Reply to: Borrowers face repossession over unsecured debts

[centurian]

Terms did not include a "secured loan", hence the high charges.

They want change the terms by turning it into "secured loan" then the charges should come down. Fair's fair after all

Since when have lenders ever been fair...

I'm sure lenders would argue that debtors haven't been "fair" either over the past few years with the huge expansion of those finding legal loopholes to get out of paying debts, despite the lender giving the debtor money in good faith.

And before that, we had lenders who weren't exactly "fair" on their payment protection insurance, selling insurance to people they knew were self employed, when the small print basically said they wouldn't pay out if you were self employed etc. etc. (this happened to me in the 90s).

[pzz76077]

Terms did not include a "secured loan", hence the high charges.

They want change the terms by turning it into "secured loan" then the charges should come down. Fair's fair after all

There will be a statement that the agreement is bound by the laws of England and Wales- this includes a 'convert to secured loan via a court of law' clause.

PZZ

[IR35 Avoider]

Thinking about it, Im also not sure this is a symptom of today's credit market , I seem to remember stories from Dickens about people that had all their possessions (furniture etc) taken away and then sold followed by them being thrown in the poor house because they couldn't pay their debts.
Its very easy to get a charging made against a property tile that would prevent someone selling a home. It happens prior to many divorce hearings.

PZZ

That seems to be how it worked in 19th century France. I've just finished reading "Madam Bovary" in which she runs up debts without her husbands knowledge, encouraged by a local shopkeeper who keeps extending credit. When she sells some inherited property and tries to pay off the debt, he offers to roll it over so she can keep on spending. He sells the debt to someone else, so he won't have to incur the social cost of enforcing repayment against someone in his own village. After a couple of years, repayment gets enforced; notices are put in the village, officials come round to the house to make an inventory of all the furniture and possessions so they can be auctioned off. Tragedy follows.

[gingerjedi]

It's the same institutions that caused this recession that are now kicking us in the balls.

I have a mate who is a credit risk manager with Lloyds and he is defiant in blaming the banks, he blames everything on the feckless public.

Tosser.

[Not So Wise]

Nope - you took a loan out on their terms - see your signature at the bottom of the page??

PZZ

Terms did not include a "secured loan", hence the high charges.

They want change the terms by turning it into "secured loan" then the charges should come down. Fair's fair after all

[Cyberman]

The problem with that seeming piece of commonsense is that it doesn't work like that. History is peppered with examples.

The British Empire was built on credit, and was more successful than others because it was good at spending money it didn't have. When another 30 ships were needed to face down France, the British government's more efficient credit machine could borrow the money right away and build the ships, beat the French, take the spice colonies, rule a monopoly, and profit from it more than enough to pay off the debt.

The fledgling United States of America did exactly the same: at its inception, the greenback was a worthless IOU. But enough of them were printed to finance the building of what would become the biggest economy in the world. Their credit was bigger than our credit that time.

Borrowing to finance capital expenditure and growth is ok as long as it is affordable, but borrowing to finance debt to the tune of 1 Billion every two days is absolutely crazy. There really is no gain, but the delay of pain which will inevitably be far worse than if we had bitten the bullet earlier.

[expat]

Absolute commonsense. If only our HMG could be so sensible.

The problem with that seeming piece of commonsense is that it doesn't work like that. History is peppered with examples.

The British Empire was built on credit, and was more successful than others because it was good at spending money it didn't have. When another 30 ships were needed to face down France, the British government's more efficient credit machine could borrow the money right away and build the ships, beat the French, take the spice colonies, rule a monopoly, and profit from it more than enough to pay off the debt.

The fledgling United States of America did exactly the same: at its inception, the greenback was a worthless IOU. But enough of them were printed to finance the building of what would become the biggest economy in the world. Their credit was bigger than our credit that time.

[pzz76077]

True, but why would a creditor want to?

If there was something (money) in it for them??

PZZ

[Menelaus]

It would seem to me that if would be fairly easy for creditors to apply the same law to prevent a debtor from selling their house to avoid paying a contractual obligation IMV.

PZZ

True, but why would a creditor want to?

[pzz76077]

Indeed - and in divorce proceedings it may be worthwhile but here charging orders are typically made to prevent disposal of the asset without the underlying debt being extinguished.

It would seem to me that if would be fairly easy for creditors to apply the same law to prevent a debtor from selling their house to avoid paying a contractual obligation IMV.

PZZ

[Menelaus]

Thinking about it, Im also not sure this is a symptom of today's credit market , I seem to remember stories from Dickens about people that had all their possessions (furniture etc) taken away and then sold followed by them being thrown in the poor house because they couldn't pay their debts.
Its very easy to get a charging made against a property tile that would prevent someone selling a home. It happens prior to many divorce hearings.

PZZ

Indeed - and in divorce proceedings it may be worthwhile but here charging orders are typically made to prevent disposal of the asset without the underlying debt being extinguished.

[pzz76077]

This is, as is becoming commonplace amongst m'learned friends in the media, utter bollocks and a non-story of the worst possible kind.

The use of charging orders or, in Scotland, charges is a method that has been on the statute books essentially forever. Their use to create forced sales - especially where there are no mortgage arrears - would be frowned upon (to say the very least) in the courts.

As for the question "so what purpose do they serve?", consider this: a debtor owes the credit card company £10,000, and sell their house without clearing off their credit card - this way, if the debtor sells or remortgages his house (as he would do normally - not under coercion from their creditors) the credit card debt is cleared.

Thinking about it, Im also not sure this is a symptom of today's credit market , I seem to remember stories from Dickens about people that had all their possessions (furniture etc) taken away and then sold followed by them being thrown in the poor house because they couldn't pay their debts.
Its very easy to get a charging made against a property tile that would prevent someone selling a home. It happens prior to many divorce hearings.

PZZ

[Menelaus]

This is, as is becoming commonplace amongst m'learned friends in the media, utter bollocks and a non-story of the worst possible kind.

The use of charging orders or, in Scotland, charges is a method that has been on the statute books essentially forever. Their use to create forced sales - especially where there are no mortgage arrears - would be frowned upon (to say the very least) in the courts.

As for the question "so what purpose do they serve?", consider this: a debtor owes the credit card company £10,000, and sell their house without clearing off their credit card - this way, if the debtor sells or remortgages his house (as he would do normally - not under coercion from their creditors) the credit card debt is cleared.

[pzz76077]

Taking on a 25 year commitment, such as a mortgage or a wife and kids, is more of a gamble than it was 10 years ago IMO. Especially if you work in IT.

Also probably not economically feasible in the current climate in fact.

PZZ

[TimberWolf]

Taking on a 25 year commitment, such as a mortgage or a wife and kids, is more of a gamble than it was 10 years ago IMO. Especially if you work in IT.