Credit Card Debt

treliac

Dan: wrote: »

It's quite easy to get it written off - and many do, unfortunaly.

So that means the rest of us pay for the debt of others, when the credit card companies put their rates up to cover their losses.

Thrugelmir

treliac wrote: »

So that means the rest of us pay for the debt of others, when the credit card companies put their rates up to cover their losses.

No need to increase them further as the interest rates charged are penal already and trap people in for life, paying on the never never.

mr.broderick

bigfatbelly wrote: »

You can't turn an unsecured debt into a secured debt. Credit card debts are unsecured debts and the companies cannot put a charge against your home if you owe them money. Against the law.

If you go bankrupt then all your debts become secured if you have equity - including credit card debts. But if you make token payments then the CC companies cannot even take you to court. End of.

I know of 2 people who have run up debts on their credit cards - one as much as £25k in total and he pays off something like a tenner a month. Every so often he gets letters offering him a deal to pay half what he owes in one lump sum and they'll write the rest off. He can't do that as he was made redundant last September and is stony broke. So he just gives them a tenner a month and they have to accept it. As it happens he's in neg equity anyway so fat lot of good it would do if they were able to put a charge against his home but the y can't do, and they will never be able to - the debt is UNSECURED.

They've probably realised they are not going to see their money, i find it hard to sympathise with these credit card companies, i do apologise.

bigfatbelly

tomterm8 wrote: »

That's not quite correct in the general case - probably is for your mate though. What you are refering to is this



If an installment order is made, or applied for, before the relevant section comes into force, then the changes don't apply. However, the court still has the power to refuse to grant the installment order until a charge is issued, which is a loophole that exists under the current law.

If a CCJ is granted, and the debtor doesn't apply for an installment order before the relevant section comes into force, a charge could still be issued even if an installment order was granted after the provision came into force.

That's what I tried to explain to you in my first post - this new ruling (IF or WHEN) it comes into force WILL ONLY APPLY TO CASES WHERE AN INSTALLMENT PLAN HAS NOT BEEN APPLIED PRIOR TO THE DATE OF THE NEW ACT.

THUS, all people who are at present on installment plans to try and pay off their UNSECURED loands will be exempt from this new act.

The new law cannot change a once unsecured loan into a secured loan. And a charge cannot be put against a property unless a person REFUSES to enter into a payment plan - in which case they would be taken to court and a judgment made against them.

No-one is foolish enough to allow things to spiral out of control to that degree. Thousands of people are making token payments of as little as £2 a month to CC companies - and thousands are being written off each week because the CC companies would prefer a few grand lump sum NOW, rather than a couple of bob a month.

So to clarify - PRESENT UNSECURED loans will stay that way forever. And even if those people refused to make regular payments, and were taken to court and ended up with CCJs they would not be charged against their property. They would just be CCJs which would give them a zilch credit rating for a minimum of 6 years.

Dan:_4

treliac wrote: »

So that means the rest of us pay for the debt of others, when the credit card companies put their rates up to cover their losses.

Only for people with a poor credit rating, those of us who have excellent ratings will use the many 0% cards available.

lostinrates

bigfatbelly wrote: »

...
The new law cannot change a once unsecured loan into a secured loan. And a charge cannot be put against a property unless a person REFUSES to enter into a payment plan - in which case they would be taken to court and a judgment made against them.
.....

We had a really good explanation (more than once) of how this would work when we had our reseident barrister here I tried some serches yesterday and couldn't find her explanation, but it would be a hugely beneficial addition to this debate.

lemonjelly

bigfatbelly wrote: »

That's what I tried to explain to you in my first post - this new ruling (IF or WHEN) it comes into force WILL ONLY APPLY TO CASES WHERE AN INSTALLMENT PLAN HAS NOT BEEN APPLIED PRIOR TO THE DATE OF THE NEW ACT.

THUS, all people who are at present on installment plans to try and pay off their UNSECURED loands will be exempt from this new act.

The new law cannot change a once unsecured loan into a secured loan. And a charge cannot be put against a property unless a person REFUSES to enter into a payment plan - in which case they would be taken to court and a judgment made against them.

No-one is foolish enough to allow things to spiral out of control to that degree. Thousands of people are making token payments of as little as £2 a month to CC companies - and thousands are being written off each week because the CC companies would prefer a few grand lump sum NOW, rather than a couple of bob a month.

So to clarify - PRESENT UNSECURED loans will stay that way forever. And even if those people refused to make regular payments, and were taken to court and ended up with CCJs they would not be charged against their property. They would just be CCJs which would give them a zilch credit rating for a minimum of 6 years.

Sorry, but I simply don't agree with this.

Creditors have powers of enforcement - steps they can take to recover monies owed under the original lending agreement.

If the original agreement is breached, the creditor has the option to pursue the matter via the county court. Which specific court is decided by the amount owed.

The net result of this action for the debtor is that:

1)they're credit rating is adversely affected
2)they are liable for the enforcement costs
3)the creditor has increased powers of enforcement.

Once the CCJ is awarded, the creditor has a much wider range of options open to them. The district judge will set up a repayment plan (however if the debtor doesn't attend court, the dj will award payment in full). If this is defaulted on, the creditor can apply to the court for additional powers, such as the right to use bailiffs to recover the debt, an attachment of earnings order (if you are working), a stat demand (if the debt is over £750), and/or a charging order on your home if you are an owner occupier.

If the court agrees to the charging order, this is then registered with the land registry. Any potential buyer is then aware that the creditor has an interest in the property.

If the debtor continues with erratic payments, the creditor can apply for an order for sale.

Whilst I agree that many creditors will accept token payments, they can - and will - apply for charging orders. And these are being granted by courts up & down the country.

One of the worst culprits of this in the current climate is the government owned Northern Rock.

The above quote could lead to people being blase about unsecured debt. Please do not let this happen.

I have seen hundreds of people in my career who HAVE let it spiral to this extent, for a variety of reasons.

Generali

longleggyblonde wrote: »

Northern Rock have never lent unsecured loans - ever.

According to these guys, NRK were selling unsecured personal loans in 2005:

http://www.moneynews.co.uk/1245/northern-rock-unsecured-personal-loan-launched/

Northern Rock Unsecured Personal Loan launched

Wed 9th Nov 2005


Northern Rock has announced the launch of its new unsecured personal loan with a rate of 5.7 per cent typical APR.

The Northern Rock Unsecured Personal Loan is available to customers over a period of one to ten years and is dependent on the applicant's credit rating.

According to NRK's results for H1 2007:

http://companyinfo.northernrock.co.uk/investorRelations/results/stockEx070725.asp

Our personal unsecured credit portfolios comprise the unsecured element of “together” lending and standalone unsecured loans not linked to a residential mortgage. An analysis of lending volumes on the separate elements of our unsecured portfolios is shown in the following table........

Dan:_4

longleggyblonde wrote: »

'One of the worst culprits of this in the current climate is the government owned Northern Rock.'

Northern Rock have never lent unsecured loans - ever. So they have every right to go to court and ask for a charge to be made against a debtors home - all their loans are, and always have been, secured.

Northern's Rock 125% Mortgage products were made up of two separate loans (on the same interest rate)

95% Secured Loan
30% Unsecured Loan

And thats how it would appear on your credit file. You could also settle just 1 loan if you like.

Broken_hearted

Dan: wrote: »

You can't pay a credit card with a credit card (unless you do a balance transfer), but some mortgage products allow credit card payments, often with a fee.

Back a few years ago you could. We payed our mortgage on the CC, we had no choice. DCA will happily take CC payments even now.