Worse case scenario if you don't pay back a loan?

dodgydaz

What if, hypothetically, you took out a loan for a smallish amount, say 6 grand, but then due to redundancy, you could not afford to repay. What can the loan company or bank do?

Is it really bad if you fail to pay back the money? I am curious as it seems that a lot of people are taking out loans, then are unable to make the repayments.

This is not happening to me by the way, but with all the talk on bailiffs etc I read on this and other sites, it seems to be a common thing now. What is the worst that can happen if you take out an unsecured loan?

I am also not about to do the above as I am OK financially at the moment, but if you can get away with it fairly easily, I can imagine it becoming very common.

Ames

It depends. Absolute worst case scenario is (if you're a homeowner) they take you to court several times going through the system and you get a charging order on your home so that they get the money back when you sell, they can't force you to sell. Or if you default on a CCJ payment they can apply for bailiffs, but if you don't let them in, talk to them or sign anything then there's not much they can do.

At the other end of the scale, there's where I am - a default and a trashed credit rating, and paying £1 a month token payments indefinitely but having to deal with nasty debt collection agencies.

Where someone would be on the scale is like asking how long's a piece of string.

CLAPTON

one can apply to make someone bankrupt if the amount is over 750... not actually heard of such a case though

jonesMUFCforever

Would it not be prudent in these uncertain times to take out PPI for a loan should you not be able to make the repayments in the case of redundancy (or illness for that matter) ?

costapkt

Most PPIs only pay out for twelve months and have to be taken out at least six months before claiming. Then you have to check small print to see if you qualify. There is a lot of missold PPI out there.

dodgydaz

So let me get this straight. The absolute worse that can happen is for the money to be taken out of your house sale if you decide to sell up?

What about all the stories about bailiffs showing up and taking away goods, and the tv shows showing the same.

What about the phonecalls from XYZ credit demanding payment or they will declare you bancrupt - I know that's all crap - but don't you get harrassed daily by these firms?

Does it matter if you get a poor credit rating. What does it matter if you have a partner with a good credit score who can get stuff instead for you.

Sorry. I am finding this unbelievable that if you default on a loan, you could get away with a slap on the wrists at most!

CLAPTON

in bankruptcy, the house will be sold if necessary

MrsTinks

No the absolute worst case is that they declare you bankrupt and in theory they COULD force a sale of your house...
And if you had a job then you could get an attachment of earnings - ie they take their payment before you get your salary - worth remembering if you get a new job...
You do make it sound very "easy" to get away with but trust me it's not.
Having a debt hanging over you for 6 years is a long time - what if your partner left you? You'd be snookered wouldn't you?
And if it went to county court the judge as mentioned could give you a CCJ - this can be chased for longer than 6 years with the courts permission... They could also cease your car...
Do I personally think that it should be legal to not be able to chase a debt after 6 years if you haven't paid AND the creditor has not been in contact with you to try and recover the money? No... personally I think that if you owe the money you owe it - the ONLY way to get out of it should be bankruptcy and once bankrupt you should never be able to get ANY credit again... but then I repay all my debts so I guess I'm biased

~Brock~

dodgydaz wrote: »

Sorry. I am finding this unbelievable that if you default on a loan, you could get away with a slap on the wrists at most!

This reflects the shift in societies attitudes and values over the last 20 odd years.

There is no longer any shame in defaulting on debts, and the spin added by consumer advocates and vote hungry politicians is that it is just lenders that are to blame if a borrower cannot pay - no responsibility could possibly be levelled at the poor consumer who failed to plan for the unexpected but also wouldn't dream of giving up his Sky Sports subscription to try and repay.

Now I do agree that credit has in the recent past been handed out too liberally, but there should still be a shared responsibility for this providing the government is prepared to treat the electorate as adults (although this is becoming less apparent with each new crackpot legislative announcement from Westminster)

The obvious result - which is being experienced right now - is that credit shifts from being incredibly easy to incredibly difficult to obtain.

Rupert_Bear

dodgydaz wrote: »

What if, hypothetically, you took out a loan for a smallish amount, say 6 grand, but then due to redundancy, you could not afford to repay. What can the loan company or bank do?

Is it really bad if you fail to pay back the money? I am curious as it seems that a lot of people are taking out loans, then are unable to make the repayments.

This is not happening to me by the way, but with all the talk on bailiffs etc I read on this and other sites, it seems to be a common thing now. What is the worst that can happen if you take out an unsecured loan?

I am also not about to do the above as I am OK financially at the moment, but if you can get away with it fairly easily, I can imagine it becoming very common.

Worst case scenario and this is the worst. They sell the debt and the heavies move in and break everyone bone in your body.