Half a million in Negative Equity

System

Surely most debts incurred in order to buy things result in negative equity?

If you take out a loan on a new car it is instantly worth less than the purchase price, and by the time it has depreciated by more than the deposit you are in negative equity.

But we don't pretend that cars or consumer goods are investments, just a way of obtaining use of something at a price we presumably can afford.
No body buys a car hoping to make a profit on it and trade up to a better one.
Isn't that what's gone wrong with housing?

CLAPTON

gingeralan wrote: »

While I see your point that you are not bankrupt unless you go through court, I perhaps should have said insolvent.

so lets see

see a man borrows 20k to buy a brand new car

he drives away and the car is instantly worth only 18k

are you saying he is insolvent?

if he can't make the repayments then that is another matter

thequant

wymondham wrote: »

... make me wonder how widespread the rises have been?

The North is !!!!ed, the only thing that will sort it out is a damn good fracking.


The sooner we start fracking away up there, the sooner these people can start contributing to the country rather than being a drain on it.

gingeralan

CLAPTON wrote: »

so lets see

see a man borrows 20k to buy a brand new car

he drives away and the car is instantly worth only 18k

are you saying he is insolvent?

if he can't make the repayments then that is another matter

Yes, if that was his entire balance sheet then technically they are insolvent, they owe more than they have the collateral to clear. If they own a property or have savings worth more than the shortfall, or just put down a deposit on their purchase they would owe less than the value of their assets and would be solvent.

CLAPTON

gingeralan wrote: »

Yes, if that was his entire balance sheet then technically they are insolvent, they owe more than they have the collateral to clear. If they own a property or have savings worth more than the shortfall, or just put down a deposit on their purchase they would owe less than the value of their assets and would be solvent.

total nonsense

one is only bankrupt if one can't pay one debts according to contract.

in your mad world half the people and companies are 'technically insolvent'

System

CLAPTON wrote: »

in your mad world half the people and companies are 'technically insolvent'

There are different rules for companies and individuals.

It is illegal for a limited company to continue trading if it is insolvent.

BillJones

thequant wrote: »

The North is !!!!ed, the only thing that will sort it out is a damn good fracking.


The sooner we start fracking away up there, the sooner these people can start contributing to the country rather than being a drain on it.

Don't you think that it's better to frack where the gas is, rather than where it isn't?

And as for us from the North being a drain, this Northerner runs a trading desk that brings in the money that pays people like you, so wind your neck in.

CLAPTON

Clifford_Pope wrote: »

There are different rules for companies and individuals.

It is illegal for a limited company to continue trading if it is insolvent.

what do you mean by insolvent?

do you mean unable to pay it's bills? or something else?

purch

CLAPTON wrote: »

what do you mean by insolvent?

do you mean unable to pay it's bills? or something else?

If your current liabilities exceed your liquid assets you are insolvent.

In business terms that is failing the Acid test :eek:

grizzly1911

BillJones wrote: »

And as for us from the North being a drain, this Northerner runs a trading desk that brings in the money that pays people like you, so wind your neck in.

Is that like gambling with other peoples money?

Isn't that a zero sum game where some one else loses?