Under 30's Are A Bankrupt Generation

[dogbox]

What's CSA got to do with the student loan system? Students do not need to repay if they are not earning - if they do they can't avoid it.

Bankruptcies will lead to a crash (see my earlier example)

I give up cas. Just watch the headlines in the comming years and u will then see just how many students make use of the new lite touch bankcruptcy rules.

The new Bankcruptcy rules will lessen the prospect of a crash, as its a really easy way out of crippleing debt. In the past bankcruptcy was much harder and more stigma attached. The only loosers are the unsecured lenders.

[pendragon]

What's CSA got to do with the student loan system? Students do not need to repay if they are not earning - if they do they can't avoid it.

Bankruptcies will lead to a crash (see my earlier example)

<{POST_SNAPBACK}>

But could you pay back your Student Loans with your credit card... and then go bankrupt?

There must be better ways to stimulate enterprise than making bankruptcy easier - lowering business tax, for example...

[Casual Observer]

The new Bankcruptcy rules will lessen the prospect of a crash, as its a really easy way out of crippleing debt. 

<{POST_SNAPBACK}>

It's not so much a way out of debt - it's a way to transfer a loss to the creditors. Naive if you think this is a win-win situation.

[right_freds_dead]

I give up cas. Just watch the headlines in the comming years and u will then see just how many students make use of the new lite touch bankcruptcy rules.

The new Bankcruptcy rules will lessen the prospect of a crash, as its a really easy way out of crippleing debt. In the past bankcruptcy was much harder and more stigma attached. The only loosers are the unsecured lenders.

<{POST_SNAPBACK}>

dogbox: if you go bankrupt with £10k of debt that debt doesnt just disappear. its passed on to lender to merchant to etc and it ends with higher taxes for everybody and a really sh1tty sociiety for us all.

the money doesnt vapourise. you just pass it down the chain it came from.

how about standing up for the debts you have and being more careful with your personal drain on our commercial systems and government.?

just a thought.

[Casual Observer]

But could you pay back your Student Loans with your credit card... and then go bankrupt?

There must be better ways to stimulate enterprise than making bankruptcy easier - lowering business tax, for example...

<{POST_SNAPBACK}>

No, because if you're still employed it will revert back to collection via PAYE. And if you're not employed you don't have to pay it anyway.

[Saving For a Space Ship]

I give up cas. Just watch the headlines in the comming years and u will then see just how many students make use of the new lite touch bankcruptcy rules.

The new Bankcruptcy rules will lessen the prospect of a crash, as its a really easy way out of crippleing debt. In the past bankcruptcy was much harder and more stigma attached. The only loosers are the unsecured lenders.

<{POST_SNAPBACK}>

Dogbox, , you are mistaken if you think bankruptcy is an easy 'start again' activity. As has been discussed many times on this board,lenders ask 'if you have EVER been bankrupt & very few will lend money, those that do will charge enormous interest premiums for higher risks.

It has been likened to trying to get insurance after having a drink driving ban lifted.

in addition to unsecured lenders, The other loser is a bankrupts credit rating which becomes terminally ill.

[RichM]

CSA payments are separate to PAYE, as far I was ware. That is why it doesn't work; it should be handed over to the Inland Revenue, but even then it's difficult to work out who is owed what...

[Guest Charlie The Tramp]

Under the new bankruptcy laws if the Judge finds you have been irresponsible in your financial matters as many are, the term can be extended to 15 years,

[Libertine]

What rule book did u read that in sfbs?

Some students have already gone bankcrupt you muppet.

<{POST_SNAPBACK}>

According to the Insolvency Service, since 1/9/2004, outstanding student loans cannot be claimed in bankruptcy. They remain the responsibility of the (former) student to repay within the terms of the loan arrangement.

Ursa Minor

<{POST_SNAPBACK}>

Nice one, Ursa. Saved me having to speak directly to Fvckwit of the Year 2005 !!

