Unenforceable loans????

nwph

dfh wrote: »

I think people need to put themselves in the Bank's shoes.Let's say you are a bank and lending money is your livelihood.You lend someone money with the understanding that they will pay it back with interest.You agree to the terms and conditions and then sign an agreement.Then the customer decides that just because there was a spelling mistake in the agreement they don't have to pay it back.And the courts agree with the customer.I bet you will go blue in the face saying how unfair it all is.And it will never end.People will decide that their mortgage agreements are unenforcable and hence they don't have to pay their mortgages and will own their houses outright.Besides,how many times have we lied on application forms tweaking our income and outgoings? What if the banks decided to scrutinise each and every agreement and then decide that you broke the terms and conditions and demand the entire sum in one go?

What does make me go blue in the face is the fact that tax payers money is used to prop up the financial system ,then 6 months later the !!!!ers are paying out silly bonuses again ,come on ,whats wrong with these people .
Interesting article .
Ever wonder what happens when you default on a loan?

Does the bank suffer a huge amount when this happens? Well, banks are set up so that money may be created from virtually nothing. So do we expect banks to suffer when loans go bad and creditors – as sometimes happens in life – become unable to pay their installments? No.

In fact, they make a little profit from a combination of several things.
First there is the insurance (which you have been paying towards, though you may not know it). Secondly there is the tax break that writing off the loan gives them. Thirdly, they get a few hundred when they sell the debt on to a debt purchasing company (DPC) who will then try to recover the whole amount (though they bought the debt for pennies on the pound), plus their own expenses and fees, plus interest, and will spend the next few months or even years making your life Hell in the process, using tactics which usually involve breaking the law.
The bank knows the DPC will do this, but they don’t care. By this time they will be quids in.
Of course, the bank doesn’t want you to default. They want to keep you paying your monthly installments to them for years and years because they can get away with it. But when things go bad, the banks are amply covered.
That’s it in a nutshell. But let’s have a look at the various stages of what happens when you default on a loan.
Of course, banks do all they can to prevent you defaulting on a loan, and they also make a very tidy sum by adding penalty charges to your account (typically £35, sometimes more) every time you are late with a payment.
“Banks are making up to £3.5 billion a year from overdraft penalty charges, the Office of Fair Trading (OFT) said yesterday.”
Source: Times Online, Sept 12 2007
Such penalty charges have since been declared as illegal, and thousands of people have benefitted from successfully claiming back all their penalty charges from their bank (although this process is now on hold until the law can decide once and for all what the penalty charges should actually be).
So the banks make money when you are late with a payment. But what if you find yourself in a position where you cannot meet the installments at all? What happens when you actually default on a loan?
There are a number of ways that the bank makes money when you default on a loan.
Firstly, remember that the bank will only ever lose about one twelfth (about 8%) of the loan, because that’s all it needed to have of its own money in the first. So even if you defaulted in the very first month, the bank would only lose 8% of the whole loan value. If you have been keeping up with your installments for a number of months, the chances are that you will have paid back the bank all of the 8% it had originally invested.
But it still expects you to pay back the other 92%.
So if you default on your loan the chances are that the bank will have had all its “real” money back anyway, and a whole lot more, plus interest.
But the bank is allowed, by law, to pursue you for the whole amount. It may well start doing this from its own debt recovery department. If that fails it will write off the debt and sell it to a debt purchasing company (DPC) or use a debt collection agency (DCA) on a commission basis. At the same time it will receive a payment from an insurance policy which was taken out when the loan was first authorised.
Because, on top of your repayments and on top of your interest you will also (perhaps unwittingly) have been paying a monthly insurance premium – directly or indirectly – to be paid when the loan defaults.
Not paid out to you (though you have paid the premiums directly or indirectly) but paid to … you’ve guessed it … the bank!
So the bank gets paid a lump sum by the insurance company whenever a loan defaults and is written off.
There are also tax breaks which will benefit the bank when a loan is written off, as this is put in the Expenditure column of the accounts and so counts against the bank’s tax bill.
Then there is the tidy little sum that the bank will make when it sells the debt on to a debt purchasing company. DPCs buy debts, sometimes individually but more usually in bundles, for mere pennies on the pound. So a £10,000 debt will typically be bought by a DPC for £400. The DPC will then pursue you, using both legal and illegal means, for recovery of the whole £10,000.
And if you thought that the banks were making a good deal by their 92% + interest profit margins, then just look at what the debt purchasers are making!
If the DPC buys a bundle of debts for £10,000 it will mean that, at 4%, the total original value of the debt would be £250,000. It will then try to recover all of this.
Of course, it won’t be able to, as the debtors will not be in a position to repay what they owe. They defaulted on the loan in the first place, after all. Their circumstances may have changed completely since first signing their credit agreement. All sorts of things could have happened including unemployment, bankruptcy, divorce, disease, insanity and any number of personal disasters unique to the individual debtor. So most of the money will never be able to be collected.
But the DPC will be able to recover some of this, and so make a healthy return. At only 4% investment it would be difficult not to make a profit! However, in order to do this the DPC’s sales staff will try every dirty trick in the book to maximise its profits. All its sales staff will be paid (entirely or mainly) on commission, so everything will be geared up to pressure the unfortunate debtor as much as possible.
They will phone you up and lead you to believe they are calling from the bank. They will try to break your will and use all the tricks that salesmen know about (they are essentially, for the most part, very good telesales people) to make you part with your money then and there.
(Incidentally, this is why you should never speak to a DPC on the phone. Always insist they put everything in writing and politely close the telephone conversation when they ring you up. The reason for this is that they know that they can get away with saying things on the phone that they can never get away with in print. It’s also the reason why DPCs are always so keen on knowing all your telephone numbers, you mobile numbers, work numbers, etc.)
Another option for the bank, other than selling the debt to a DPC, is to hire a debt collection agency (DCA) who will then use similar tactics to the DPC in trying to collect the money. In this case, instead of selling the debt outright, they retain the debt and pass a percentage of the sum thus recovered by the DCA to that agency.
The effect on the hapless consumer, who is presumably down on his or her luck in order to be in this situation in the first place, is much the same whether a DCA or a DPC is employed. A prolonged period of misery will ensue: phone calls at all hours of the day and night, threatening letters, threats to “send the boys round” and people knocking at the door.
And this is after the bank has lost none of its own money.
Still troubled by your conscience?

