Where do our debt problems really lie???

Zulu_Dawn

One thing that really bugs me here is how much we seem to slag off the companies that have provided us with the debt that we are now struggling to repay.

Just for a few seconds let me put a slightly different view to the story I read here so frequently.

I have got myself into massive debt as a result of my own stupidity. I kept asking for money from credit cards and loan companies and they kept giving it to me. Sometimes I was given access to credit that I didn't need but whose fault was it that I then went ahead and spent it?

I now can't pay back what I owe. I accept that this is my fault not theirs.

Despite this I have found that all my contacts with debt providers have been absolutely fine. Some of them have been very pleasant ("we are trying to help", "sorry for the situaton you find yourself in" etc.). Others have been very firm but fair. I have not had one person be rude, unpleasant or unreasonable.

All my debt providers have frozen interest on my outstanding debt, contrary to the agreement I signed. They have let me pay back less than I'm supposed to each month. A number have even said that I may not need to pay all the capital back if I can find a lump sum.

Please can we try and recognize that the situation we find ourselves in is largely of our own making and do our best to show some respect for the credit providers. If they do behave unreasonably, then we have a number of recourses to rederess that wrong. However if we behave unreasonably their only recourse is in the way they decide to deal with us.

I suspect that most of the problems that arise between creditors and the debt providers is due to our lack of communication or our defensiveness.

By showing the people that work on behalf of the credit card and loan companies some respect, by keeping them informed, by accepting our position and working with them to find the best resolution, I believe that half of the complaining posts on this forum could be avoided and the stress and worry that we all feel could be reduced.


Peace.

ZD

hypno06

Of course what you are saying is absolutely right, up to a point.

No one forced people to sign on the dotted line, or to hand over the credit card for the impulse purchases.

But credit of every type has been made ridiculously easily available over the past 15 years or so. It is not that long ago really that you had to go on a waiting list to even apply for a mortgage, and the only ones with credit cards were the ones on big salaries.

Then the way in which we obtain credit became much easier and of course it all seems like such a good idea at the time - take this storecard out and you can get 15% off your shopping today, buy this sofa now and pay nothing for a year, want a new car? simple, put £100 deposit and drive away today. A few years ago these would have simply not been presented to us in the way that they are now, so the temptation is not there.

Ok, we have to be strong to resist that temptation but when it is chucked at you left right and centre, you have to be really really strong to work on the "save now, buy later" ideal that existed a few years ago.

So when people do find that they have overextended, they need to sort it out. Very often, the people at the other end are nice and helpful as you say. But sometimes they are downright rude and threatening. That is when people get upset, angry and frustrated about what they are trying to do. That is when they need these boards to vent that anger and to ask for support.

Getting out of the debt we have created for ourselves, and we generally are all able to acknowledge that it is of our own doing, one way or another, is one heck of a journey. It is tough, struggles will be met, and spanners thrown into the works. You could be on the best payplan DMP for example with all your creditors happy, but when the boiler blows up or you are made redundant you have a problem, and you have to get through that problem and maybe it is not easy.

So, this board is all about support for those that need if, for whatever reason. No one is saying "I shouldn't have this debt", we are all cross with ourselves for getting to these situations, but at the same time perhaps if the temptation wasn't SO blatantly thrust upon people, they may have found it a little easier to resist.

And if people need to come here to complain or to rant or whatever, then let them - it is all part of the process of becoming debt free and learning not to make the same mistakes again.