Would you like cream with your humble pie, dogbiscuits ?!?

[RichM]

Mor bankrupts = banks less willing to lend money = one pricked bubble

[Bluelady]

CSA payments are separate to PAYE, as far I was ware. That is why it doesn't work; it should be handed over to the Inland Revenue, but even then it's difficult to work out who is owed what...

<{POST_SNAPBACK}>

CSA payments from persistent non-payers are taken through an attachment of earnings, ie deducted at source by the employer in exactly the same way as PAYE.

[dogbox]

Dogbox, , you are mistaken if you think bankruptcy is an easy 'start again' activity. As has been discussed many times on this board,lenders ask 'if you have EVER been bankrupt & very few will lend money, those that do will charge enormous interest premiums for higher risks.

It has been likened to trying to get insurance after having a drink driving ban lifted.

in addition to unsecured lenders, The other loser is a bankrupts credit rating which becomes terminally ill.

OK I know Im gonna get slated, but here's a real world example;

Girl I know, aged 24 owes £30000 accross lots of cards and loans.

Her husband earns £27000 and is not party to any of her debts.

She cant cope with the debt now thier first baby is on the way and she isnt working.

Shes declared herself Bankcrupt by pretending her husband has left and so she has no income.

This means a £750 per month wieght is removed at a stroke.

Ok she cant get a mortgage for 1 year but so what. Her hubby will get one in his name only.

Even if she did want a mortgage she will pay 3.5% over the top, which in her case equates to about £250 per month more for 2 years. After this she will get a much better rate as is common practice.

As for credit rating being terminally ill, this is not the case. If u move a few times u can loose your past quite easily. What do u think happened to all those repossesed home owners from last crash.

See u can always bend Governemtn rules to suit. No doubt thousands of others are doing just that.

[Saving For a Space Ship]

OK I know Im gonna get slated, but here's a real world example;

Girl I know, aged 24 owes £30000 accross lots of cards and loans.

Her husband earns £27000 and is not party to any of her debts.

She cant cope with the debt now thier first baby is on the way and she isnt working.

Shes declared herself Bankcrupt by pretending her husband has left and so she has no income.

This means a £750 per month wieght is removed at a stroke.

Ok she cant get a mortgage for 1 year but so what. Her hubby will get one in his name only.

Even if she did want a mortgage she will pay 3.5% over the top, which in her case equates to about £250 per month more for 2 years. After this she will get a much better rate as is common practice.

As for credit rating being terminally ill, this is not the case. If u move a few times u can loose your past quite easily. What do u think happened to all those repossesed home owners from last crash.

See u can always bend Governemtn rules to suit. No doubt thousands of others are doing just that.

<{POST_SNAPBACK}>

In the case you quote bankruptcy looks attractive. If the sheer amount of repayments or stress of debt is intolerable it makes sense to declare bankruptcy.

But many debtors do not realise, that If folks are not earning, they can get interest frozen and after being on a low/no income for a few years can settle with creditors for 20-40% of the loan in a full & final settlement in most cases, (obviously providing they have or can borrow the money) this may be better than having a black mark of bankruptcy.

Re: terminally ill credit rating , lenders check previous addresses for 3 to 5 years, certainly you can move house, but you will only repair it a bit after 3 to 5 years of it being terminally ill. My main point is that for most lenders who ask if you have 'EVER' been bankrupt, will judge you accordingly, & unless you are good as gold, credit wise in future, you will probably never escape the effect of it fully, not declaring it is quite serious fraud.

Also, is not 40% + on your loan interest a massive price to pay ?

[Casual Observer]

OK I know Im gonna get slated, but here's a real world example;

Girl I know, aged 24 owes £30000 accross lots of cards and loans.

Her husband earns £27000 and is not party to any of her debts.

She cant cope with the debt now thier first baby is on the way and she isnt working.

Shes declared herself Bankcrupt by pretending her husband has left and so she has no income.

