Debt Collectors.

[Saracen]

.....

And don't get me started on the HBOS débacle.

Sorry. I won't tell you that I unloaded my Lloyds shares (*) before the price fell off a cliff over HBOS then.


.
.
.
.
.
.

(*) In fact, it was about 5 years before and nothing to do with the current banking crisis, but it sounds better sounding like I'm prescient or something .


And if I was prescient, I would have got rid of my BT shares when they were 1500p-ish, rather than the 100p-ish that they currently are (though there's been some hive-offs and repayments that reduce that price differential somewhat. But even so, the share performance in recent years has been absolutely dire. Good job I didn't buy at anything like the peak.

[Andeh13]

I really struggle to pick a side in all of this, because iv seen both sides of it.

On one side i had a house mate who i lived with at university. He worked every evening 5 days a week, pulling in £1,000 a month. Not much in the big scheme of things, but for a student who receives the maximum amount of bursaries & loan to cover course & living costs it does work out as a lot of disposable income. Despite this he was beyond irresponsible with his money. He bought a brand new car without properly reading through the finance package, and signed into a 3 year contract without haggling/shopping around for loans or finance packages. His mobile bill bounced 3 times in 5 months, and he repeatedly had problems paying for his rent, and had too many credit cards/account to think of.

At the end of the year we had to pay our final bill, everyone managed to pay it except him. He didnt have the money to pay it (£115) and despite repeatedly reminding him over a period of 3 months he never had the money to pay it. In the end the rest of us started to get hassled with debit collectors, threatened with being blacklisted and the full package that goes with it. As the rest of us had never been in this situation before, we obviously got very concerned & didnt appreciate the tactics used to try & force us to pay. It took him a further couple of weeks before he finally paid & even then he gave us a bucket load of attitude over it.

On this side of it i have no sympathy for these people, he had more then enough money and yet had no control, common sense of sense of responsibility with it. As a result he was just jumping from one debt to another. I say throw them all to the lions & leave them.


On the flip side of it is my girlfriends mum;

She split up with her husband (gf's dad) 17 years ago. He was the main breadwinner but when they split he put the house in her name (so it went to my gf & her sister in the future) but also left her with the montage to pay. She works full time with the revenue service yet barely pulls in £15k a year. With this money she pays for the mortgage, feeding herself & daughters, me & sister's bf when we're round and now helps myself & gf out with our new daughter who lives here. She is living further & further into debt because there is nothing she can do. Despite this she still refuses to accept any money off me/sister's bf and all i can do to help it buy shopping & put it in the fridge when she isnt watching. She has no worthy possessions to her name (TV & computer came with my gf when she got back from uni) no car and no jewellery/luxury goods at all.

She deserves better, she puts up with so much yet struggles so badly. She works 7-7, helps us with the baby in the evening & has no real social life/escape to speak of. Despite this she pushes on, does her best to make the money go further and we do our best to help.

Not everyone in debt can help it, but those that can should be hung, drawn & quartered.

[Saracen]

..... Despite this he was beyond irresponsible with his money. He bought a brand new car without properly reading through the finance package, and signed into a 3 year contract without haggling/shopping around for loans or finance packages. His mobile bill bounced 3 times in 5 months, and he repeatedly had problems paying for his rent, and had too many credit cards/account to think of.

At the end of the year we had to pay our final bill, everyone managed to pay it except him. He didnt have the money to pay it (£115) and despite repeatedly reminding him over a period of 3 months he never had the money to pay it. In the end the rest of us started to get hassled with debit collectors, threatened with being blacklisted and the full package that goes with it. As the rest of us had never been in this situation before, we obviously got very concerned & didnt appreciate the tactics used to try & force us to pay. It took him a further couple of weeks before he finally paid & even then he gave us a bucket load of attitude over it......

