leaving debt behind

[JayJay 4]

Haha! I like this thread!

Now morally the argument is between two parties: the lender, and the person they are lending to.

The lendee (so I shall call him/her) borrows money because:

1) They are hard up.

2) They need something and our entire lives nowadays are based around credit and how to get it - each and every store will accept a credit card, furniture stores will offer it, car places will offer repayments and our banks offer us loans etc.

Basically in a world where the motto is "you need it now, and you need this, this and this", you almost need credit to be "normal", whether or not you're living withing your means... When you take out a line of credit, whatever that may be, there are guidelines in place for the financial intitutions lending to YOU, as well as for you.

The financial institution is out to make money, plain and simple. Like McDonalds, they have an enormous amount of profit on their "goods", which in this case is money being lent. They will charge you $30 for being late, $20 for being overdrawn, interest monthly IF YOU'RE LUCKY - sometimes, it's a biweekly cycle and you're actually getting charged TWICE a month, instead of once, which effectively increases your interest rate amazingly, as follows:

Lucy has a credit card with $2000 dollars on it. She goes over her limit one month by $1, and gets charged $20. She's one day late paying, and gets charged $30 dollars. The credit card company have made $50 from her this month in charges alone. Then you have interest. Unfortunately Lucy, like many people, have chosen a credit card (like Dicover....they do this) with a biweekly cycle, meaning she is paying 10% interest once....bringing her balance up to approximately $2016 ...and then again...bringing that up to about $2033. So add that to the monthly charges she's incurred, and you have a grand total of about $83 that Dicover, say, have made from Lucy in a month. And she didn't spend a penny.

The vicious cycles some people find themselves in mean that if Lucy is again late in paying, she will get another late charge, an overlimit charge (because even if, half the time, she's paid what's owed, the interest is added twice more before she is billed again, meaning she's again over her limit), plus interest. If Lucy is the average person, she might find that...especially if they INCREASE her credit limit....she's out of pocket by perhaps $500 (at best) in interest and maybe at best, $150 in fees PER YEAR. If she keeps her Discover card for five years, she's paid them $3250 over that time. And that's without them even increasing her credit limit a lot. Oh - and during that time, paying only the minimum balance, she's paid off her card and THEN some...but what's this (?)...her balance is STILL around $2000. Hmmmm....interesting eh?

Morally speaking, none of these credit companies are giving you a good deal. They are drawing money out of you like a blood bank the entire time. So morally speaking if after fice years, Lucy finds herself in a position in which she's unable to pay any more, the credit card company have already gotten back ALL of the money, plus about $1500 MORE than what she spent in the first place. Don't even get me started on what could happen with a higher APR card at $10,000 credit limit...or for that matter what could happen if you borrowed the money from an unscrupulous lender like, for example, Capital One...

So who'se stiffing who? Certainly not Lucy...she's paid them back PLUS more of what they lent her to begin with. Interesting "moral" dilemma don't you think? And at the end of the day, if Lucy wants to, she can declare bankruptcy and not pay them anything anyway - after all, they've made $1500 on her over five years, and now they want more...

If you're financial status is because of hospital bills or unforseen circumstances and you cannot pay your debt off any more, does that make you a bad person? Nope. Does it mean that your financial institution is "out of pocket" and can defer higher interest charges onto other people? Nah. Do you only have one life to live - certainly, and if you've been a good person and paid your debts to the best of your ability, beating yourself up over this "moral dilemma" is going to cause you untold stress and worry, and maybe even destroy your mental happiness for years to come. If you feel bad, file bankruptcy - that's always an option. But you still won't be paying your creditors anymore....

See what I mean?

[zyggy 9]

Haha! I like this thread!

Now morally the argument is between two parties: the lender, and the person they are lending to.

The lendee (so I shall call him/her) borrows money because:

1) They are hard up.

2) They need something and our entire lives nowadays are based around credit and how to get it - each and every store will accept a credit card, furniture stores will offer it, car places will offer repayments and our banks offer us loans etc.

Basically in a world where the motto is "you need it now, and you need this, this and this", you almost need credit to be "normal", whether or not you're living withing your means... When you take out a line of credit, whatever that may be, there are guidelines in place for the financial intitutions lending to YOU, as well as for you.