This means a £750 per month wieght is removed at a stroke.

Ok she cant get a mortgage for 1 year but so what. Her hubby will get one in his name only.

Even if she did want a mortgage she will pay 3.5% over the top, which in her case equates to about £250 per month more for 2 years. After this she will get a much better rate as is common practice.

As for credit rating being terminally ill, this is not the case. If u move a few times u can loose your past quite easily. What do u think happened to all those repossesed home owners from last crash.

See u can always bend Governemtn rules to suit. No doubt thousands of others are doing just that.

<{POST_SNAPBACK}>

Dogbox - In your example the 24 year old wouldn't have to repay her student loan while she's not working. I'll say it one more time - it's only repayable via PAYE if you earn above the threshold, which I think is £10,000 pa. Thus you can't get out of it whilst your employed via the PAYE system, as most graduates would be. Declaring yourself bankrupt can't make the loan debt go away.

[Helen]

Dogbox - In your example the 24 year old wouldn't have to repay her student loan while she's not working. I'll say it one more time - it's only repayable via PAYE if you earn above the threshold, which I think is £10,000 pa. Thus you can't get out of it whilst your employed via the PAYE system, as most graduates would be. Declaring yourself bankrupt can't make the loan debt go away.

<{POST_SNAPBACK}>

I agree re PAYE, but I graduated in 1999 and didn't have to start repaying my student loan till I was earning over £18K.

Regarding being declared bancrupt - i've seen various friends take that option, and whilst I do agree that it appears to lift massive weights from people's shoulders, and some banks will grant basic bank accounts almost immediately, it does prevent people doing things e.g. my ex-husband who declared himself bancrupt a couple of years ago, couldnt even get a mobile phone contract!

I dont know what sort of people you know Dogbox, but in rural East Anglia it is still as much of a social stigma as ever - it's most definitely seen as a very last resort of the desperate.

[Casual Observer]

I agree re PAYE, but I graduated in 1999 and didn't have to start repaying my student loan till I was earning over £18K.

Regarding being declared bancrupt - i've seen various friends take that option, and whilst I do agree that it appears to lift massive weights from people's shoulders, and some banks will grant basic bank accounts almost immediately, it does prevent people doing things e.g. my ex-husband who declared himself bancrupt a couple of years ago, couldnt even get a mobile phone contract!

I dont know what sort of people you know Dogbox, but in rural East Anglia it is still as much of a social stigma as ever - it's most definitely seen as a very last resort of the desperate.

<{POST_SNAPBACK}>

Extract from Student loan company:

Under the new Student Support scheme, you are liable to start repaying your loan from the April after you graduate or otherwise leave your course, and when your gross income exceeds £833.33 per month (£192.99 per week or £10,000 per annum). From April 2005 this threshold will increase to £1,250 per month (£288 per week or £15,000 per year). The majority of borrowers will have repayments collected by the Inland Revenue via the employer. So, repayments will be taken directly from your salary through the Pay As You Earn (PAYE) system. Alternatively, if you are subject to Self Assessment you will repay to the Inland Revenue via that method, or if you are outside the UK tax system you will repay directly to SLC.

You can pay off your loan more quickly by making extra repayments, even if you do not earn £833.33 per month (£10,000 per annum) (From April 2005 £1,250 per month (£15,000 per annum) or before your start date for repayment.

With the PAYE system, if your income falls below £833.33 in any month (£192.00 per week or £10,000 per annum), from April 2005 £1,250 per month (£288 per week or £15,000 per annum). no repayments will be collected that month.

Repayment will not be over a fixed period. Repayment details differ in that repayments will be calculated as a percentage of income above the £833.33 per month (£10,000 per month annum) threshold. (From April 2005 £1,250 per month (£15,000 per annum). This marginal income percentage is set at 9%. So, the level of repayments will rise or fall directly in line with your income. This means that the length of time over which you will repay your loan will depend on your income after graduation and on the total amount you have borrowed. See repayment examples.