System

Good points ZD, and some of which I echo myself. I got myself into this mess and I will get myself out of it. I think it probably boils down to 'Responsible Lending'. One of my cards had a credit limit of 10K. Now, in 8-9 years I had that card, I probably missed one payment and crucially, I only ever made the minimum payment so now that I have seen the light, I ask 'Why would they increase my credit limit when it is painfully apparent that I have only ever made the minimum repayments?' Is that irresponsible lending? I think so or maybe not. If the CC companies asked people to provide bonefide proof of their income, say by way of a letter to their employer to ratify their earnings, along with an SOA, say accompanied by bank statements, they would have to lend responsibly because in the majority of cases business guidelines would not allow them to lend if the lender could afford the repayments. I think that is where the majority of people are. I'm trying to think of relevant analagy, but it escapes me at present. Something like 'give em an inch and he'll take a yard', maybe thats not accurate. I am with Payplan and quite simply the amount of debt I had accrued with the interest rates it would have taken me over 200 years to pay back. SO what do they do, cut their losses probably. Anyway, I am sure that Martin has covered this arguement countless times somewhere, in fact I know he has and I think that is where an answer to you question may lie. Lenny

nrsql

You should realise that you are talking about your personal experience which seems to be unusual. If you read some of the posts on this board you will see how DCAs often act. I had two disputed contracts which incorrectly (I think illegally) went to DCAs and they were abusive and refused to listen or respond to correspondence. They both took about two years to stop. Some people are not emotionally equipped to deal with that.
With a lot of people I would agree with you but others have been taken advantage of.

As to debt - some people don't understand the long term effects and believe that banks are acting in their interests - "If I couldn't repay it they woulkdn't offer it".
Bank charges are often the root of the problem.

Unexpected events can also cause debt and I think it's unreasonable to think that everyone's situation is the same.

Sounds like you knew what you were doing and rightly don't expect sympathy. Also sounds like you've been lucky with the providers and it hasn't gone to DCAs (yet). See if you think the same when they decide to sell on the debt.

GettingThingsDone

Remember, as Martin says, it's us against them. 'They' will use every legal trick n the marketing psychology handbook to maximise their profits. I've noticed a definite shift in lender behavior as profits are being squeezed, such as the gratuitous hiking of credit card interest rates and arbitrary reduction of credit and overdraft limits. Sorry to be gloomy!

Mozette

I think it's a question of joint responsibility. Obviously one shouldn't take on more debt than is affordable; however, circumstances do change. When I took on a lot of my debt, I had a partner, and between us we could afford it. However I am now on my own, and struggling a bit, though I took it on, and fortunately, though it's tough going, I will get it paid off (barring any unforseeable events - don't know what, but that's unforeseeable for you!)
At the moment I could have over £40,000 worth of non-mortgage debt, and no way could I pay the minimum on that. There was a point when I could have got over £100,000 on credit cards, and earning at the time about £20,000. Now I would consider myself irresponsible to have used all that credit, however it is not terribly responsible of the various lenders to let me have access to all that.
So I think it goes two ways, I do find it amusing that lenders are oh so responsible with their good deals, but if you want a card with a decent limit at around 20 odd % APR, they're less 'responsible'. But there, they are I gather, in it for profit!

Interesting debate btw!

Obviously some people's experience is that the financial institutions don't play by the rules, and I'd just like to add that bullying is just plain wrong, whatever the situation.

mattfiona

I can see both sides of the story, although, of course, my personal debt is no where near as large as it is for some.

I take complete and full responsibility for my debt. When I met my husband, I had a personal loan of £1,000 which I had taken out to help with graduate expenses even though I probably didn't really need it. I moved to Essex and started working in London - DH and I had just met, we were eating out, drinking, socialising, enjoying life - and, even though we were earning good money, when the funds seemed a little low, we extended our loans for a bit of extra cash instead of budgeting and living on £10 a week - that was just not possible for us!! Eventually, we bought a house and got married in quick succession and incurred all the expenses that entails - we didn't save, we put it on credit. As a fairly recent graduate, it's dead easy to get loans and credit cards......but, of course, I chose to take them.