The financial institution is out to make money, plain and simple. Like McDonalds, they have an enormous amount of profit on their "goods", which in this case is money being lent. They will charge you $30 for being late, $20 for being overdrawn, interest monthly IF YOU'RE LUCKY - sometimes, it's a biweekly cycle and you're actually getting charged TWICE a month, instead of once, which effectively increases your interest rate amazingly, as follows:

Lucy has a credit card with $2000 dollars on it. She goes over her limit one month by $1, and gets charged $20. She's one day late paying, and gets charged $30 dollars. The credit card company have made $50 from her this month in charges alone. Then you have interest. Unfortunately Lucy, like many people, have chosen a credit card (like Dicover....they do this) with a biweekly cycle, meaning she is paying 10% interest once....bringing her balance up to approximately $2016 ...and then again...bringing that up to about $2033. So add that to the monthly charges she's incurred, and you have a grand total of about $83 that Dicover, say, have made from Lucy in a month. And she didn't spend a penny.

The vicious cycles some people find themselves in mean that if Lucy is again late in paying, she will get another late charge, an overlimit charge (because even if, half the time, she's paid what's owed, the interest is added twice more before she is billed again, meaning she's again over her limit), plus interest. If Lucy is the average person, she might find that...especially if they INCREASE her credit limit....she's out of pocket by perhaps $500 (at best) in interest and maybe at best, $150 in fees PER YEAR. If she keeps her Discover card for five years, she's paid them $3250 over that time. And that's without them even increasing her credit limit a lot. Oh - and during that time, paying only the minimum balance, she's paid off her card and THEN some...but what's this (?)...her balance is STILL around $2000. Hmmmm....interesting eh?

Morally speaking, none of these credit companies are giving you a good deal. They are drawing money out of you like a blood bank the entire time. So morally speaking if after fice years, Lucy finds herself in a position in which she's unable to pay any more, the credit card company have already gotten back ALL of the money, plus about $1500 MORE than what she spent in the first place. Don't even get me started on what could happen with a higher APR card at $10,000 credit limit...or for that matter what could happen if you borrowed the money from an unscrupulous lender like, for example, Capital One...

So who'se stiffing who? Certainly not Lucy...she's paid them back PLUS more of what they lent her to begin with. Interesting "moral" dilemma don't you think? And at the end of the day, if Lucy wants to, she can declare bankruptcy and not pay them anything anyway - after all, they've made $1500 on her over five years, and now they want more...

If you're financial status is because of hospital bills or unforseen circumstances and you cannot pay your debt off any more, does that make you a bad person? Nope. Does it mean that your financial institution is "out of pocket" and can defer higher interest charges onto other people? Nah. Do you only have one life to live - certainly, and if you've been a good person and paid your debts to the best of your ability, beating yourself up over this "moral dilemma" is going to cause you untold stress and worry, and maybe even destroy your mental happiness for years to come. If you feel bad, file bankruptcy - that's always an option. But you still won't be paying your creditors anymore....

See what I mean?

It's called if you don't like the terms... then don't sign the contract. There's nothing preventing someone from paying cash on things. Last time I checked, everyone accepted cash. The fact of the matter is that too many people are using other people's money through credit to live a lifestyle that they cannot afford and then crying when their creditors come to collect and declare bankruptcy to get it all wiped away. Have the creditors been too fast and loose on who they issue credit to... absolutely. But that does not excuse the borrower from their responsibility to meet their obligations.

[w¡n9Nµ7 §£@¥€r 123]

It's called if you don't like the terms... then don't sign the contract. There's nothing preventing someone from paying cash on things. Last time I checked, everyone accepted cash. The fact of the matter is that too many people are using other people's money through credit to live a lifestyle that they cannot afford and then crying when their creditors come to collect and declare bankruptcy to get it all wiped away. Have the creditors been too fast and loose on who they issue credit to... absolutely. But that does not excuse the borrower from their responsibility to meet their obligations.

Well said, zigz. If only people listened!

[RichiJenny 14]

Certain creditors have been known to move the goal posts in the UK. After contact is signed, and is perfectly legal. Thats FACT...and fukcing outrageous.

[ChristinaM 0]

It's a common misconception that people use credit to finance an "extravagant" lifestyle. Unfortunately, with housing cost inflation rising at considerably greater than wages (as just one example), people are increasingly using credit to find their day-to-day expenses. Yes, there are people out there who abuse the system, but they are many, many fewer than regular people.

There is something called "The Over-Consumption Myth", which is what is, in part, being referred to here. However, compared to a comparable family in the early 1970's:

* The average family of four spends 21% less on clothing

* Combining the cost of eating out and the cheaper grocery pruduce now available, they spend 22% less on food

* When the costs of microwave oven, dishwasher, tumble dryer, stove, refrigerator and washing machine are combined, our average family today spends 44% less on major appliances than they were a generation ago

* 0.8% more families own a vacation home

* We spend 23% more on "home entertainment" - CD's, DVD's, cable and cable - which amounts, in real terms to a $170 per year increase

(All numbers adjusted for inflation, data collected from US government spending habits analysis from the 70's to date.)