The moral of that story .... it's another way for people to end up on the wrong end of debt collectors for no fault of their own. So be very careful who you share a house with, and under what type of tenancy agreement. If you have a joint tenancy agreement, i.e. where you all sign one agreement, rather than you each having an agreement over your own room(s), then you almost certainly have what's called "joint and several liability" and the landlord can go after any tenant(s) for any defaults on the agreement. If someone you share with fails to pay their rent for several months, then vanishes (perhaps abroad), you can end up paying his missing rent (and damages and any other valid costs or expenses) .... or being chased by debt collectors if you don't pay it. The principle is that you are ALL fully responsible for the entire debt on the agreement, and if someone defaults, the others are fully liable, either jointly or individually for the whole lot.

Be very careful who you sign such an agreement with.

[BlackDwarf]

Sorry. I won't tell you that I unloaded my Lloyds shares (*) before the price fell off a cliff over HBOS then.

And I wish I bought a load when they hit 38p! Would have tripled my money when their losses were published and the shares hit over a quid again, hah!

[WhiteGiant]

I racked up a reasonable sum of debt whilst in uni, got to the point where I was working more than studying just to pay, and ended up getting in even worse debt to deal with it. That was 5 years ago.

Only this year have I grown a pair, and decided to do something about it. I live in a crappy house, with awful housemates, doing an even worse job. But I have a great girlfriend, and in under 30 months I'll be debt free. Then its time for a mortgage . . . *gulp*

I had my fun, now I'm paying for it tenfold. Tis life I suppose.

[Clunk]

The bill collectors, they ring my phone
and scare my wife when I'm not home
Got a bum education, double-digit inflation
Can't take the train to the job, there's a strike at the station

....

[TheAnimus]

Ok the original article is just frankly awful.

£20bn in overdue debt, quoting that figure isn't analysis, you want to know the average owed per person or legal entity in order to understand how this really effects the colleciton of it:
http://www.creditaction.org.uk/debt-statistics.html <-- intresting link!

But he starts by attacking the tory poletitions, well matey, you know what he has a point £70k is really below average for that kind of role, compare say the RMT unoin head honcho on £138k.... Sorry but that is less. And fair play for boris on not bull****ting, that £250k after tax per year really is mostly chicken feed to him. Should he lie? Should he give away all of his money? pfft.

Now what this comes down to is reclaiming debt is hard, I've seen it from both sides, from previous occupants of the property, to putting an agency onto someone who owed my parents business £2k and where refusing to pay, point blank refusing to pay for services they had used, not disptuting the amount, despituing the contract, just refusing to pay....... (also worth noting here it was the verging on incompitent book keeping my parents had that allowed this to happen, their business failed obviously)

So now i'm just going to defend debt. I have a mortgage, its large as I was 21 when we aranged it. It has allowed me to buy a flat, do it up, and i have little danger of loosing it, i've got 3-6 months mortgage in savings (thou not cash). This has let me live in the place for pretty much the same price as renting would have been. The only difference would be the £600 worth of emergancy DIY work when a pump failed and leaked. Now with the rate reductions I pay considerably less (about £200 per month) than someone for the identical flat in the buidling. This has allowed me to invest back into the flat, buying a new kitchen + fitted furnature etc. That is just great.

Then take my salary, I previously used to get half of my salary in 2 months, the rest spread over the year, i know have directors loans to ease out my quaterly dividend payments. Either way my cash flow is predictable yet poorly spaced. Having the ability to use a credit card to spread things out is brilliant, pure and simple. I know the apr (fixed 6.8%) I think to myself, if i buy this now, its going to cost me £x more than if i wait till feb. I have the option, i'm in no way forced.

So we then also have the in case of emergancy, my amex has a credit limit which is a 1/3rd of my annual gross income. How useful is that? If i find myself stranded in some foriegn city (wolverhampton obviously) i know i can have the facility to not have to endure any immediate hardship, i know the rate of intrest on that card is high, 12.9% to be precise, but i can make an informed decision. Things like last time my mum had a stroke, the flight cost me £400 walk on, and then another £30 for taxi. I then know that i can simply cut down my expendature (food is the easiest) and pay it back over hte next 3 months.

