Getting into debt

No one should feel guilty about a debt which has been sold for pence in the pound to a debt collection agency. These companies are rotten to the core and make their money from human misery.

The original lender or bank will have sold on the debt because they reckon its not worth collecting - even though the debtor may be paying it back in a responsible manner. Top companies have insurance and invoice factoring to cover themselves against bad debt.

Debt collection agencies are parasites and you can actually make a game out of dealing with them and making them "prove" the debt.

At the moment, I only use my credit card for Amazon, and that is a direct debit set up every month for the amount owing,..🤓

We pay ours off every month too.
I also get M&S reward vouchers with mine.

Same here, but many don’t pay in full each month and are paying for the defaulters’ debts.

Germanshepherdsmum

Yes, we end up footing the bill.

I’ve never paid CC interest, just have a direct debit to pay off card in full every month.
CCs are really useful because you are covered for fraud, that’s increasing I had to make 2 claims in the last year, both refunded without fuss.

A friend of a dd eventually took voluntary bankruptcy after running up over £30k of cc debt. It wasn’t down to poverty, she was just a shopaholic and addicted to designer labels.

At the height of the debt, dd went to see her because she was depressed about the debt. In her flat there were several new bags of shopping - clothes and e.g. cushions - she’d been at it again!

Dd said, ‘Look, you haven’t used any of it, let’s go now and take it all back for refunds.’

Friend: ‘But I bought it to cheer myself up!’

Honestly, what can you do?
But the bankruptcy did finally sort her out - IIRC she was allowed no credit cards for quite a while.

I totally agree. DH and I were disgusted by this!
Especially as despite not under any obligation to do so, DH and I had bailed them out previously.
We cut this person out of our lives.

Yes, we end up footing the bill.

Marydoll

NotSpaghetti

Marydoll - isn't the executor
responsible for paying off outstanding debts from the estate?
Are credit cards different for some reason?

There was no will, no executor and no money.
So how could the debt be paid?
I know this because it was a family member.

This is why interest rates are so high on credit cards, to cover the cost of those that deliberately borrow money they can’t repay.

NotSpaghetti

Marydoll - isn't the executor
responsible for paying off outstanding debts from the estate?
Are credit cards different for some reason?

There was no will, no executor and no money.
So how could the debt be paid?
I know this because it was a family member.

I have another view on debt because I worked in the debt industry back in my mature uni days. I saw from the inside how deeply corrupt and filthy the industry is. After a year I left the job because if filled me with disgust. But it taught me a lot about how to manipulate the system. And I love to beat "systems".

A friend got into debt through loss of employment/illness. She went to Stepchange and entered a debt repayment plan where all her spare income was divided up among her creditors. Even when she regained employment it was difficult to catch up but she kept paying into the plan. And here is where the corruption begins. One by one the creditors to whom she owed the debts sold them off for pence in the pound to debt collection agencies (similar to the one I had worked for). These DCAs then attempted to collect the full baance regardless of what had already been paid off. They wrote frightening letters using terminology which verged upon illegal.

My relative believed that she had paid off over half of her obligation but because of the corruption of these agencies (who buy and sell debts among themselves) she was still deeply in debt. Having an inside knowledge of the system - and the debts being "old" ones - I showed her the loopholes in the legislation which enabled her to get most of the debts written off. She was able to write off about 8K worth of debt which was no longer owed to legitimate organizations like banks. Rather to these sleazy and Dickensian DCAs who had purchased the debts.

You can no longer write off debts in the same way because the law has changed and the loopholes in the Consumer Credit Legislation which we used have been closed up.

However there are several websites where you can get expert help in dealing with debt. One is the Consumer Action Group where there are some very knowledgeable people who can help one write template letters which send the greeds DCAs into a headspin.

Marydoll - isn't the executor
responsible for paying off outstanding debts from the estate?
Are credit cards different for some reason?

I know of someone, who knowing her husband was dying, ran up a huge credit card bill on his card. She never honoured the debt.
How can anyone think that is acceptable?

It depends on the lender - in the case of banks, unfair practices imo.

For some people who lived hand to mouth, going overdrawn just to pay a bill for heating, food, could lead to charges which then accumulated and the debt spiralled out of control very quickly. It's like a quicksand, swallowing someone up with no hope of paying back the charges.

Luckily banks were usually ordered to pay back the charges by the Ombudsman. Whilst the charges are not considered illegal, they can be unfair and people found themselves in debt through no real fault of their own.