Yes in hindsight, we weren't massively over-spending but looking back, there is a lot we could have done to save money and spend money more frugally without resorting to debt but we made that choice and now we're having to cut back to pay it back - I don't regret that and don't blame the bank for lending me that money.

nearlyrich

I think the idea that the bank won't let you borrow more than you can afford is long outdated to be honest, the best customer for a bank or credit card company is one who borrows to the max and pays the minimum repayment each month, they are paying interest on interest so the bank is winning.
The old saying about banks lending you an umberella and wanting it back at the first sign of rain is also very true. It's simplistic to say don't borrow more than you can afford and have all your outgoings covered by insurance etc, no-one knows what is going to happen to them in their life, illness, divorce, bereavement or loss of employment can strike and scupper the most organised.
People who come to this board have usually realised that they are in deep many of them say on their first post how embarrased and ashamed they are to have got into such a mess, they need some advice and support to get back on track, that's why critical posts really don't help, hindsight is a wonderful thing.

GirlRacer_2

I blame myself for the money mess I got myself into, the credit was very easily available to me. Saying that when I was absolutely struggling to pay and failing to meet my payments the only offer of help I had was more credit. Have a loan to pay off your credit cards etc etc.

Since having my lightbulb moment I realise that these people are not trying to help me at all, I still get pre-approved loan documentes through the door and all the fabulous offers from credit card companies but I now have the willpower to throw this rubbish in the bin.

So wheras I agree with the OP that the debt was my own fault, I also think that credit companies are equally to blame as they continued to allow me more credit when they knew I was struggling.

No matter how much debt you have you can still get credit, albeit from sources that charge extortionate interest rates.

Zulu_Dawn

GettingThingsDone wrote: »

Remember, as Martin says, it's us against them. 'They' will use every legal trick n the marketing psychology handbook to maximise their profits.

I agree with this in so far as I beleive it is totally legitimate for us to take advantage of the best interest rates, free offers, BOGOF and all other bits and pieces the use to try and entice us into borrowing more than we can really afford.

However I do not accept the highly confrontational approach often recommended on this forum.

I have debts with DCAs. There is a very long thread on this forum relating to RMA Resolve. I dealt with them in one phone call following submission of a reasonable SOA and a fair offer.

I have debts with MBNA. They are hard to deal with but I was able to get interest frozen on £22k of debt for 12 months in exchange for paying them a monthly sum that was less than the interest they were previously charging me.

I hear stories of DCAs phoning people 10 times per day. I suspect this is simply because you don't pick up the phone on the first call.

I hear people being advised not to give out their phone numbers. I don't deny that everytime my phone rings my heart sinks, but the fact is I need to communicate with these guys to keep them off my backs and the phone is the most immediate way. I always back up significant calls with letters and always get back to my creditors as soon as I possibly can. I also keep them fully informed.

My concern is that newbies reading some of the horror stories here can end up terrified. There is somebody posting currently who is considering bankruptcy despite having substantial savings. This is scary.

I am just trying to point out that when you find yourself in the unfortunate situation of not being able to pay your debts, it does not need to end up in confrontation. Communicate, be firm but fair. All "they" want is to make as much money as possible. They don't want confrontation and nastiness. By understanding this, by learning the best way to deal with your problem, your situation can be far better managed and the outcome far better for all parties.


ZD

hypno06

Zulu_Dawn wrote: »

I hear stories of DCAs phoning people 10 times per day. I suspect this is simply because you don't pick up the phone on the first call.


ZD

So consider yourself very lucky that this hasn't happened to you. If you have been in the situation where you are threatened, verbally abused and generally bullied by people with targets to meet and no ounce of understanding or good nature, you too would worry about picking up the phone. Even those who are facing their debts head on, get endless phone calls, DCAs trying to squeeze every inch of energy from you one way or another.

Good for you for getting things sorted without too much hassle. However, the same is not true for many.

If the board were full of "I telephoned my bank today and they were really nice, they sorted everything out for me just as I wanted" then unfortunately this would seriously mislead the newbies as in real life it simply ain't that easy.

This board is all about truth. The truth is exactly what people post here. For some good, for others not so good. But it is the truth and those people need support, whether new or long standing posters.