I do get mail shots, alliance and liester keep offering me a 7.9% APR loan or some such crap, i have a shredder, i also get mail shot for new cars. I don't go blaming the car industry for giving me asperations above my pay grade?

PayDay Loans, Credit Cards, its all buyer beware, if your too stupid to realise how to use the APR (brillaint peice of legislation, the yanks need something similar imo) then you are in trouble, but hell you have no excuse to not understand that primary school level maths.

It is no different to some people i know who are paid monthly spend it all in the first two weeks (going out, and take out) then complain they have no money left, it is only themselfs to blame.

Or is this something different i'm miss understanding, something about humans not been smart enough to know whats best for them? Is this like gambling and the lottery? Just another way for the rich to make more money out of the poor people?

I still do not understand how anyone can play the lottery, its as if they just can't imagine scale?
49! / (6! x 43!) = 13,983,816
All i can think is greed exceeds stupiditiy. How can you protect people from that?

[AledJ]

I think the OP was talking more about the way debt companies go about recovering that debt, and whether it is legal or not!

[aeonf242]

I just applied for 2 new Credit cards, the first with MBNA was a Sunderland Football Club Affinity card, they gave me a £10k limit despite the fact I already have another card with them with a £10k limit....
Then I took out a Marriott affinity card (for free points) and they also gave me a £10k limit.
Despite the fact I have number cards with large limits...
Madness
(I am moving away from Visa as I hate Verified by Visa)

[Michael]

I've not long ago had to deal with Bailiffs myself... not through personal debt, they were chasing me for "unpaid" court fines.

I'm a student... an apprentice actually, which exempts me from the minimum wage law, so my wages are currently not very great at all.

I had a court fine of around £510, which I had arranged to pay off at £5 a week. I had paid off £50 leaving me £460 outstanding. I missed two payments, I can't remember why, something to do with bank holidays and not getting to the bank on Saturday mornings I think. Anyway. I called to pay my massive arrears of £10 only to be told that because I had not kept up payments my debt had been passed onto a bailiff.

I immediately called the bailiff to try and see if I could have it sent back to the court... they were not interested in the slightest. I asked them if I could make the same payment plan with them, they said sure, as long as I pay £100 off upfront... with my financial situation, this was not an option during this phone call. I told them i'd have to get it together.

Two weeks later I called them to pay this £100 and start the payment plan, they told me it was too late now and i'd have to deal with an actual bailiff who would visit me soon(!!)... and that I now owed them a total of £723.

The bailiff finally showed up while I was at work one day, I received a call from my brother telling me a bailiff was at the door, and he was telling him that because it's a court fine he has the authority to force entry and seize goods, and that I need to pay in full, that day.

I spoke to the bailiff on the phone, tried to explain my situation and that I want to pay the debt off, but since day one the court would not take my money, the bailiffs HQ qould not take my money, and that I simply cannot pay in full. I offered him the £100 I had saved originally and he said he doesn't 'do' payment plans, and he'd give me until the next day to acquire the money.

By this point, i'd had enough.

The day he'd called me I spent the entire day on the phone finding out what he can do, what I can do, what procedures can be followed etc. After learning enough for myself, but still being worried, I found http://www.bailiff-mediation.com/ . I called John Galt who runs the site and we agreed a price. That night he drew me up a 'Statutory decleration' which stated that I own absolutely nothing i the house (my parents) except for a chest of draws and some clothes. It raised issues such as I have absolutely no contract with the bailiff, and their fee should be deducted from the money they collect from the court, and so on. The following morning I went straight to a solicitors to swear on the decleration which, as far as I know, makes it a legally standing document. John helped more here by faxing copies to the courts and to the bailiff company.

I handed the bailiff a copy through the letterbox when he arrived, he laughed saying "Oh this is novel."... and then dissapeared to his car for 20 minutes making phonecalls. He then came back and started making threats about locksmiths, until he saw that I was recording him, at which point he shut up and left.

I never heard from him again. The next thing that happened was a court summons, which is what I wanted... my chance to have the debt returned to court. Not only did it get returned to court, it was also reduced by £250. I paid them the £100 I would have originally paid Martsons (The bailiff) (Which I am glad they never took because i imagine i'd still be dealing with them if they'd had any money from me). I left the court owing only £110 and the debt was clear. It may have cost me £100 to a third party to get there but it's a price, I feel, was completely worth paying.

Happy days

I took alot of pleasure from calling the bailiff (Who didn't yet know) and telling him that i'd won, he was a prick, and he's the scum of the earth.... Seriously... Around £300 in charges and threats of breaking in for missing £10 in payments. Christ.

[Saracen]

Ok the original article is just frankly awful.

....

I still do not understand how anyone can play the lottery, its as if they just can't imagine scale?
49! / (6! x 43!) = 13,983,816
All i can think is greed exceeds stupiditiy. How can you protect people from that?

Mostly, IMHO, just for a bit of fun, and for the dream that it justmight be you that comes up with a whopper of a win. Anyone playing it seriously thinking that a big win is likely needs to go back to school and redo the maths bits they obviously slept through, but I strongly doubt most people expect to win. I put a quid on here and there, but I'm happy enough with a tenner or so from time to time.

As for the rest of your post, broadly, I agree ... but with some caveats. Two things ... credit cards, and mortgages.

Firstly, credit cards. They are, undoubtedly, very useful. The obvious examples are things like foreign travel ... if you can't reserve hotel rooms, or book car hire, with a credit card, it's going to make things a lot harder to do. They are also useful for making large purchases ... assuming the seller will accept them. Amex's famous "that'll do nicely, Sir" is certainly not always true .... like the time I tried to use mine to pay for a new BMW M3. The garage were quite happy to accept a personal cheque, though, and let me drive off before they'd banked it, let alone before it cleared. And yes, I know, a conventional Amex card is a charge card not a credit card, but the distinction is technical ... in both cases, you pay with a card, take the goods now and settle up with the card alter. But for true credit cards, the Consumer Credit Act gives protections for purchases (over £100) that are worth having.

And yet, credit cards are also dangerous, either if you don't keep an eye on what you spend and use them sensibly, or if you get caught out by the unexpected.

The same applies to mortgages. Taking out a mortgage for a lot less than the property is worth is one thing ... in the event of disaster, you can always sell up and clear the mortgage. And the advantages are obvious .... in normal times, rent is money down the drain provided the lack of commitment isn't important to you. Mortgages aren't for everybody in all circumstances, because they do tie you down, and they cost money to get into and to get out of. If you get a sudden golden opportunity in a distant part of the country, or a different country, a mortgage (and owning a house) is a major problem to deal with. With rent, at least you can cut and run fairly quickly and fairly cheaply. But for most people, most of the time, I agree with you .... the mortgage may well not be much different to a mortgage, and with the mortgage at least you have a property which, over the long term, is going to end up worth more than the payments.

But unless the property is worth a lot more than the mortgage, you are taking a risk. The unexpected can happen. It does happen that events overtake you. For instance, a friend of mine was badly hurt in a car crash, spend over a year in hospital and had over 30 operations. He did subsequently work again, but never in the way he was and a promising and successful career was gone. Why? A drunk driver coming the other way.

If you want to avoid the financial risks inherent in unforeseen events, you either have to be very careful to be insured to the hilt (which can be expensive), or you have to avoid being over-exposed. Personally, I've never ever taken out a mortgage for as much as 70% of the property value. I could have bought much more expensive properties, but then, I'd either be facing expensive insurance premiums or be at risk of major problems IF the worst happened.

You referred to a "large" mortgage and "small" risk. What about a car crash that meant you could never work properly again? If it's your business, it'll probably fold. If it isn't, there's only so long most companies will carry someone for, no matter how sad or unfortunate the circumstances.

My attitude is that I won't take credit I can't cover, and unless you either have the wherewithal rto clear a mortgage, or thorough insurance cover, or enough equity to sell and clear the mortgage and all costs, then you are taking a chance of a life-changing sum. The size of the risk might be very small, but with most mortgages, the impact if that chance comes up won't be.

And that brings me back to credit cards. Where a lot of people come unstuck, and where credit cards are especially dangerous, is where you buy things in anticipation of future earnings .... where you put the holiday, or kitchen extension, on a card knowing you'll have the money in a few months ...... and then something goes wrong, be it illness, accident or unemployment. Then, people tend to put off unpleasant truths, hoping for a sea change. They start to put expenses on a card, to pay gas bills and food shopping with a card, in the hope that the illness will be over or they'll have a new job before the problem gets out of hand. And most of the time, they will either recover or get a new job in time, and they'll pay a bit in card interest and a few months later, it'll all be back to normal.

But for some, time catches up with them, and more so in a recession than in recent years.

Credit card problems, debts and debt collectors aren't always about excessive or stupid buying decisions and consumerist greed. They're often about decisions that seemed just fine at the time, and appeared to be sensible and manageable, but in hindsight, were serious mistakes, because events caught up with you.


My attitude, as I said earlier, is that it's best to never take things on credit if you can help it. But I ought to refine what mean by that. If you want it (be it car, holiday, new large TV or new kitchen), and have the money in the bank, or investments (that aren't locked down for too long), then fine, put it on the card. If things go as expected and the income stream is as predicted, you can settle as intended. But if not, if the worst happens, you can transfer money for a savings account or sell shares (or whatever) and clear the debt. That, in my opinion, is using a credit card sensibly, as a convenience, and not for anything more than transitory credit, and you aren't exposed to the serious problems that can arise from injudicious use of credit cards.

But, and again I stress it's a personal view, credit cards should be used as a convenience, not as a way to buy things you couldn't otherwise afford right now. If I couldn't afford to buy that new TV, or holiday, or kitchen extension outright, I won't put it on the card. Doing anything else is, in my view, paying for today's lifestyle using the hope and expectation of tomorrow's earnings, and that is a dangerous risk to take.

We agree that credit cars, used sensibly, are very useful and convenient. Most people would agree. But where people differ is in what "sensible" means. Just because you have a £5k a month income this month doesn't mean you will next moth or next year. The same applies to mortgages if you can't sell up and clear the mortgage without ending up in debt, even if the property market tumbles.

The mistake (IMHO) a lot of people make is to set their sights on, for instance, a property they can't sensibly afford .... to rely on either future rises in house prices, or on anticipated future earnings, to be able to afford the mortgage. Instead of buying the modest two-bed place in a normal area, they opt for the 4-bed detached place that they can just afford, because, after all, in a few years, the increased equity will have made it a sound "investment". But that isn't an investment. It's a bet. It's a bet that the property market will keep on going up, and it's a bet that their income stream will be what they expect it to be until property values rise enough to cover their gamble.

And that is where we can place blame with the banks and mortgage lenders. If banks restricted the LTV of a mortgage the way they used to, you wouldn't be able to get into negative equity without a major collapse on property prices. With a 90% minimum LTV, it needs a substantial negative growth to get to negative equity. But hell, we saw it happen in the late 80s/early 90's. I watched the value of my home nearly halve over the peak "value" .... though never quite to less than I paid, let alone less than the mortgage, due to not taking more than 70% of the value as mortgage.

You'd think, after watching the housing market nosedive in those years, that banks would be brighter than to relax the controls they had in place then even further .... and you'd think government would be brighter than to let them. You'd think that they'd see that if it happened once, it can happen again, without indulging in a greedy race for short-term profits that merely fuelled the whole bubble and pretty much guaranteed it would happen again, sooner or later.

Much, though by no means all, of the fault for this lies with Gordon Brown. As Chancellor, he kept telling us he was the embodiment of prudence and was responsible for a golden age of prosperity, and for the "end of boom and bust", when all he was actually doing was indulging in the greatest bout of government "credit card" spending in our nation's history, and encouraging all of us to do the same on a personal level. Bugt it was fuelling the housing bubble and, sooner or later, the bubble was going to burst. As it happened, it was an external trigger, in the form of the US sub-prime farce, that providsed the trigger, but the trigger could have been any number of things and, sooner or later, it would have been something else if that hadn't happened.

The warning signs were clear. House prices were growing far faster than salaries or wages, far faster than people's ability to keep paying the price unless it was fuelled by ever-expanding credit. People were getting desperate to "upgrade" the more time passed, the further away that upgrade got. It was obvious that that cycle couldn't continue indefinitely, and I and may others have been saying so for several years. For at least 5 or 6 years, it wasn't if the market was going to break, but when, why and by to what extent? Gentle decline, before resuming stable growth, or collapse?

Brown and his government cronies keep trying to shift the blame by claiming it's an international recession. And they're right, of course, it is. The trigger for much of our current problems was international and nothing to do with Brown etc, at least, directly. But the fact that the triggering factor for the housing collapse was out of their control doesn't mean that the collapse was. If it wasn't the US sub-primes, sooner or later, it would have been something else, because the system was reaching breaking point.

And this, of course, is why despite Brown continually preaching that we're "better placed" than most to weather the recession, the truth is, we're much worse placed. That's why, for instance, the French went into recession before we did, but are now coming out and we aren't, and why their recession was much shallower than ours, why they didn't have to do anything like the extent of intervention we did and why they don't have the structural debt levels we have.

This all looks to be getting right off the point, but in fact, is exactly on point. The housing market is what fuelled the excessive consumerism in the last few years, what encouraged excessive mortgages (to be able to afford super-inflated house prices) and what drove the credit card binge that's now largely responsible for the growing levels of unsupportable debt, and thereby, the growth industry in ambulance-chasing debt collectors.

If banks had exercised sensible levels of due diligence before approving mortgages based on expectations of house price rises, and if they had been sensible with LTV levels and income multipliers, and if they hadn't been trying to make a quick buck from credit cards, we wouldn't have the debt collector problem.

Yes, borrowers have often been stupid in their buying decisions, but banks have been equally stupid, or rather, greedy, with both their lending decisions and, more worryingly, overall policies. And, at least at senior levels, they're paying themselves vastly inflated salaries and obscene bonuses, for so thoroughly screwing up.

So yes, borrowers have to apply for loans ..... but banks do everything they can to shove them at us. They bombard us with adverts, bombard us with junkmail and even increase our credit limits without bothering to ask if we either want or need it. And, at the end of the day, the final decision on whether to lend or not is with the bank. We can all apply, but they decide whether to lend or not, and how much they'll lend and on what terms.

[Steve]

But, and again I stress it's a personal view, credit cards should be used as a convenience, not as a way to buy things you couldn't otherwise afford right now. If I couldn't afford to buy that new TV, or holiday, or kitchen extension outright, I won't put it on the card. Doing anything else is, in my view, paying for today's lifestyle using the hope and expectation of tomorrow's earnings, and that is a dangerous risk to take.

Exactly my view. I've just ordered a pair of air miles cards (they give you two, one being amex which gains more miles per pound spent). Is it going to be worthwhile? I don't know, but it's a drop in replacement for the card I had, which I always paid off. The credit limit is puny, and I'm happy with that, because I don't buy things I can't afford.

Returning to the topic, I am fearful of the lack of regulation we have for bailiffs in this country. How can we not regulate people paid to come around and take your money by force?

[Saracen]

....

Returning to the topic, I am fearful of the lack of regulation we have for bailiffs in this country. How can we not regulate people paid to come around and take your money by force?

You need to be a bit careful about terminology. Bailiffs and debt collectors aren't the same.

Bailiffs are collecting on behalf of a Court. It'll be, for instance, for unpaid taxes, court fines, or where a County Court judgement exists against you. There are various types of bailiffs, with different powers, but they are regulated, and might even be court appointed. Even then, most bailiffs have limited powers. About the only ones that actually have the right to force entry to your property are bailiffs for the Inland Revenue, and even then, they need a warrant. Other bailiffs can't force entry, but they can force re-entry once they've been in once. By "force entry", I mean they can't break windows, breaks locks or push past you at the door. Or not lawfully anyway .... except the Inland Revenue. But they can go though closed but unlocked doors, through open windows, etc. And once legally in, you can't use force to throw them out. It'll be assault if you do. And once legally in,they can "seize" goods, and remove them, either right then, or by walking possession order at a later time, and can force entry to achieve that. But even then, there are limits on what they can or can't legally seize, or take.


Debt collectors, on the other hand, are a very different level of issue. Most are fairly respectable, and use legal means. But there's a small proportion but pretty substantial and prominent number that are a good deal less respectable, and they use all sorts of means, including those discussed, largely because they don't have the power bailiffs collecting court-approved debt or fines do. For instance, they don't have the power to force entry to your home or seize your possessions .... though they might make out that they do, and standing up to some large, hard-looking individuals standing at your door might not be easy if you're intimidated by their sheer presence and appearance .... and demeanour. But they should be following a code of practice, and Trading Standardsshould be dealing with them if they don't. If they offer or threaten force, call the police.

The problems isn't so much that there's no regulation, because by and large, there is. It's more that it isn't adequately enforced. Whether that's to do with that it can be hard to prove they do some of what they do, or simply that the local TS don't have the resources to deal with them and all their other work ... who knows?

[TheAnimus]

Saracen, i'm going to get a christmas card made for you on a tl;dr theme.

I'd agree with your idea that people forget about risk. In the world of modeling risk people use the idea of 'shocks' disturbances that are both postative and negative (normally following lognorm distrabution, so we can say its a wiener proccess and use geometric brownian motion). From this theory you can model how likely it is for the price of your house to fall to say 50% of what you paid etc.

For instance after my death, there would be about £130k of mortgage outstanding on my flat. The flat should be worth about £300k, it is unlikely, even if brown was voted in for another 10 years, that the value would go below that? I'd say yes, and i'd put the inheriotor of my estate at that risk.

The difficult one is perminant disability. I have one that kicks in 6 months after i have not been able to work, it pays me a meager £100 per day or something net. I have savings that should in theory be able to last me that long, but if they can't i have access to credit. The problem is i'd have to use that credit for cash flow whilst i sold assets (computers.... damnit this is making me depressed).

People who have debt, should also have savings to cover themselfs for this. You could say i could save money by paying off my mortgage more with the cash savings i have, i am after all getting **** all return on my cash. But it gives me a few months repreve should something bad happen.

[Dogers]

Just thought I'd throw the MoneySavingExpert forums link in - those guys have been through everything and are always willing to offer advice for anyone in the situation.

Although Saracen clearly seems to know his stuff too

[Saracen]

Saracen, i'm going to get a christmas card made for you on a tl;dr theme.
....

What can I say? I was bored this afternoon and had a bit of a rant.

And normally I'm so concise.

....

For instance after my death, there would be about £130k of mortgage outstanding on my flat. The flat should be worth about £300k, it is unlikely, even if brown was voted in for another 10 years, that the value would go below that? I'd say yes, and i'd put the inheriotor of my estate at that risk.