Today, we spend more on our pets, telephone services and airline travel than we did back then, but less on tobacco, dry cleaning (no, really) and carpets. In fact, when you tally up "frivolous spending", we do about as much of it as we did a generation ago.

So there's nothing there to explain that since that time we've seen a 255% increase in the foreclosure rate, a 430% increase in the bankrupcies registered and a 570% increase in credit card debt, as of 2003.

Where's that money going? Housing, in the majority of cases. Not the size, but the cost. The average middle-class family home grew from 5.7 rooms in 1975 to 6.1 rooms in the late 1990's - a 7% increase. The house price rose by 78% over that same period, whilst wages stagnated. And of course, when people buy housing at a higher cost, they need to rent it at a higher cost to offset their own mortgage.

So what can we say in conclusion? If a greater percentage of people's earnings is going to pay their fixed living costs (rent/mortgage, electricity, gas) then they have less disposable income. By the time you've added in paying debts - such as student loans, credit cards, bank loans - there comes a point where what you pay for your fixed expenses eats up a such a large part of your wages that you can no longer afford to eat, put gas in your car to get to work, pay your childcare provider (and yes, there are women for whom childcare is simply not a choice, because they can't afford not to work) etc. You live on your credit, paying back the bare minimum, and lo and behold, you're in the position that JayJay described above.

The US is not bankrupting itself on new clothes and washing machines, guys, and the practices of the lending agencies are truly dispicable. Of course, if you don't like the terms don't sign the agreement, but if it's that or eviction.... Desperation plays a large part, and I can only assume that if you can make a statement like that you have no understanding of the issues at play - and I hope you never do.

To deny that these problems exist is naive, but there are none so blind as those who will not see.

<sigh>

(Edit for some APPALLING typos!)

Edited February 7, 2006 by clmarsh

[mawilson 2,133]

I had a serious question; can ignoring or defaulting on debt overseas affect your citizenship? could you be denied when the FBI do their checks?

No and no.

[JayJay 4]

Very true. But if you don't get a credit card, all of whom are designed to make money off you, then in turn, you cannot get anything else involving credit, including a mortgage. I personally have made arrangements to pay off all of my debt from here, but I'll tell you what - I cannot sit here and argue that anyone not paying their debt off is leaving their creditors in the muck, because they're not. Credit companies are designed explicitly to get money off you - there are no good deals out there - they're just pre-packaged to sound that way.

Unless I can afford to get a house with cash, I'll need a mortgage, and that'll mean firstly signing on with a credit card, and building up credit. I'd rather get a house via cash, but I bet that'll be impossible.

[LaL 418]

Is there a problem with UK creditors that individuals feel the creditors don't need all the money they are due back? Creditors provide a service however lacking they may be. Most of it is convenience, and yes, you can pay alot for it, but there are terms and signing your name links you to the repayment.

As far as take the loan or be evicted, um well that does not fly with me either. I don't know too many people who are in a position who would otherwise be evicted that would be approved for a loan that would save them from said eviction

I have a student loan just under 30k. I am disabled and it has been a difficult year for me with work. On top of that immigration, mortgage, regular bills pile up. I HAVE been in the situation so you are not preaching to the so called naiive, so no need for that in this thread. I do not deny that we are for the most part slaves to our economy, but there are many alternatives to living well above your means or conversly deal with a significant finnancial event (ie medical, etc.).

I think it was Richi who stated terms can change - well that is something on a completely different level and should certainly be fought (should it be valid), but that does not change the fact that again - when one signs on for the convenience of having credit, they get all the bad with it too.

But oh yes, the poor consumers.

Edited February 8, 2006 by lal_brandow

[JayJay 4]

Haha...true, of course we should all pay back our debts. But we do, you see.

They aren't so much providing a service, however, as providing a means to make as much money for themselves as possible. By the time you've finished paying everything you owe, they've made often more than triple what you actually spent. Plus consider, all of this time, they're been playing the stock market as well.

How about going bankrupt then - you're still not giving them any money! What would you rather do, to be honest - pay debts you cannot afford and in turn have no money for the rest of your life, to do ANYTHING at all? Or go bankrupt? Because the latter is exactly the same as not paying your debts - the only difference being that you're telling them first.

I've come from a family in which debts were large for many years, and this led to depression and basically a crappy atmosphere for bringing up children in. Had my family member gone bankrupt before he did, things would have been an awful lot better, psychologically, for his four children. And that would have meant I'd not have to have gone to as many hours of therapy as I did, too.

