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zugzwang

'Breathing Space', Tory debt forgiveness bill?

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Private members bill set to receive a second reading next week.

'Families with problem debts need a breathing space to get back on their feet.'

http://www.conservativehome.com/platform/2017/02/kelly-tolhurst-families-with-problem-debts-need-a-breathing-space-to-get-back-on-their-feet.html

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Problem debt is when that debt gets out of control. Credit can be a good thing, helping people smooth their finances and make purchases today to be repaid out of future income. Yet the rise in personal borrowing has led to mounting concern that households who get into debt need safer ways to manage when they get into difficulties. Personal debt problems after all can have a profound impact on people’s lives. Debt makes people ill; it causes families to break up; it stops people from working and makes people less productive at work.

Analysis from The Children’s Society has revealed that children in low-income families with multiple debts are at far higher risk of suffering from mental health problems than equivalent families with smaller numbers of types of debt. Their findings also show that almost a quarter of children in debt-ridden families – equivalent to more than 500,000 children – are unhappy with their lives. This means that children living in families struggling with debt are five times more likely to be unhappy than those in families without debt troubles, putting them at greater risk of developing mental health problems later in life.

In my own constituency of Rochester and Strood, there are an estimated 2,700 children living in families affected by problem debt.

Seeing the impact of debt on children and families both nationally and in my constituency, I have decided to take this issue on in my first Private Members’ Bill. I am working on the Bill with The Children’s Society and charities across the debt advice sector including StepChange Debt Charity. This Bill would introduce protections for families who are doing the right thing – getting debt advice and wanting to repay their debts over time in a safe and affordable way, without having to cut back on the basics for their children.

Often families can fall into debt due to a one-off circumstance in their life – illness, bereavement or job loss. My Bill is calling for a ‘Breathing Space’ scheme for families. This period – where families are free from enforcement action, additional fees and interest on their debts – gives them time to get their finances back on track without fear their debt will mount even further. Only a fraction of people seeking help with their debts currently qualify for existing legal protections and I believe there needs to be a better way to support those families who want to repay their debts, but need support and protection to enable them to do so.

 

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Just now, Si1 said:

Fine. But it would push up the cost of borrowing.

Exactly. Higher interest rates would just mean borrowers would reach the point at which they needed a 'breathing space' faster. Possibly higher interest rates and a mandatory breathing space would cancel out fairly precisely so debtors would run out of breathing space at the same they would have stopped servicing the debt anyway with lower rates.

Something tells me Kelly Tolhurst MP isn't the sharpest knife in the drawer. Always useful for the leadership to have lots of party line-toers in Parliament though.

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It's inevitable. And at the same time, they will come for the savings of those who have lived with their means.  It's only fair you know.  Why should someone who has not been tempted by the new car every two years, the three holidays a year, iPad, iPhone and other latest gadgets be able to keep their money when there are children starving.  Won't someone think of the children?  

When marx discussed communism and the redistribution of wealth, I don't think that this is quite what he had in mind 

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Ludwig Von Mises: ‘There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.’

Looks like they have chosen the second option. Don't panic last!

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1 hour ago, zugzwang said:

Private members bill set to receive a second reading next week.

'Families with problem debts need a breathing space to get back on their feet.'

http://www.conservativehome.com/platform/2017/02/kelly-tolhurst-families-with-problem-debts-need-a-breathing-space-to-get-back-on-their-feet.html

 

debt forgiveness, and it is for the children (the unborn indebted children) what a jolly nice fellah thinking of the children like that.

 

1 hour ago, Si1 said:

Fine. But it would push up the cost of borrowing.

Great, something needs to, if Interest Rates can't do the job.  Both mechanisms end up at the same place, paying everything you've got to pay down what is owed, whilst year after year not ever owing anything less.  Better for the state to be generating an income off that than some loan shark outfit.  This is the market sector this reads like it is meant to address.

 

 

Breathing space is another way of saying.... don't let them go bankrupt and walk away, those debts you have need to stick to you for as long as we can milk you.  All delivered in a bill that is well meaning political brownie points to help build up a picture of how helpful the government can be.

Edited by Odin

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Debt makes people ill; it causes families to break up; it stops people from working and makes people less productive at work.

