What really happens when you go into debt...

[Scarlett]

Okay, I've just spotted this ongoing story on the BBC site (parts 1-3 here and parts 4-6 here) written by someone whos financial situation is looking bad at the moment and about to get worse. What gets me is that she seems to be doing everything that she's supposed to but its not actually getting her anywhere.

Most of the banks seem to be at best indifferent to her plight and at worse completely uninformed about what they can/can't offer her.

I feel for her and it looks like she'll have to be far worse off before some of them will start to negotiate. WTF!!!

Okay you owe me £100, I'll demand that you keep paying me £5 a month until you have to be declared bankrupt and I lose the remaing £70 because you cannot pay your creditors or I'll offer you a payment holiday and/or a reduced payment and I'll get my £100 in full 2 Years later than expected.... It ain't rocket science but apparently beyond the ability of some of the financial institutions that she's trying to deal with...

Hope she gets some where once she's had debt counseling (who will probably tell her to do exactly what she is doing now)

[Chimaera]

I've had experience of this through a friend, once the financial people know you are in trouble (in this case, through no fault of their own), they circle like sharks waiting for the kill, and threaten you with all sorts of things that are not legal eg forcing the sale of the house they were living in at the time to pay back the debts (it wasn't theirs to sell) and sending in baliffs to take possesion of goods (again, not their house, not their goods). They do listen to organisations like the CCCS, once you get an appointment with them and they start things moving, the banks etc back off.
No wonder some people take desperate measures at some of the threats these financial institutions make - I've seen it first hand.

[etccarmageddon]

"I managed to find another temporary job, but when I told them that I was pregnant they gave me my one month notice." I wonder if there's anything she can do legally about this - eg. this is clearly sex discrimination.

---------- Post added at 13:33 ---------- Previous post was at 13:31 ----------

and personally I wouldnt have remortgaged the family home to finance a restaurant and I wouldnt have got baby making when finances were so fragile. an error of judgement perhaps?

---------- Post added at 13:41 ---------- Previous post was at 13:33 ----------

"Basically, I feel I am being punished just because I wanted to have more children and needed to take a maternity break. Great!" hmm for an IT consultant that comment is really stupid.

[James Henry]

Instead, I and my husband have borrowed to finance our future.

My husband Thomas owns a French restaurant in Holborn, London. To buy the restaurant, my husband and I had to re-mortgage the family home and my two small buy-to-let properties.

Oh no only owning 3 properties and a business. On behalf of those unable to buy a home due to people like this pushing up prices through buy-to-let I'm deeply moved.

This woman simply mortgaged to the hilt and took a risk on a business which didn't pay off. After taking this huge risk she decided to become pregnant which would, of course, reduce their income.

I have no sympathy at all, they shouldn't have gambled money they didn't have if they couldn't afford to lose.

I have an impeccable credit history and I want to avoid blackening it.

Sadly the history is exactly that, and not making the required payments on time is a part of that history. Can't have it both ways.

I can't even begin to imagine how much debt this woman has secured on homes. I can't really believe that she considered it justified to take this much on. Did she actually look at that 250k mortgage she took on, or the second or third one? Then remortgaging for the business? I can imagine this woman's total debt being not far off 7 figures.

Incidentally this isn't really what happens when a lot of people go into debt. Not that many people have at least 4 and possibly 6 mortgages. (At least 2 on the family home, and at least one on each of the buy-to-let places.)

[Gareth]

Originally Posted by James Henry

Oh no only owning 3 properties and a business. On behalf of those unable to buy a home due to people like this pushing up prices through buy-to-let I'm deeply moved.

This woman simply mortgaged to the hilt and took a risk on a business which didn't pay off. After taking this huge risk she decided to become pregnant which would, of course, reduce their income.

I have no sympathy at all, they shouldn't have gambled money they didn't have if they couldn't afford to lose.

I couldn't have put it better myself. She took a risk... it didn't pay off. Sorry, but that's life.

[etccarmageddon]

and I thought I might have been unsympathetic with my comments and could of offended some people re my comments about irresponsible pregnancy. It's good to see other people have similar views to mine.

---------- Post added at 14:15 ---------- Previous post was at 14:14 ----------

dont get me wrong though - although she is responsible for her problems the banks and mortgage companies should do their best to negotiate rather than ruin her.

[James Henry]

Originally Posted by etccarmageddon

and I thought I might have been unsympathetic with my comments and could of offended some people re my comments about irresponsible pregnancy. It's good to see other people have similar views to mine.

---------- Post added at 14:15 ---------- Previous post was at 14:14 ----------

dont get me wrong though - although she is responsible for her problems the banks and mortgage companies should do their best to negotiate rather than ruin her.

At the end of the day she ruined herself by borrowing like crazy.

I hope she keeps her family home, no-one deserves to lose their home. The two buy-to-let properties she should sell now before she is forced to.

This is certainly not your typical debtor due to the amount of property she has and how hard she's leveraged it. You know, we're not talking about someone who has borrowed too much on credit cards, etc, this woman has by the looks of it 6 mortgages, 3 residential properties plus a restaurant. Having those kinds of assets screams 'bankrupt me' pretty loudly.

The banks are probably concerned that one of the others will bankrupt her or repossess a property before they do. There is also the minor issue that she may not be able to afford to pay this mass of debt after she returns to work either, though it's another issue asking why she wanted a child just to send it to nursery ASAP.

[Kliro]

The bbc (think it's the bbc) have a programme called 'the bank of mum and dad' shows you how people got into debt, and then try and get them out.

