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 (http://news.bbc.co.uk/1/hi/business/4997170.stm) and parts 4-6 here (http://news.bbc.co.uk/1/hi/business/5037736.stm)) 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]

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 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]

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]

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]

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 £300,00 0 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]

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.


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.



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.


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...

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.

[James Henry]

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.
I have been offered contracting but have refused it, don't fancy the insecurity. Obviously the restaurant wasn't doing that well if the lows so quickly overwhelmed the higher points.

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.
Indeed not. It's always bad for someone's business to fail but they did choose to do that. To be bleating and complaining because that risk didn't pay off doesn't wash.

As stated before at the time she took it on, they had no problems servicing the debt.
At the time, however this was based on an insecure contracting income, and even more insecure (apparently) restaurant takings. At the time is the key phrase. The apparent security they had before was shredded by the business undertaking.

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...
Ah right so that's ok. 'Sorry we can't pay you but we are contacting you early, sorry that the business isn't doing so well but honestly all will be fine in a few months'. I seriously doubt that she earns enough to pay her own mortgage plus the 3 remortgages plus all the other bills, etc. That's probably the concern from the banks.

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.
Again from the point of view of her lenders there is nothing there to confirm that she'll be able to pay again.

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.
She has a lot of property which could be sold off. Money now or maybe money later.

Please start a bank I'd love to be a customer :) Could I have a 125k loan for this fantastic new business, might not be able to repay straight away mind...

---------- Post added at 15:45 ---------- Previous post was at 15:37 ----------

Just as a final point...

Financially things seemed to be fine. Restaurant takings, after the earlier problems, had recovered. But by late February our restaurant business began to show signs of struggling.
My bank advised I take out a personal loan in my name, which I accepted in desperation.
So... she was working, however due to the restaurant not doing so well they were unable to service their debt. Yes they shouldn't really have offered her a loan however they were probably a little scared of losing a huge amount of money, and you do wonder if all of that was actually the case. If she was 'desperate' as she says the restaurant must have been losing money hand over fist.

From the point of view of an actuary at a bank just what exactly do they have to say that this will change?

She claims pregnancy, etc, is the cause of woes however in that first few paragraphs are the key phrases... they were struggling before her pregnancy became relevant, she was working but they still had to borrow to service their debts due to the restaurant not making enough money.

It sounds very much like the restaurant is a loss making business.. why should the banks cut her slack so that she can continue to pour their money into a business that isn't making anything?

That's about as clear as I can make it. It's not so much the banks being evil or wicked, they are just, quite rightly, assessing the risks and considering the risk of her failing to pay them in full even if they give her the benefit now as not being worth it.

[Chrysalis]

I dont have too much sympathy I will explain why.

This women has 2 BTL properties which no offense to her are not critical to her survival (what happens if a boiler packs in and she has to pay a nice sum to replace it? she wouldnt even be able to honour her obligations as a landlord), she gambled in a restuarant and although she says it went downhill after she went pregnant I think going for a baby after taking on so much debt is just dumb, if she wanted a baby then they should have let the restaurant drop as it was a liability. It appears she is trying to use the child to gain sympathy. Always the case in this country.

Compare it to say a single adult who rents and has smaller debts, taken out to simply pay bills, they have nothing to fall back on and no partner to turn to for help, thats what I call someone who really needs help.

I am not surprised the banks have treated her like that, she has expensive assets, she is asking for a freeze on payments for her BTL properties yet expects to continue to profit of them, and again no offense to her, if her own survival was really in so much peril they would sell up the restuarant now or just close it down. Been in debt you supposed to learn to make cut backs of stuff you dont need obviously the banks seen stuff in her budget plan that she doesnt need and have decided that she should drop them before they help more. Also because she has assets they are less likely to care if she defaults on her loans since they are secured loans.

Banks do help people in genuine trouble with interest freezes etc. but thats on things like credit cards and small personal loans and the person has no assets. She needs to get a reality check, sell the restaurant, if she is still in trouble then consider selling a BTL property. I also agree with James Henry that she couldnt have wanted the child that bad if its just going to be put in a nursery.

Its a shame the BBC dont cover single childless people who are now the most vulnerable in our society since they often have no partner to help them and often have no assets and higher proprtional living costs.

[etccarmageddon]

http://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=407235&in_page_id=3

SAYARA BEG has been using an IFA for ten years and won't make an investment decision without contacting him.

Sayara, from London, consulted IFA Julian Nurse of Select Financial Solutions about Alice's Child Trust Fund voucher .....
......I needed someone willing to demystify things for me. Now I wouldn't make a financial move without asking for his help.


I'm a little suspicious that a search on yahoo has brought up another press interview - perhaps she enjoys the limelight!

[LSainsbury]

Did anybody see that programme on ITV last night? Britain's Biggest Spenders I think it was called...

Some woman was £80k in debt! And she wanted to be the next Jordan....sorry love, you're a dog...

[Nugget]

Some woman was £80k in debt! And she wanted to be the next Jordan....sorry love, you're a dog...

Well, obviously halfway to being the next Jordan then ;)

[handyman]

Yeah I saw that program, that manchester fella's eye brows where shocking. Sorry but he looked like a proper fake chap I'd not be able to stop laughing at him.
I cannot belive that lass was going bankrupt for the second time as well.

[Gareth]

http://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=407235&in_page_id=3

SAYARA BEG has been using an IFA for ten years and won't make an investment decision without contacting him.

Sayara, from London, consulted IFA Julian Nurse of Select Financial Solutions about Alice's Child Trust Fund voucher .....
......I needed someone willing to demystify things for me. Now I wouldn't make a financial move without asking for his help.

I'm a little suspicious that a search on yahoo has brought up another press interview - perhaps she enjoys the limelight!Yep, she sounds like a proper attention whore to me.

I'm not sure that her financial adviser will be best pleased... on one website, she says she doesn't even get out of bed in the morning without consulting her IFA. Then, on another site, she's in debt over her head, after having made bad investments and using her family home as collateral. Hmm, if I'm looking for an IFA, I don't think I'll use her's!

[Xaccers]

Perhaps someone should tell them?

[Nidge]

Did anybody see that programme on ITV last night? Britain's Biggest Spenders I think it was called...

Some woman was £80k in debt! And she wanted to be the next Jordan....sorry love, you're a dog...


Did you see the state of her face? It was that tight that when she crossed her legs she smiled.