I'm interested to know

BaldEagle

That's an interesting point made by Alastair. I went BR with c. £50k of unsecured debt amassed over a 10-12 year period. I wonder just how much of that "debt" was made up of interest payments, penalties and charges. I would imagine that well over half of that figure would have been fees applied by the CC or loan companies rather than the money that I'd actually borrowed.

Now I know that all the CC companies charge interest and fees because they're in the business of loaning money but I wonder how many people would still go down the BR route if, at the point you start having difficulties paying, the account was frozen and all interest and fees were retrospectively removed from the amount you owed them.

My feeling is that most people would then enter a DMP or similar to pay off the vastly reduced amount rather than go BR.

In most cases, the lender or DCA will get fractions of a penny in the pound in a BR case. If the lenders were more on the ball and got involved earlier, chances are they'd actually get more money back in the long term. Sure they wouldn't make a profit but they also wouldn't make a loss.

Ineedaname

I would say that 99% of my 'extras' were standard variable rates added whilst I was still making minimum payments. Once I defaulted it was only 3 months or so before I involved the CAB (mostly because LTSB just would not talk to me and kept telling me to get a third party involved). I'd already got interest frozen by the more reasonable creditors, CAB did the rest and I haven't paid a penny in interest or charges the entire time I've been on the DMP.

So they didn't make any extra out of me, just the standard rates on the cards whilst I was using them and running them up.

I still maintain that credit and store cards should be banned. I mean, common sense dictates that very few people can keep a proper handle on a variable loan which is what cards basically are. Most of the time with a mortgage you know where you are and bank loans or HP are set from the start, no variations.

BaldEagle

Ineedaname wrote: »

So they didn't make any extra out of me, just the standard rates on the cards whilst I was using them and running them up.

But they did. They made the interest payments and that's the thing.

Let's say you have a £2k bill with our old friends Barclaycard. Paying just the minimum payment each month would take you 337 months to repay the £2k and you'd pay £3212 in interest (source: http://www.whatsthecost.com/creditCard.aspx)

By my reckoning, for the last 12-18 months of having any credit cards, I was just paying the minimum amount before I defaulted and got whacked with extra late payment fees and suchlike.

My 50k debt is probably closer to £20k. If the lenders had taken the route above, I wouldn't have gone BR and would have entered into some kind of DMP alternative.

I don't know the going rate for a DCA to buy the debt (the figure 30p in the pound is knocking round my head but don't know where I heard it) so I don't know if they're better off with the current scheme or if they'd be smarter to look much closer at their lending and cut off problems earlier.

alastairq

Does anybody know roughly how much...a CC company can re-coup from other sources, following an account going through BR?...[on the original amount loaned?]

debtinfo

BaldEagle wrote: »

But they did. They made the interest payments and that's the thing.

Let's say you have a £2k bill with our old friends Barclaycard. Paying just the minimum payment each month would take you 337 months to repay the £2k and you'd pay £3212 in interest (source: http://www.whatsthecost.com/creditCard.aspx)

By my reckoning, for the last 12-18 months of having any credit cards, I was just paying the minimum amount before I defaulted and got whacked with extra late payment fees and suchlike.

My 50k debt is probably closer to £20k. If the lenders had taken the route above, I wouldn't have gone BR and would have entered into some kind of DMP alternative.

I don't know the going rate for a DCA to buy the debt (the figure 30p in the pound is knocking round my head but don't know where I heard it) so I don't know if they're better off with the current scheme or if they'd be smarter to look much closer at their lending and cut off problems earlier.

Yeah, thats never going to happen, there is a breakdown in your logic, The bank doesent care about the money lost on you, they have the same contracts that cover all their customers, so although it forces you over the edge and they lose money on you, the same terms and conditions mean they rake in continuous payments from millions of other people, if they let you off, then the next person asks and the next and next and next and next and next and next.................... They need to keep up the fear to make sure as many other people keep paying interest on a debt that will be around fo the next 20+ years


Also as people before asked what can be claimed in the bankruptcy, it is simple, everything in their contract up until the date of bankruptcy and then 8% per annum after

alastairq

and to think, intelligent people still think Bankruptcy is morally wrong....

fiveyearplan

alastairq wrote: »

and to think, intelligent people still think Bankruptcy is morally wrong....

I would question their intelligence.