The difficult one is perminant disability. I have one that kicks in 6 months after i have not been able to work, it pays me a meager £100 per day or something net. I have savings that should in theory be able to last me that long, but if they can't i have access to credit. The problem is i'd have to use that credit for cash flow whilst i sold assets (computers.... damnit this is making me depressed).

People who have debt, should also have savings to cover themselfs for this. You could say i could save money by paying off my mortgage more with the cash savings i have, i am after all getting **** all return on my cash. But it gives me a few months repreve should something bad happen.

When my post talked about "you" I was really talking about a generic you rather than you specifically, Animus. For the value you specify and the mortgage level you mention, I'd say your assessment of how the market will go, even with Brown running us (into the ground) as probably correct .... it's not very likely to drop that far, and so you're covered. But that generic "you" probably isn't that well covered.

Also, of course, in deciding whether to take out a mortgage to buy a home, almost all of us are going to put ourselves at some level of risk. The issue, I guess, is 'how much'? Living a totally risk-free life is not only next to impossible, but would probably be very boring. We take a risk (perhaps of falling down the stairs) by getting out of bed to go to the bathroom.

£130k mortgage on a £300k flat is a minimal risk. But personally, if you'd taken out £400k mortgage in order to buy the flat, and fit it out, and used the excess to buy a new Porsche and go on a 3-month world cruise, I'd say that you were both living a lifestyle beyond your means, and taking an stupid level of risk. But then, if you'd borrowed at a 6x multiplier just in order to buy a property to put a roof over your family's heads (in order to avoid rent) .... I'd say you were screwed by the system.

I guess I'm a financial conservative, and at least in part, I'm a product of my age and upbringing. I was brought up in an age when wartime rationing was still a very clear memory. And even though it had ended, that didn't mean that stuff that was no longer rationed was actually widely available. And I was brought up where Mum did the weekly shop, and if she didn't make the weekly allowance last, then overspending on Monday probably meant we went hungry the following weekend. Fortunately, she didn't do that. Credit cards didn't exist, relatively few people owned their own houses (or even cars for that matter) and the general feeling was that you didn't buy what you couldn't afford ..... largely because you couldn't.

I know I'm sounding like a bad version of a Monty Python sketch, but in those days, being in debt carried something of a stigma. These days, it's pretty much a universal condition. And personally, I don't think it's a healthy indicator of the status of society. It's a sign of a level of greed, a level of consumerism that people want what they can't afford, and will use credit to get it, putting off the responsibility for affording it to tomorrow. And, unfortunately, doing that carries a risk and some of the time, for some people, that is going to bite ... and bite hard and painfully.

If you aren't in debt, you can't come unstuck like that when circumstances change and while you may still find things very hard to cope with, at least you don't risk having debt collectors chasing you or showing up on your doorstep. I exclude, of course, the mistakes and sheer bad practice from some debt collectors that leaves the innocent getting persecuted as a result of incompetence of lack of care by the collectors, and yes, I know that happens.

But that's why, despite a credit arrangement requiring two parties (a lender and a borrower) I put most of the blame for this on the lenders ... because they have so aggressively sought to lend to virtually anybody, and in virtually any circumstances and with apparently little if any checking to see if the borrower could afford it. For instance, that Amex situation I mentioned. Despite them having very little information about me, or at least, very little I'd authorise them to have, and despite me declining to give them ANY way to verify my income, they still went ahead and issued a card. And they weren't the only ones.

I'm actually sure I know what they were doing. At that time, I was flying to the US half a dozen times a year on business, usually with American Airlines, and usually either business or first class. I was an AA frequent flyer in their Platinum Class and a lifetime member of their Admiral's Club airport lounge. And the Amex offer was in collaboration with American airlines. And believe me, I was not happy with American Airlines for siccing Amex onto me. I haven't used them in years. But I'm convinced that it was that flying profile that convinced Amex they could ignore any ability to actually check my income before issuing a card. Oh, and after the first year (free, because that was the Amex/AA offer) I dumped the Amex card too.