Why the negativity towards not paying

izools

My take is this:

It matters why people might not pay their debt back.

There are several reasons, but I believe they fall into three categories:

1. An unwillingness to pay
2. An inability to pay due to income issues
3. An inability to pay due to an inability to budget

As for point 1, that is right out. Pay back what you borrow. If you agreed to fair terms, stick to them. Debtors know the APR they are borrowing at before they borrow. They know the charges scheme for defaulting before they borrow.

Once a debtor has tied themselves into a contract they have an obligation to use every reasonable efford to stick to that contract, not just one day decide the terms no longer suit them, unless they are willing to clear whatever is outstanding and close the account.

Point 2, I can sympathise with, as I was in a position a few years ago wherby I was being as thrifty as you like, surviving on cheap-dodgy tobacco and Sainsburys Basics but still unable to pay even enough for creditors to consider freezing interest. Most creditors agreed to accept payments in exchange for stopping action but the payments they accepted didn't even cover interest.

They also refused an IVA, so I was left with no choice, despite doing everything I was physically able to bar working 18 hour days (I'd be dead now if I had), but to declare myself bankrupt. If they had not denied the IVA proposal I would be content in continuing to clear balances in an affordable manner, but they chose not to accept it, so they get jack. Not my choice.

3. If someone has a problem budgeting, IMHO they are making a concious choice not to pay debt on the basis they are choosing not to make a concious efford to spend less on frivoloties. There is help available from friends, families, CAB, CCCS, etc to help those less thrifty learn the art of spending less and anyone unable to pay debt because of an inability to budget shouldn't be in the position for more than a few months if they are genuinely trying and progressing to budget better.

That's my opinion anyway.

sillystudent_2

never-in-doubt: I think you mean it is called utilising the options available as per the law in context,

Funny... I think the Nazis used that same defence at Nuremburg - obviously I wouldn't insult anyone who suffered through WWII by comparing something like that to a thing as minor as this. But the point stands - just because it's within the law doesn't make it morally right

And anyway, you say being able to write off your debt isn't a 'technicality' - yes it is, exactly that! It was merely a loophole which has now been closed by the Consumer Credit Act 2006, Parliament said as much when they passed the Bill!!

My take is this:

It matters why people might not pay their debt back.

There are several reasons, but I believe they fall into three categories:

1. An unwillingness to pay
2. An inability to pay due to income issues
3. An inability to pay due to an inability to budget

As for point 1, that is right out. Pay back what you borrow. If you agreed to fair terms, stick to them. Debtors know the APR they are borrowing at before they borrow. They know the charges scheme for defaulting before they borrow.

Once a debtor has tied themselves into a contract they have an obligation to use every reasonable efford to stick to that contract, not just one day decide the terms no longer suit them, unless they are willing to clear whatever is outstanding and close the account.

Point 2, I can sympathise with, as I was in a position a few years ago wherby I was being as thrifty as you like, surviving on cheap-dodgy tobacco and Sainsburys Basics but still unable to pay even enough for creditors to consider freezing interest. Most creditors agreed to accept payments in exchange for stopping action but the payments they accepted didn't even cover interest.

They also refused an IVA, so I was left with no choice, despite doing everything I was physically able to bar working 18 hour days (I'd be dead now if I had), but to declare myself bankrupt. If they had not denied the IVA proposal I would be content in continuing to clear balances in an affordable manner, but they chose not to accept it, so they get jack. Not my choice.

3. If someone has a problem budgeting, IMHO they are making a concious choice not to pay debt on the basis they are choosing not to make a concious efford to spend less on frivoloties. There is help available from friends, families, CAB, CCCS, etc to help those less thrifty learn the art of spending less and anyone unable to pay debt because of an inability to budget shouldn't be in the position for more than a few months if they are genuinely trying and progressing to budget better.

That's my opinion anyway.

Agree 100% with this

Ritchie74

Debated whether to get involved with this one, but here goes...

For my sins I am a banker (that's banker with a b, not a w). I admit I don't know everything there is to know and don't know about every institution and can only comment on what I know.

Firstly, by not paying debts back (even using the unenforcibility route) you stand to mess up your credit record for 6 years, so if you have a clean record it seems silly to do this. If it's messed up already then I guess you have nothing to lose.

On the other point that is being discussed -that of the 'goods' being penalised for the 'bads' yes I have seen this happen. During the recession when write off rates have increased, CC rates have increased, both for new business and also repricing of the back book- I have seen more repricing occur in the last year than in my whole career). I am not saying it's right, that's just how banks will mitigate against detrimental impacts to the P&L. Other mitigation strategies include increasing score cut-offs at application (ie reduction of accept rates), and credit limit decreases/ lower limits assigned at origination.

I could be wrong, and happy to be proved as such, but don't retailers have a mark up for losses through theft added into their prices? Don't car insurers charge higher premiums to cover those who don't take out insurance?

Oh and I am back office and can only dream of £1m bonuses, no I will be lucky to get over £5k this year and that's working for a profit making bank that hasn't been bailed out.

PinheadSK

sillystudent wrote: »

Funny... I think the Nazis used that same defence at Nuremburg

Noooooooooo! You were doing so well... then Godwin's Law zapped you right out of the game!

http://en.wikipedia.org/wiki/Godwin%27s_law

never-in-doubt

Ritchie74 wrote: »

Debated whether to get involved with this one, but here goes...

For my sins I am a banker (that's banker with a b, not a w). I admit I don't know everything there is to know and don't know about every institution and can only comment on what I know.

Firstly, by not paying debts back (even using the unenforcibility route) you stand to mess up your credit record for 6 years, so if you have a clean record it seems silly to do this. If it's messed up already then I guess you have nothing to lose.