StuTheDon

For all of you who are going on about these technicalities and justifying yourselves and your actions in getting our of your commitments consider this.

You dont' have to have credit to live your life.

If you choose to be a sheep and follow all your firends with the latest iphones, clothes from catalogues and newest cars that is your choice. Everyone signs a credit agreement for these things where the details are clearly laid out (in most cases) - if you cant be bothered to read it and just sign then you have absolutely no right to complain after the fact about how unfair the banks are. If you dont agree with them then dont use them.

Of course there are people who have lost jobs, been injured etc, but they are in the minority. Unfortunately the majority have simply overspent and over committed.

For those who signed without reading, and then complained when they dont like it, I have no sympathy.

IN_DEBT_4EVA

nwph wrote: »

What does make me go blue in the face is the fact that tax payers money is used to prop up the financial system ,then 6 months later the !!!!ers are paying out silly bonuses again ,come on ,whats wrong with these people .
Interesting article .

Still troubled by your conscience?

Excellent post. :T

*Chattie*

nwph wrote: »

Interesting article .
Ever wonder what happens when you default on a loan?

Still troubled by your conscience?

Interesting that you copied this article from a claims company.

Surprised you have time to read such websites given your busy life making such a load of dosh

IN_DEBT_4EVA

*Chattie* wrote: »

Interesting that you copied this article from a claims company.

Surprised you have time to read such websites given your busy life making such a load of dosh

write off credit card debt dot co dot uk

regulated my ministry of jutise? i bet they are

~Brock~

Not sure where you copied that article from, but it is so far from reality to be laughable. Isn't it funny how the public love a good conspiracy theory - makes them feel good about themselves. Not sure who the original author was (he probably swent down with the Rainbow Warrior) so there is no point in debating its contents on here.

