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What happens to debts?
HaydenB
Posts: 160 Forumite
Please someone resolve the [STRIKE]argument[/STRIKE] debate me and my partner are having.
What happens to a debt when someone goes into DMP? My partner believes that the creditor is paid by their insurers whereas I just cannot believe that would happen. I could imagine that happening should someone file for bankruptcy but not under a DMP where the intention is for the debt to be repaid in full.
What happens to a debt when someone goes into DMP? My partner believes that the creditor is paid by their insurers whereas I just cannot believe that would happen. I could imagine that happening should someone file for bankruptcy but not under a DMP where the intention is for the debt to be repaid in full.
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A DMP is a debt management plan. You basically agree to pay your creditors a set amount until the debt is paid off.
The debt it not paid to the company by an insurer.0 -
The company gets its money, just over a much longer period of time and (usually) without any further interest.£1000 Emergency fund No90 £1000/1000
LBM 28/1/15 total debt - [STRIKE]£23,410[/STRIKE] 24/3/16 total debt - £7,298
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How long would an insurance company, that offered a policy covering clients who failed to pay there debts, remain in business do you think ?
Considering the fact that the country as a whole, owes roughly 14 billions pounds worth of unsecured debt, not very long is the answer lol !!!!I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter0 -
You are assuming that the lender had insurance coverage for this kind of loss. A lot of companies do not as the cost is prohibitive. Generally, where there a business has a risk of financial loss, this is factored into their costs and therefore the retail price of their products. So everyone pays a higher price to cover those that default.0
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Please someone resolve the [STRIKE]argument[/STRIKE] debate me and my partner are having.
What happens to a debt when someone goes into DMP? My partner believes that the creditor is paid by their insurers whereas I just cannot believe that would happen. I could imagine that happening should someone file for bankruptcy but not under a DMP where the intention is for the debt to be repaid in full.
Banks do sell debts on. It's not insurance they are just cutting their losses. It's a very complex subject matter. The bank probably won't lose very much at all. They spread the risk amongst lots of other investors some of which may or may not lose out.:footie:
Regular savers earn 6% interest (HSBC, First Direct, M&S) Loans cost 2.9% per year (Nationwide) = FREE money. 0
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