, his creditors got paid and at one point in his career he was one of the poorest people alive.
I guess you had to live through it to understand the anger directed at him for his "choice," and the change in perception that got us to your attitude. A change Trump is largely responsible for.
Zachary Wood
And masses should avoid being underwater in their loans and try to quuckly remove oneself in such a position if one finds himself underwater. I would think this was a universal truth for anyone who takes loans, not just for americans in the 1980's.
Adam Brooks
>to quuckly remove oneself in such a position if one finds himself underwater.
traditionally this mean spending less and working more to honor the debt.
not so much anymore.
Elijah Long
>.wsj.com
Goddamn paywall.
Yellow Fever Murdoch isn't getting a dime off me!
Thank goodness for content pirates:
advfn.com
Austin Sanchez
I knew you'd find it.
respect for being the one user on Veeky Forums both curious enough and intelligent enough to use a search engine.
If you google "trump can't get a loan in the US" you'll find a lot more content of varying quality. Stuff from before his presidential run is most useful for gauging sentiment on the issue.
Joshua Hughes
Thanks man. It's rate, but not everyone here needs to be spoonfed
>If you google "trump can't get a loan in the US" you'll find a lot more content of varying quality.
yeah that's exactly why i asked for a "well researched" article, by the sounds of that article I really do believe that one-by-one he's burned bridges.
Caleb Howard
>by the sounds of that article I really do believe that one-by-one he's burned bridges.
it's one of the better articles I've read since the 80's and 90's. His business dealings aren't public though, so there's always going to be an element of speculation.
he has himself bragged/complained over the years that he can't get a loan because of his bankruptcies.
Liberal media loves to knock him for his poor performance in biz, but they forget he went broke more than once. Which means he's gone from zero to billionaire a couple times over.
Christopher Hall
For a normal person it should be viewed as a last resort. Chapter 13 is preferable for an individual as opposed to Chapter 7. Chapter 7 is a clean slate. Sometimes you are so deep in debt there is no other way out. It will stay on your record 7 years. After 10 years its gone. However, questions may come up on job applications many years after. Bankruptcy is never a good thing for an individual or corp entity, but sometimes its a necessary evil.
Nolan Gonzalez
Umm, bankruptcy isn't only permisable if you have no more money left, it could be permisable to declare bankruptcy if you have a string of negative balances, or if the interest of your debt outpaces the income of your business, or if there's a sudden shift of rates in high interest loans or if your assets suddenly devalues
The ability to declare bankruptcy and plan for restructuring because of the aforementioned causes is not that uncommon. Its a modern fallacy to think that bankruptcy is only permisable when you no more money to spend on debt.
And calling trump making a declarative statement AFTER filing bankruptcy as fraud is kinda manaical. If that is fraud then you can implicate hundreds of thousands in the states, lawyers would have a field day.
Josiah Ramirez
>If that is fraud then you can implicate hundreds of thousands in the states, lawyers would have a field day.
I thought it was fraud when I was a teen in the 80's and I read his bullshit.
later I realized it's just bullshit.
You are correct, you don't have to be completely broke to do a BK. Especially if you're a business. But make no mistake, your creditors WILL get paid before you do.
Nolan Roberts
>later I realized it's just bullshit.
to be very clear:
He didn't commit fraud
He pretended to commit fraud because that was a better excuse in his mind than the reality- that he failed at business.
sadly this inability to admit failure gave the public the idea that fraud was an acceptable business decision.
Owen Jackson
Thats a matter of subjectivity, maybe you didn't have accounting knowledge during that time and thought it was a rare thing to declare bankruptcy and start resrructuring early.
Hell the bankruptcy clause itself seems morally reprehensible at first glance but by reading it throughly you would realize that its a tool to prevent the U.S from becoming an overtly loaner/debtor state.
Levi Gray
>Thats a matter of subjectivity
exactly.
my memory is of huge newspaper headlines and angry reactions to his cavalier attitude.
the reality is he probably just failed at a business venture and pretended he didn't.
but that pretense changed American attitudes towards bankruptcy. It went from being seen as a failure to being a simple business decision in the public mind.
Hunter Brooks
Welp there's also the matter of declaring bankruptcy early and passing it off as a business decision after isn't really fraud.
Not to mentiom the fact that the whole "1980's trump did a not-fraud*" assertion relies on speculation.
Caleb Perry
>there's also the matter of declaring bankruptcy early and passing it off as a business decision after isn't really fraud.
yes, again you're exactly right.
trump pretended to defraud his creditors because he can't admit real failure.
pretending to have committed fraud isn't the same as committing fraud.
unfortunately it made it easier for the average American to justify fraud. Or at least justify not trying to meet their obligations.
>speculation.
the entirety of the tempest rested on trump's own words and nothing more.
Ian Lewis
Can we even verify the claim that it was because of trump that americans' views started to shift from "bankruptcy means failure to bankruptcy is just a tool"? I'm sorry if I'm abit skeptical about it since its baffling to think that past generations didn't use the bankruptcy clause in this manner. Considering the people who made the ammendment did so in the express intent to ensure the mercantile spirit to be vibrant and resilient and to also prevent the loaner/debtor state from forming.
Aiden Moore
>Can we even verify the claim that it was because of trump
no, like I said you had to live through it.
if you saw the public reaction to trump's claims you'd have no doubt.
the only change that actually happened is that attitudes that were common in business but hidden from the public became part of the public domain.
>prevent the loaner/debtor state from forming
a system that is encouraged in every aspect of our tax law. Like it or not we have a debt economy now, and BK is the pressure-relief valve.
Bentley Clark
I think I'm so far removed from what the normal citizen thinks about business that I feel like I can't comment on their views about bankruptcy anymore but by judging OP's post, it seems like the masses still think that bankruptcy is a sign of failure.
maybe the truth of it all is thst nothing really changed but you just gained more knowledge in finance throughiut the years and saw the truth behind the "bankruptcy is a failure" myth.
Julian Martinez
nah, I became cynical enough over years of business ownership that I began to see bankruptcy as a tool as well. I have 2 personal bankruptcies and 1 business bankruptcy behind me. If it pays to do so I'll do it again.
All I'm commenting on is the outrage I remember over Trump's comments on his BK.
if it was common or normal before that I can't imagine other people being so angry over it.
I was never angry about it, I didn't care then what trump did and I don't much care now.
Thomas Rogers
Just like you said, maybe it was the norm for business owners to utilize the bankruptcy clause but the public wasn't in the know, trump in his usually lovable brashness, spurts out a trade secret and the public freaks out.
I still think its the same situation today, where the only people with backgrounds in accounting, finance, or in business management knows the tricks of the trade wherein the general public is ignorant about it. Hence the whole myopic cry of protest against trump's tax statements when it was confimred that he bankrupted four times to restructure.
Jason Green
>trump in his usually lovable brashness, spurts out a trade secret and the public freaks out.
I think that's exactly right.
> the general public is ignorant about it.
they're significantly less ignorant now is all.
to put it in context, I was in my early teens when I read about Trump's bankruptcy. He wasn't a political figure then, so it's weird that that made headlines if people weren't outraged.
his bankruptcies are on a par with Nixon's resignation, the Iran hostage crisis and the assassination attempt on Reagan in my mind. Huge news at the time. Because of his mouth in Trump's case. He made it a big deal because the public couldn't fathom his motives. Now it seems like nothing, but only because he pioneered that attitude. He made bankruptcy normal.
Charles Hall
>Huge news at the time
His divorces were even bigger news because America at the time was overwhelmingly white, Christian, and conservative.
times have changed is all. Conservatives went from hating him to electing him.
Ayden Anderson
Have 10 million dollar /biz that makes 1 mill per year. Retard cuck slips on ice out front. Sues and wins for 100 million.
Guess I will just file for bankruptcy and reopen accross the street.
Im sure his 4 bankruptcies are more like dozens.
What is a Nevada corporation.
Yes, bankruptcy on a personal level is for retard cucks. Bankruptcy on a business is just another layer of asset protection.
Samuel Sanchez
>Sues and wins for 100 million.
pfft. the average settlement for death is 3 mil.
what is liability insurance? If you can't understand that you don't deserve to be in business.