Families On The Brink Of 'insolvency Crisis'

[okaycuckoo]

Written off by the bank, not written off entirely. Usually these loans are sold on to 3rd parties who are much more tenacious than the banks when it comes to getting their pound of flesh.

Loan gets assigned to third party for about 50% face value. Third party pursues debtor, and if they fail the assignment often gets reversed back to the original creditor - so not a total write off for the creditor. I think the crucial thing is the recorded paperwork - creditors are really poor with this, and if the court kicks out a claim on that basis the third party can turn around and say the deal is off. Not a bad business model. Link Financial are the main guys.

[needsleep]

Catch 22.

However from the banks perspective the faster they write this stuff off the quicker the taxpayer will pick up the tab.

Anyone like to bet RBS/Lloyd's are writing the most off?

Why provide £500bn of toxic loan guarantees if the banks won't bother to use it? Are the banks in a position to cynically transform 'regular' debt into toxic debt by turning the screw on ordinary families and in doing so qualify for more bailout money? I think we know the answer.