Not paying small companies for goods and services they have provided is quite a different matter and the small businesses may be forced to close as a result.

Non-payment of utility bills etc results in higher charges for us all.

I’m quite keen on introducing lessons in basic finance in schools (maybe they have, I’m out of touch) about income and expenditure. Mr Macawber’s theory was a good one..

We had an annual, financial education week in my primary school, which I was responsible for organising.
We had people from the banks and credit unions coming into talk to pupils.
We also did a series of lessons on budgeting, Credit Unions, HP, loans etc. It was an eye opener. I worked in an area of high deprivation and some parents could have bought five washing machines by the time they paid back the interest on the HP they took out. We had to be very sensitive to some pupils' home situation.

Each class also had to undertake an enterprise initiative, where they learned about profit and loss.

With another colleague I did a spoof video on one of the loans companies, who were constantly bombarding us on television with adverts.

I agree that there are loads of people that have little regard for accumulating debt, and aren't too worried about paying it back.

A friend of mine has a daughter that is constantly making bad financial decisions, but it ends up falling back on the parents. For instance buying a new vehicle, but not able to pay her monthly bills for heating or phone. I can't tell you how many times my friend has helped her daughter. I've seen her in tears more than a few times. But can you let your grandchildren live in a house with no heat? I don't think the young lady will ever learn, and I hate what it does to my friend.

We were taught not to go into debt unless it was for house or a car loan. We did have some challenging years, but never felt overwhelmed.

Particularly difficult when dealing with people overseas, but in this country easier to get a judgement. Judges tend not to be susceptible to sob stories.

Sometimes, you just have to write off money you are owed. A few years ago, a previously good and trusted customer of DH's company put it a big order, telling him that his father was joining him in his business.
The order was despatched to Scandinavia, £000s of equipment made in DH's small factory. No payment arrived. Eventually DH received a tearful telephone call from the customer, who told him that his father had emptied his bank account and disappeared.
There was nothing to be done.

Some people seem to have very strange priorities.

I guess the rest of us will be paying it for them.

No we won’t. They’ll have a pay as you go meter fitted and will have to pay up front for any more electricity they use as well as paying off the current debt.

It will probably take them years!

Yes, we would pay whatever we owed - we would never consider it to be our money to spend otherwise. We were brought up to not ever be in debt - apart from house and car payments, which it would be impossible to do without debt. If we didn't have the money we went without, and that included the children, although they obviously had things before us. Our children were brought up the same, and it takes a load off my mind to know that none of us are in debt. When we have to tighten our belts it means luxuries go but no bailiffs.

A couple of months ago I heard a young couple talking about the electricity bill they couldn't pay. 'Well we won't be able to pay that. It's just cost us £3000 for holidays and it will be Christmas soon. We'll just tell them we can't pay. They won't do anything because we have kids.' I guess the rest of us will be paying it for them.

My friend’s DinL had run up debts, online (over) shopping, blaming her DH for working long hours. Friend cleared the debt, some £8K, helped by selling some of the stuff on eBay or whatever. Only a few months later, it transpired there was a further £24K she’d run up before she met and married my friend’s son. Apparently her best option was to go bankrupt, but in all honesty, it’s barely affected her - she is constantly bombarded with offers for loans and credit cards, at exorbitant rates of course. She actually has a form of mental illness - buying anything that takes her fancy and just keeping it, rather than wearing/using. She does work and repaid my friend, but both she and her son have to keep a constant eye on her spending.

I agree with GSM though that efforts should be made to pay off debts rather than go down the easier route of IVAs or bankruptcy. So many people just stick their heads in the sand as she did, then couldn’t be entirely honest when things came to light.

I’m quite keen on introducing lessons in basic finance in schools (maybe they have, I’m out of touch) about income and expenditure. Mr Macawber’s theory was a good one.

I noticed bankruptcy was seen quite differently in America.
I once heard a banker say "well he won't do that again".

Yes I would feel obliged to clear my debts. People who try to blame the lender or want a voluntary arrangement sicken me. It will come back to bite them because their credit record will prevent them from getting more credit for a long time.

I know someone whose business became bankrupt years ago. They paid everyone back eventually. They sent small sums regularly. My father was owed and told them to draw a line under it. They couldn't do that and paid him, little by little anyway.

Some people feel deeply responsible, some people don't.
... and of course some are responsible and some become bankrupt by things outside their control.