On the other point that is being discussed -that of the 'goods' being penalised for the 'bads' yes I have seen this happen. During the recession when write off rates have increased, CC rates have increased, both for new business and also repricing of the back book- I have seen more repricing occur in the last year than in my whole career). I am not saying it's right, that's just how banks will mitigate against detrimental impacts to the P&L. Other mitigation strategies include increasing score cut-offs at application (ie reduction of accept rates), and credit limit decreases/ lower limits assigned at origination.

I could be wrong, and happy to be proved as such, but don't retailers have a mark up for losses through theft added into their prices? Don't car insurers charge higher premiums to cover those who don't take out insurance?

Oh and I am back office and can only dream of £1m bonuses, no I will be lucky to get over £5k this year and that's working for a profit making bank that hasn't been bailed out.

Hiya mate - Happy New Year lol (been ages!)....:beer:

I won't argue with your statement above - we all have our own views and 'slant' on things and whilst I agree that companies can and some do inflate prices to cover for risk/loss whatever the bottom line is that it is not always possible.

My mate for instance has a games shop, to compete with the big players he has to resort to adding maybe £3 per game which is just not viable to run a fully functional store, so he takes that risk and pays slightly more insurance but less on security measures, for instance he only puts empty cases on display - BUT - staff theft, not a lot you can do about that. Similarly, games go out of date very quickly, he makes losses when he has to bundle or reduce them...

My point is that he cannot afford to inflate prices, or he'd be out of business.

You know I know what you do for a living mate, lol, so won't argue with your points but i'm just explaining that not all losses are apportioned back down to the customer - business doesn;t always work like that, yea maybe some does but it is not the norm.....

Ritchie74

never-in-doubt wrote: »

Hiya mate - Happy New Year lol (been ages!)....:beer:

I won't argue with your statement above - we all have our own views and 'slant' on things and whilst I agree that companies can and some do inflate prices to cover for risk/loss whatever the bottom line is that it is not always possible.

My mate for instance has a games shop, to compete with the big players he has to resort to adding maybe £3 per game which is just not viable to run a fully functional store, so he takes that risk and pays slightly more insurance but less on security measures, for instance he only puts empty cases on display - BUT - staff theft, not a lot you can do about that. Similarly, games go out of date very quickly, he makes losses when he has to bundle or reduce them...

My point is that he cannot afford to inflate prices, or he'd be out of business.

You know I know what you do for a living mate, lol, so won't argue with your points but i'm just explaining that not all losses are apportioned back down to the customer - business doesn;t always work like that, yea maybe some does but it is not the norm.....

Fair point, well made. I guess there is no 'one suits all solution' and it's about finding the balance so that you still get the custom and make a profit. I can only guess at what other banks are doing from reading posts on here, unlike supermarkets (call me cynical) we don't get together and discuss our business models and "price fix". Maybe other banks mitigate losses elsewhere (as you mentioned, through Shareholders)

And a Happy New Year to you too! Been back on here a few weeks now after a bit of a break (moved house in Oct and what with Christmas, we've been v busy).

never-in-doubt

Ritchie74 wrote: »

And a Happy New Year to you too! Been back on here a few weeks now after a bit of a break (moved house in Oct and what with Christmas, we've been v busy).

Yea wondered where you went! Thought you'd eloped with some rich chic (:eek::eek:)

So have you moved inner city or further away? I gotta venture into town one day, really not looking forward to it! That's country living for you! :rotfl:

Ritchie74

never-in-doubt wrote: »

Yea wondered where you went! Thought you'd eloped with some rich chic (:eek::eek:)

So have you moved inner city or further away? I gotta venture into town one day, really not looking forward to it! That's country living for you! :rotfl:

Slightly further away in a northerly direction, so longer commute but nicer area with better schools for the squids.

Rich chic? I wish. No I'm happy with my lot really. Hope all is well for you.

kalaika

never-in-doubt wrote: »

...Excuse me? Right and wrong is for a court to judge, thank you very much.

I know, as much as the next guy that mugging an old lady is wrong, but as for getting into debt and legitimately not being able to repay it, well that's a totally different kettle of fish...... I follow the law, not morals.

So if you follow the law, not morals, does that mean you would happily mug an old lady if the law didn't say it was wrong?

Like I said before, there's a legal right and a moral right. I think izools has described the situations well in that sometimes situations out of our control occur when it is not possible to fulfil both the former and the latter. I cannot comment on those in situations like this through no fault of their own. However, getting debts written off when there was never any intention of paying it back (as the OP appears to be indicating was his intention) is definitely is a moral wrong, even if not a legal one.

In a civilised society we should always consider both the legal and moral aspects of our actions.

roadster

kalaika wrote: »

So if you follow the law, not morals, does that mean you would happily mug an old lady if the law didn't say it was wrong?

It would depend if the old lady was shafting me sensless for compound interest on a credit card debt that i had paid several times over and still owe on. Also if she was unreasonable to my requests to feeze interest and set up a realistic payment plan as my income had dropped through no fault of my own and if she was hassling me every week to increase my repayments even though i am practically living hand to mouth every payday---well yes i would mug her wouldnt you ???

I fully take responsiblity for my debts and have always paid them. The banks are in their eyes strictly following the loan to repayment equation you borrow - we add interest - you pay back thats ok with me. My predicament has fallen on deaf ears, if the banks would have listened and helped me they would have had their money plus some profit and I would not be going down the uneforceablity route. If they have executed an uneforceable agreement then their requests for payment will fall on my deaf ears. Thats just tough on them, BoE rates are at an all time low Libor rates at an all time low - credit card interest at an all time high - how does that work ??? also when they fall on hard times its us tax payers that bail them out. Well its about time the banks got mugged and shafted.

Right thats my two pence worth. Or 78 pence worth if your working for a credit card company.

:rotfl: