Debt interest may be waived for persistent debtors who cannot pay.

Morglin

http://www.bbc.co.uk/news/business-39476895

sourcrates

Well its a start i suppose, but it needs to be implemented along with other changes to help people in serious debt.

For example, a six month hold on further action whilst the debtor takes advice, as Martin has been campaigning for.

An end to AP markers (arrangement to pay) they effect peoples credit files for up to 12 years in most cases.

Get the creditor to issue a default notice as per FSA guidelines, and not when it suits them.

Debtors need access to cash when a household essential item breaks down or is faulty, so the six month moratorium period is an excellent chance for them to save up an emergency fund, this point is completely ignored by the debt charities at present.

Implementing these changes will make a real difference to peoples lifes, which is whats needed.

dumpyboy

Could not agree more with sourcrates post, but there people should be treated the same by all creditors and the regulators treat complant s the same

[Deleted User]

Oh great, so people who can pay will be treated with even more comptempt.
Fantastic idea.

That's why this country is very wrong. I must find this acting school.

Somebody always pays.

We have a benefit system where you could never dream of using the I paid in... why should debt be any different.

StopIt

Deleted%20User wrote: »

Oh great, so people who can pay will be treated with even more comptempt.
Fantastic idea.

That's why this country is very wrong. I must find this acting school.

Somebody always pays.

We have a benefit system where you could never dream of using the I paid in... why should debt be any different.

I am struggling to see where you even got close to this conclusion.


First, this is a non judgmental forum, so why take the tone that this is bad when the people it'll benefit would usually be in debt crises?


The article states that usually, the accounts this is referring to has charges and interest of £2.50 for every £1 of credit borrowed.

After 18 months: Firms should prompt customers to make faster repayments, if they can afford
After three years: Providers must propose a repayment plan to help clear debt more quickly.
If a customer still cannot afford to repay the main debt more quickly, firms should consider reducing, waiving or cancelling any interest or charges

This is for people who haven't reduced their balance for at least 3 years. By this time, how many people would have actually paid a good chunk of the capital balance, only for interest and charges to mean they now owe more than they started?


This isn't a "get out of interest free card" this is telling banks to stop interest once it is clear that someone is not able, or willing to get out of the minimum payment trap. Either way, a solution other than whacking more interest on and waiting for them to pay up or default is not sustainable. It'll draw a line for both creditor and debtor.


Finally, cancelling interest is a last resort, and frankly, if a creditor is at that point, they're already "paying" because they'll likely default and sell the debt on for pennies in the pound. We already pay for bad debts anyway as the underwriting and insuring of debt made by banks doesn't come for free.


This just formalises a process that should be best practice.

Karonher

I am glad that there are plans in place to help, but why not stop people getting to that place?

If they pay the minimum for 6 months in a row and are still using the card then contact them then, not when the debt has gone much higher. Obviously, if the card is 0% this would not be as much of a problem.

Maybe a sort of stop could be put on the card until it is paid off, with a caveat that if there was the need to use it, it could be lifted for special circumstances.

As for the waiving of interest, I would like what the money had been spent on to have some bearing on the decision.

lazer-zxr

Deleted%20User wrote: »

Oh great, so people who can pay will be treated with even more comptempt.
Fantastic idea.

That's why this country is very wrong. I must find this acting school.

Somebody always pays.

We have a benefit system where you could never dream of using the I paid in... why should debt be any different.

I agree completely. I've been in a lot of debt, have paid a lot of interest, and still am in debt, but I would never want a cop out where I don't pay back either the amount I have loaned from someone else, or the interest I agreed they could charge me if they loaned me the money.

People not paying back what they have borrowed, and the interest they agreed to pay make me so angry. The rest of us end up footing the bill for their stupidity and irresponsible behaviour and they get let off the hook.

sourcrates

lazer-zxr wrote: »

I agree completely. I've been in a lot of debt, have paid a lot of interest, and still am in debt, but I would never want a cop out where I don't pay back either the amount I have loaned from someone else, or the interest I agreed they could charge me if they loaned me the money.

People not paying back what they have borrowed, and the interest they agreed to pay make me so angry. The rest of us end up footing the bill for their stupidity and irresponsible behaviour and they get let off the hook.

That's quite a "one size fits all opinion".

How do you work out that the "rest of us end up footing the bill" though ?

Bad debt is big buisness, the creditor certainly doesn't lose out, they sell the debt, and make some money from that, the rest they reclaim in tax relief and other corporate benefits.

The debt purchaser also makes money, if one account proves fruitless, they have several thousand more to chase up.

Creditors and the banks set interest rates, if you have a good credit rating, you can get low interest deals, if you haven't, then you pay more interest, but the setting of interest rates has nothing to do with the volume of bad debt, that is another, common misconception.

Also most people don't wake up one morning and think, I'll just borrow a few grand I know I can't pay back, debt is often racked up over many years and the people it effects most are usually victims of other life changing circumstances, they are not all stupid or irresponsible, so we're as you are entitled to your opinion, it's not a very helpful one.

iolanthe07

the setting of interest rates has nothing to do with the volume of bad debt

Surely, though, if everyone paid their debts in full and on time, then interest rates for everybody could come down? Lenders have to charge higher rates than would otherwise be necessary to all of us, to cover the bad debts of the few.

Lrimas

I couldn't disagree more with Keepcalm & Lazer.

I am currently making money out of credit card companies through 0% cards.

And who is footing the bill? People who can't afford to.

So if I no longer get a few extra pounds a month (that I don't need) and someone else who is in serious trouble gets some help I won't complain.

sourcrates

iolanthe07 wrote: »

the setting of interest rates has nothing to do with the volume of bad debt

Surely, though, if everyone paid their debts in full and on time, then interest rates for everybody could come down? Lenders have to charge higher rates than would otherwise be necessary to all of us, to cover the bad debts of the few.

The thing is though bad debt is not uncommon, something like 16 million households in this county are in some kind of debt, granted some will be down to bad decision making, or irresponsibility, but you cannot claim that for everyone.

things change in life, people get caught out, you can't always Lay the blame with the debtor !!!