This world nowadays, is so clearly being run on "the more money, the better". Heck, if I got landed with $500,000 worth of medical bills, what would I do - attempt to pay that debt off and not have a life, for the rest of my life, or go bankrupt? I'd go bankrupt. I couldn't possibly pay all of that. Plus creditors.

To be perfectly honest, on the brader spectrum, I think there are far worse things, "morally", than not paying a debt back that you've already paid 3 times over. Be that during bankruptcy or by other means. I'd rather have people not paying their debts off than going around murdering people, or cheating on their wives or husbands - now those are moral issues. I simply won't be sucked into the propoganda of companies nowadays who are making tons of money, when the Earth around us is decaying and being polluted to the max.

And I'm still paying off my debts - but you know what? If they ever get too much, and I cannot pay them any longer, I WILL go bankrupt, rather than spend the rest of my life not living. Because I'll tell you what: I don't owe these creditors my human rights, and my soul, because I borrowed money off them. And to me, bankruptcy is exactly the same as not paying debts off, because basically, it is.

[ChristinaM 0]

I have been in the position where I had to borrow money to avoid eviction, so don't tell me it doesn't happen. The point about sub-prime lending is that they will lend money to ANYONE, regardless of their circumstances. I know, because I've seen an exboyfriend sign a loan at 400% interest (he was a victim of ID theft and didn't know it at the time, hence no lenders would touch him) out of sheer desperation. Sub-prime is the most profitable sector of the lending industry!!

One of the biggest reasons for bankrupcy is being hit by a medical emergency. You know why? Because if you don't earn a lot, you can't afford health insurance and you're less likely to have it through your work. When you can't afford medical insurance, you pay for your own treatment. Do you go without lifesaving treatment, or do you take out a the first credit card you're offered, swipe, and pray not to have another in a hurry? It happens. In fact, job loss, medical problems and divorce accounted for 87% of all bankruptcies in 2001, according to the 2001 Consumer Bankruptcy Project. These people were those targetted by a predatory lending industry for sub-prime credit.

And leave the UK out of this. Maybe we in the UK just have a better developed sense of the wider implications of credit, rather than buying that whole "they're a big organisation so they must be right". Maybe we just have a sense of fairness, and don't like seeing people get stiffed by organisations which make up their own regulations.

Edited February 8, 2006 by clmarsh

[LaL 418]

And leave the UK out of this. Maybe we in the UK just have a better developed sense of the wider implications of credit, rather than buying that whole "they're a big organisation so they must be right". Maybe we just have a sense of fairness, and don't like seeing epople get stiffed by organisations which make up their own regulations.

Thanks for explaining this to the apparently credit naiive here.

I do not really understand the statement "Leave UK out of this" then the very next sentance backs up the superiority factor.

Ah well. To each his own.

Edited February 8, 2006 by lal_brandow

[ChristinaM 0]

I'm sorry, but if you think that this is not true then you're flying in the face of a lot of research and evidence and yes, you are naiive.

I'd like to point out that you were the one who implied that the British are all morally bereft lowlives who think it's somehow fun to screw the financial institutions.

As I said before, none so blind as they who will not see.

[LaL 418]

The fact that you inferred that from my original post is not something I can help. That was not my intention, I was making an observation that it seemed to me, at least more of the UK group on this topic seemed to suggest the consumers are the victims here. Nothing else.

I am fully aware that the subprime are the predators AND they make a hell of alot of money. Again - your making assumptions just because I disagree with what you are saying that I am naiive to think it does not go on. I kinda told you I have been in those situations.

[ChristinaM 0]

Then you should have a greater appreciation of how quickly things can do wrong, and how having even a moderate and extremely managable amount of credit can blow up in your face, and to get back to the original point of the post, how it's not necessarily the case that "if you can afford to immigrate, you can afford to pay off the bills before you come" - the moralistic judgement which hit this thread without anybody even knowing the situation the OP was in.

And I don't know what I was supposed to infer from this:

Is there a problem with UK creditors that individuals feel the creditors don't need all the money they are due back?

apart from what I did. Edited February 8, 2006 by clmarsh

[LaL 418]

All I was trying to convey (apparently not very well) was there was definately a divide with how some members felt with respect to paying back debt when not in the financial situation to do so. I was asking the question because maybe there is something built into the UK credit system that makes some members feel they are ripping people off. There - I said it i am naiive (to the UK credit system)

I got my answer I think - Richi stated - the goal lines are moved legally afterward. And also apparently its just not a fair situation and the people in the UK "better developed sense of the wider implications of credit"

Bottom line to me is, you have a loan, a loan - I am not talking about catastrophic events here... regardless if its a subprime... regardless if its an unfair practice, I don't see the point in not paying it off, but thats just my take on it.

Edited February 8, 2006 by lal_brandow