Here's a interesting paragraph I read yesterday, which may interest those who have the ability to see further from the end of their nose.

The Cult of Blame
‘Blame’ has become a cultural mantra. Often it is at its most vitriolic when aimed at the undefined ‘Them’. A feeling of powerlessness and now, anger, at the ‘greedy and incompetent’ financial institutions - and a government that ‘allowed it to happen’ - has proved a lethal cocktail.
This notion of the ‘Evil Them’ allows a comforting distance between the ‘baddies’ (the perpetrators) and ourselves (the innocent victims). It absolves us from responsibility. Self-righteous anger and blame are natural psychological refuges at present but, paradoxically, they may be what keep us, as a country, from moving forward.

nwph

StuTheDon wrote: »

For all of you who are going on about these technicalities and justifying yourselves and your actions in getting our of your commitments consider this.

You dont' have to have credit to live your life.

If you choose to be a sheep and follow all your firends with the latest iphones, clothes from catalogues and newest cars that is your choice. Everyone signs a credit agreement for these things where the details are clearly laid out (in most cases) - if you cant be bothered to read it and just sign then you have absolutely no right to complain after the fact about how unfair the banks are. If you dont agree with them then dont use them.

Of course there are people who have lost jobs, been injured etc, but they are in the minority. Unfortunately the majority have simply overspent and over committed.

For those who signed without reading, and then complained when they dont like it, I have no sympathy.

Businesses need credit ,you shouldn't use your own capital ,assets to run or set up a business

The credit crunch isn't about mr smith and his plasma on a card its about cash flow for businesses ,i repeat banks are a business ,they don't give a !!!! about you and your circumstances ,corporations want us to buy the latest and greatest goods ,unfortunatly over valuing assets and overleveraging has cocked it up for everyone .

Its sad to say the current unemployment crisis was always going to happen some people are just surplus to requirements now the consumption of goods has had to slow down .

Me, i'll get what i can out of the banks while i can .

IN_DEBT_4EVA

nwph wrote: »

Businesses need credit ,you shouldn't use your own capital ,assets to run or set up a business .

Me, i'll get what i can out of the banks while i can .

spoken like a true gent.

I'll second you mate :beer:

nwph

*Chattie* wrote: »

Interesting that you copied this article from a claims company.

Surprised you have time to read such websites given your busy life making such a load of dosh

My company has adverts in all the thomson locals throughout yorkshire ,i employ a number of sub contractors ,i only work on the tools 3 days a week ,my books are full up for 12 months ,i install on the warmfront scheme and have secure contacts with all the local businesses .

You can wink all you want ,this forum is amusing, a quick glance at the is my quote fair section makes interesting reading ,on the one hand we have pay all your debts back to the greedy banks ,yet on in the other hand we have i,m not paying a greedy tradesman .

I typed into the internet ,unenforcable loans ,this forum popped up ,i am off to see a fellow this aft ,nothing ventured nothing gained .

You do know mbna write off one billion worth of loans deliberatly every year .

StuTheDon

nwph wrote: »

Businesses need credit ,you shouldn't use your own capital ,assets to run or set up a business

The credit crunch isn't about mr smith and his plasma on a card its about cash flow for businesses ,i repeat banks are a business ,they don't give a !!!! about you and your circumstances ,corporations want us to buy the latest and greatest goods ,unfortunatly over valuing assets and overleveraging has cocked it up for everyone .

Its sad to say the current unemployment crisis was always going to happen some people are just surplus to requirements now the consumption of goods has had to slow down .

Me, i'll get what i can out of the banks while i can .

My comments were not aimed at business lending, or about why the credit crunch exists. It was aimed at personal credit and those trying to avoid it on technicalities.

Good luck with trying to screw the banks for all you can - I just hope that that course of action does not come back to haunt you in a few years. A lot can happen between now and then.