I assume there's some evidence for that claim? Logically you'd think people in debt would be very motivated to work.

Either way, we're headed for some sort of forgiveness - this proposal seems better than an outright jubilee, burt maybe they're building up to that.

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We've already had 8 years of forgiveness.

HPCers were having 'the breakdown' over 'the innocents' in 2008.

0.5% (now lower), QE galore....

Now more debt smoothing forgiveness...?

Housing market with £Trillions in equity on owner side, and millions of older owners sat on mad-gainz.

BTLers been dancing into it last few years, buying up 3 properties at a time.  (Yoo-hoo, yes those BTL parents who put the "F**k You" into "I'm alright Jack, F**k You" and who didn't want to know anything about their kids reasoning why not to do it (BTL).

On 5/4/2012 at 8:19 AM, Topher Bear said:

I don't read anything in hammonds statement above which suggests he does not blame the banks, he is merely saying that the borrowers also share the blame and haven't been blamed up till now.

Are they being punished now? Not really, the overblown prices they paid have not gone down much, the interest they pay on te loan is minimal and they get to enjoy the fruits of that borrowing, including the non home items they borrowed for, holidays abroad, brand New 4x4, 50 inch mega hd tv's etc. And these same people say it was all the bankers fault...

In this whole mess there are very few who were not to blame. One group not to blame are those who refused to play the borrowing game, and we can agree here that we have been punished the most. 

 

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The government dont give a shit about those on low incomes who owe a grand or two unsecured, no votes there. The millions of middle class with mortgage debt, well thats a different matter. 

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1 hour ago, One-percent said:

It's inevitable. And at the same time, they will come for the savings of those who have lived with their means.  It's only fair you know.  Why should someone who has not been tempted by the new car every two years, the three holidays a year, iPad, iPhone and other latest gadgets be able to keep their money when there are children starving.  Won't someone think of the children?  

When marx discussed communism and the redistribution of wealth, I don't think that this is quite what he had in mind 

Everyone needs to be feckless!

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Just now, nothernsoul said:

The government dont give a shit about those on low incomes who owe a grand or two unsecured, no votes there. The millions of middle class with mortgage debt, well thats a different matter. 

Protect the mad-gainz?

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25 minutes ago, nothernsoul said:

The government dont give a shit about those on low incomes who owe a grand or two unsecured, no votes there. The millions of middle class with mortgage debt, well thats a different matter. 

I suspect that is indeed the case. This kind of govt intervention is where higher real interest rates and inflation come from. It will result in, medium-long term, eye wateringly cheap house purchase prices when we eventually hit the trough.

 

Is terribly unfair and morally wrong, however I think the govt, politically, will have little choice.

Edited by Si1

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I remember the scandal of that Christmas club that went bust a few years ago leaving those who paid in with zero at christmas. The company was still taking their cash when directors knew it was going bust. Very traditional thing for responsible working class to do, to ensure their family get a decent christmas. To his credit frank field tried to help them but I dont think they got any money or many other people really cared. You could argue that in a free market it's tough luck, it's your responsibility where you put your money. However, contrast that with how the system protects those who knowingly, without any fraud whatsoever, took out mortgage debt, because it was their entitlement to own a property in a nice area, with the expectation of making HPI money from doing nothing. History shows us the system is more concerned with looking after client interests than any sense of fairness or consistency.

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1 minute ago, nothernsoul said:

I remember the scandal of that Christmas club that went bust a few years ago leaving those who paid in with zero at christmas. The company was still taking their cash when directors knew it was going bust. Very traditional thing for responsible working class to do, to ensure their family get a decent christmas. To his credit frank field tried to help them but I dont think they got any money or many other people really cared. You could argue that in a free market it's tough luck, it's your responsibility where you put your money. However, contrast that with how the system protects those who knowingly, without any fraud whatsoever, took out mortgage debt, because it was their entitlement to own a property in a nice area, with the expectation of making HPI money from doing nothing. History shows us the system is more concerned with looking after client interests than any sense of fairness or consistency.

No. Its money. Its heavier regulated.

The directors should have gone to jail and been sued.

Xountries need to ramp up more on financial shenagigans.

