Whats stopping people from getting huge loans then when its all gone declaring bankruptcy?

I realise it can affect getting a mortgage but the with house prices as they are im probably best off renting for the rest of my life. Would it be the banks that lose money or the taxpayers?

It's always the little man who loses their money.

But to answer your first question....probably self respect!

most bank sell the mortgage loan the second they can get a big enough group of them together. Since they did not keep the loan they did some stupid things like giving money to people who can not really afford to pay back.

To 'reduce risk' the banks will group together a bunch of loans and sell the huge group to investment banks, hedge funds, and bond funds. What these funds are finding out is that a group of bad mortgages is a stupid investment.

The first to suffer is those who are too stupid to realize that they can not afford the loan. The companies that are also in pain are the one's who group these bad loans together and approved these loans. The companies that suffered last are the investment places that were dumb enough to purchase these groups of toxic loans and can't find anyone stupider than them to sell them to.

I have been watching this unfold since 2005. It ain't done yet and still has a few phases to go through. In the end, everyone will feel pain from the fallout.

Nothing is stopping them ,and they do.

What is stopping people are intelligent loan officers.

Banks do not give "huge loans" to unproven credit risks without assets. They just don't do it. How do you think they pay for the building and the smiling face behind the counter? Good business decisions and loaning huge amounts of money to bad credit risks is not good business.

The taxpayers would only lose money if the bank ended up shutting it doors, otherwise it is the shareholders that lose the money.

nothing at all, obviously affects credit, but thats it.

however, 2 points

1) you can be denied claiming bankruptcy.
2) you will/can lose all items of high value ie. cars, house

they can even check back so you don't con them. eg. buy a car, sell it for a cheap price to a friend or just transfer it and they can overturn the sale and reclaim it.

Self respect is all that is damaged, if you borrow then pay it back. Although if the interest rates weren't so high and if more credit companys assist if you are having trouble it wouldn't be so bad.

Banks have a fund set aside every year to claim the lost money back.

Oh and you can still be made to pay a monthly payment after all this.

However, the more ppl go bankrupt, the higher interest rates may go and harder to get on things like the property ladder.

Declaring yourself bankrupt will ruin your life for seven years. You can't have a bank account, get a mortgage, have credit of any kind, run a business or any assets. They will take everything you own. I'd rather keep battling on or get help from friends / family than go bankrupt. To answer your question, its the people that you owe money to who would lose out.

In theory - nothing stopping them!

Nothing stopping you at all, you only have to pay money back out of your wages if you have enough disposable income left over after all your outgoings.
Bankrupts in the UK are released after 1 year now.

However, if you don't have a mortgage then the most you can borrow unsecured is Â£25K and if you get caught its a 10 year sentance for fraud which seems rather a bum deal for Â£25 grand doesn't it?

if you have a job declaring bankruptcy isn't always the best solution as the court can take money from your wages for years to pay towards your debt.

if your on benefit, then your not going to be able to get large loans!

The insurance companies.

Is it 7 years now??? It took 10 years for my bankruptcy to get removed from MY credit record!!

Nothing is stopping anyone from filing bankruptcy but I think it's pretty low for someone to consider getting a huge loan and then declaring bankruptcy.

Besides, I don't know if it's as easy to do a bankruptcy these days as it once was. You might or might not get a Chapter 13 where all your debt is gone.....they might decide to do a Chapter 7, where you will STILL have to pay a portion of the debt off.

Even if the debt is completely vanished...they still make it hard on you for 7 to 10 years. Sure you can obtain another credit card, but it'll either have to be a secured one (where you deposit the amount of money you want to spend and that's all you can spend on it) OR it'll have a sky high interest rate and in the end you've paid MORE in interest than what you borrowed. Sure you can buy a house and/or new car, but again...you'll be classified as "high risk" and your interest rates will be sky high OR... depending on your monthly income, they'll say you don't make enough and you won't be able to make that new car or home purchase, because bankruptcy screws up your credit report and that is the first place creditors look when you apply for new homes/cars. That happened to us....we were turned down or had HIGH interest rates (whck in turn would have made our payments too high to afford) even after 7 years of bankruptcy!! Oh!! And guess what else??? Often times, if you think you can just rent for the rest of your life....apartments and landlords (as well as some employers) will check your credit report before they rent you a house/apartment or offer you a job.

It was only last year that we were able to refinance our house and get a much lower interest rate. When the banruptcy was newer, the best interest rate we could obtain for a house loan was 14.5% and it kept going up almost ever 6 months to a year. Last year when our credit report no longer showed the bankruptcy, we were able to refinance our house with NO problems for a fixed interest rate of 4.75%!! :-)

My advice is to think long and hard before you file for bankruptcy. It's a hard lesson that you'd be best not learning about. And if you're thinking of doing it just because you think you can get away with it.....nothing in this world is free. What goes around, comes around and karma will always come back to bite ya in the a**.

Nothing stopping them. Most of them have already done it and are just waiting for 7 years to do it again!

Other borrowers are the real victims as in higher rates. Your conscious is what should stop you from defaulting on your loans.

Enter Your Message or Comment

User Name:
User Email:
Post a comment:

Archive: Forum -Forum -Finance - Links - 1 - 2 - RSS - All RSS Feeds
The Causes and the Results. 0.044
Copyright (c) 2011 Financial Crisis Tuesday, May 29, 2012 - Terms of use - Privacy Policy