Some people on that program are so stupid though, that they should never have been allowed a credit card in the first place.

A lot of debt is the fault of the banks/creditors aswell, it's pretty obvious to tell that someone can't pay off a debt when they're spending more than they earn, yet they're still throwing money at them.

I think it's because of the new culture of wanting everything at once, and the ease of getting these things once you've got a credit card - there should be compulsary lessons in schools on money management and spending, as some of the people just don't know what to do with all their money after the first paycheque comes in.

[etccarmageddon]

I watch bank of mum and dad as it amuses me and also makes me feel good about myself. I thought I'd made a complete mess of things when I got into about £5-6k of credit card debt about a decade ago - this program makes me realise I was small fry! often these people owe £30k just because they like to spend on cloths!

[Gareth]

Originally Posted by James Henry

At the end of the day she ruined herself by borrowing like crazy.

I hope she keeps her family home, no-one deserves to lose their home. The two buy-to-let properties she should sell now before she is forced to.

This is certainly not your typical debtor due to the amount of property she has and how hard she's leveraged it. You know, we're not talking about someone who has borrowed too much on credit cards, etc, this woman has by the looks of it 6 mortgages, 3 residential properties plus a restaurant. Having those kinds of assets screams 'bankrupt me' pretty loudly.

The banks are probably concerned that one of the others will bankrupt her or repossess a property before they do. There is also the minor issue that she may not be able to afford to pay this mass of debt after she returns to work either, though it's another issue asking why she wanted a child just to send it to nursery ASAP.

I couldn't agree any more... she's not been foolish with her credit cards and store cards, she tried to be a businesswoman and took on all her debts in a business capacity. I can understand, therefore, why the banks/mortgage companies refuse to freeze her interest - they don't generally do that for business investments.

Also, why should she be contacting the Consumer Credit Counselling Service? I always thought this charity was run for individuals/families that get into personal debt and not business-related debt.

[etccarmageddon]

her debts are foggy though as family debt has been used to finance family business.

[James Henry]

Originally Posted by etccarmageddon

her debts are foggy though as family debt has been used to finance family business.

Exactly, the debt is all secured on their own property, not the business. Makes it all the more stupid really that they did this.

As she claims it was an investment in their future they got greedy. They had the family home and two buy-to-let properties and were I'm sure doing alright. Obviously this just wasn't enough so they took a risk and went into business.

So now due to what they had not being enough they are in trouble. Could have gone either way. Personally with a young family and planning for another child I'd choose stability but that's just me.

[littld]

This one's really simple. She is borrowing to invest, not support her current lifestyle.

The value of investments can go down as well as up.

I would have no more sympathy for someone who borrowed £300,000 and then went to the casino and blew the lot. It's a risk. That's why most of us don't take it.

Wow, if I thought I could open a restaurant tomorrow and if it failed just stop paying the bank then I'd give it a go tomorrow!

[Scarlett]

Originally Posted by James Henry

Oh no only owning 3 properties and a business. On behalf of those unable to buy a home due to people like this pushing up prices through buy-to-let I'm deeply moved.

This woman simply mortgaged to the hilt and took a risk on a business which didn't pay off. After taking this huge risk she decided to become pregnant which would, of course, reduce their income.

If you read the article, then you see that she was in a contracting job and the restaurant was doing okay a the time she became pregnant. its only afterwards that it went down hill. IT contracts are funny things, I've been in the same job for over 2 years as a contractor.

Originally Posted by James Henry

I have no sympathy at all, they shouldn't have gambled money they didn't have if they couldn't afford to lose.

Thats how entrepreneurs work. she'd probably never have got any money without being willing to share the risk. if you never gambled money you couldn't afford to lose then a lot of small businesses would never get off the ground.

Originally Posted by James Henry

Sadly the history is exactly that, and not making the required payments on time is a part of that history. Can't have it both ways.

I can't even begin to imagine how much debt this woman has secured on homes. I can't really believe that she considered it justified to take this much on. Did she actually look at that 250k mortgage she took on, or the second or third one? Then re mortgaging for the business? I can imagine this woman's total debt being not far off 7 figures.

As stated before at the time she took it on, they had no problems servicing the debt.

Originally Posted by James Henry

Incidentally this isn't really what happens when a lot of people go into debt. Not that many people have at least 4 and possibly 6 mortgages. (At least 2 on the family home, and at least one on each of the buy-to-let places.)

no it isn't but then most people don't try to sort out the debt problems ASAP as soon as they see a problem. she's been very pro active, the banks have been well, banks unfortunately...

Originally Posted by littld

Wow, if I thought I could open a restaurant tomorrow and if it failed just stop paying the bank then I'd give it a go tomorrow!

She's not though, she's trying to come to some arrangement so she can pay them. A payment holiday is not the same as not paying the debt.

It just seems that the Banks just don't really care and would rather see it all go badly wrong and write off whatever as bad debt (but demand payment in full each month) than work with her so they can get all their money back.

[etccarmageddon]

she appears to have gambled (for want of a better expression) all the family financial security on the restaurant being successful. could she not have seen that if there were any problems with the restaurant then everything would go pear shaped. the obvious backup to this would be her IT work which often pays well if you know the right stuff.

was she sensible trying for a baby knowing that they'd just piled up so much debt. from her comment "Basically, I feel I am being punished just because I wanted to have more children and needed to take a maternity..." I dont see her as an entrepreneur - more a reckless fool.