As far as the bill, its ******. Defaulting loans are a banking regulation thing. If people are struggling then the banks need to take a hit, and pay more for its capital.

IRs are turning. UK and its banks should have sorted out their loan books.

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Money or debt that creates money is created to be spent......once it has been spent intp the economy it has fulfilled it's primary purpose..... repaying debt kills debt so means only more has to be created to replace it, when issued built in that a good percentage will never be repaid......There are no debtor prisons.;)

 

 

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10 minutes ago, nothernsoul said:

I remember the scandal of that Christmas club that went bust a few years ago leaving those who paid in with zero at christmas. The company was still taking their cash when directors knew it was going bust. Very traditional thing for responsible working class to do, to ensure their family get a decent christmas. To his credit frank field tried to help them but I dont think they got any money or many other people really cared. You could argue that in a free market it's tough luck, it's your responsibility where you put your money. However, contrast that with how the system protects those who knowingly, without any fraud whatsoever, took out mortgage debt, because it was their entitlement to own a property in a nice area, with the expectation of making HPI money from doing nothing. History shows us the system is more concerned with looking after client interests than any sense of fairness or consistency.

It's just democracy. You stop pandering to the majority and they stop voting for you. The trick is to make it look like you're pandering to them when you're actually not. So there will be some level of forgiveness, but it will almost certainly come with a certain amount of sting in the tail.

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2 hours ago, Fully Detached said:

It's just democracy. You stop pandering to the majority and they stop voting for you. The trick is to make it look like you're pandering to them when you're actually not. So there will be some level of forgiveness, but it will almost certainly come with a certain amount of sting in the tail.

Oh for sure.

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This Bill would introduce protections for families who are doing the right thing

 

 Doing the right thing by over-extending themselves with too much debt when they are responsible for the welfare of their children. Don't worry, illness, bereavement and job loss are things that happen to other people - make that mortgage 8x my income.

 

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Yet the rise in personal borrowing has led to mounting concern that households who get into debt need safer ways to manage when they get into difficulties. 

How about introducing a bill that encourages people to do less personal borrowing? Less debt? No? Crazy concept?

Keep on treating those symptoms and enjoy your unexpected consequences.

 

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Debt makes people ill; it causes families to break up; it stops people from working and makes people less productive at work.

Alternative versions

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High house prices make people ill; it causes families to break up; it stops people from working and makes people less productive at work.

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Low interest rates on savings makes people ill; it causes families to break up; it stops people from working and makes people less productive at work.

Quote

The welfare state makes people ill; it causes families to break up; it stops people from working and makes people less productive at work.

 

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Im not necsssarily saying those proposing this bill are far sighted enough to have this in mind, but if there is another financial crisis, in all likelyhood worse than the last one, it will be handy for the government to have a statute like this already up and running, ready to ramp up. The first measures to stop a property crash would be some kind of firebreak, to prevent forced sales and defaults before other measures to inflate the debt away kick in. This would be part of that package.

 

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1 minute ago, nothernsoul said:

Im not necsssarily saying those proposing this bill are far sighted enough to have this in mind, but if there is another financial crisis, in all likelyhood worse than the last one, it will be handy for the government to have a statute like this already up and running, ready to ramp up. The first measures to stop a property crash would be some kind of firebreak, to prevent forced sales and defaults before other measures to inflate the debt away kick in. This would be part of that package.

Real handy.   Yeah inflate our savings away on renter-saver side, and the debt away for the few with mortgages, in a housing market worth £Trillions, and story after story of happy BTLers and owners with mortgage free homes in the papers worth £500K+.  

Reads like you got is sussed for no HPC good times.

Happy happy.   Despite 8 years of financial repression and forbearance policies already.

It casts owners as innocents.  Does it cover someone with £200K mortgage on house worth £750,000 ?

Only forbearance I could stand is some for the HTB new build buyers, but I'm wary of making an exception for them.

This bill isn't going anywhere.  It's the renters who are the ones carrying it all.   Where's their forbearance?

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Let me spell out I am totally against such a policy, both morally, for long term economic reasons, and for reasons of self interest, I would not benefit financially at all. Sadly ,I have just become very cynical regarding government actions and wouldnt put anything past them anymore with regards to propping up property.

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