If you are self employed then you will have to complete a self-assessment tax return, which will include a mechanism for calculating student loan repayments.

SLC will make alternative arrangements to collect repayments directly from you if you are outside the UK tax system.

If you would like to estimate when you will finish repaying your student loans, particularly when your annual statement indicates that you are likely to finish repaying in the current financial year, the Student Loans Company can assist you with this calculation. ICR Predictor. If your final repayment is expected within the following 52 weeks we will advise the Inland Revenue when PAYE deductions should cease. You will then be sent a letter confirming that the Inland Revenue has been advised to stop deductions. If it is more than 52 weeks we will still give you the information, but as your circumstances are almost certain to change, you will be advised to contact us again closer to the predicted stop date. You must always inform us immediately if your financial circumstances change for any reason to enable us to recalculate your stop date and avoid under or over repayment.

The interest rate is always based on inflation (Retail Prices Index). Prior to entering repayment interest is calculated daily at the appropriate rate from the day your loan is paid. The interest is added to your account every month. Once you enter repayment, and if you are either repaying through the PAYE system or Self Assessment, interest stops being applied until details are received from Inland Revenue. Interest will be applied retrospectively, dependent on your repayment method.

If you have taken more than one course of higher education and borrowed under the previous mortgage-style scheme and the new student support scheme you will be expected to repay both types of loan simultaneously (unless you are a PGCE borrower - please see repay both types of loan).

Repayments on any loan that are not yet due will be cancelled if you die. If you have kept up your repayments, any loan you still owe will be cancelled when you reach 65 or if you become permanently disabled.

If you plan to leave the UK after you graduate or stop attending your course you will need to let us know in sufficient time so that we can make arrangements for you to deal direct with SLC. Please note that we will only take instructions from someone else if they have been granted Power of Attorney, that is, if they have the legal right to act on your behalf.

[Cityfool]

OK I know Im gonna get slated, but here's a real world example;

Girl I know, aged 24 owes £30000 accross lots of cards and loans.

Her husband earns £27000 and is not party to any of her debts.

She cant cope with the debt now thier first baby is on the way and she isnt working.

Shes declared herself Bankcrupt by pretending her husband has left and so she has no income.

This means a £750 per month wieght is removed at a stroke.

Ok she cant get a mortgage for 1 year but so what. Her hubby will get one in his name only.

Even if she did want a mortgage she will pay 3.5% over the top, which in her case equates to about £250 per month more for 2 years. After this she will get a much better rate as is common practice.

As for credit rating being terminally ill, this is not the case. If u move a few times u can loose your past quite easily. What do u think happened to all those repossesed home owners from last crash.

See u can always bend Governemtn rules to suit. No doubt thousands of others are doing just that.

<{POST_SNAPBACK}>

People are missing the point about the 1 year rule. While you will be discharged in one year the way credit scoring works means in practice it will be at least 6 years before a main stream lender will go near her and moving house will only make it worse (unless she is fraudulent on the application and that is increasingly difficult).

CF

[Casual Observer]

People are missing the point about the 1 year rule.  While you will be discharged in one year the way credit scoring works means in practice it will be at least 6 years before a main stream lender will go near her and moving house will only make it worse (unless she is fraudulent on the application and that is increasingly difficult).

CF

<{POST_SNAPBACK}>

Spot on Cityfool. The more personal bankruptcies there are, the more this will drag the housing market down. Anyone putting bankruptcies or other types of financial failure forward as a reason for further HPI has become seriously bankrupt in ideas!

[Guest Charlie The Tramp]

People are missing the point about the 1 year rule. While you will be discharged in one year the way credit scoring works means in practice it will be at least 6 years before a main stream lender will go near her

Visited my accountant this morning who is also a registered insolvency practitioner.

Asked him about the new law and forgiveness from the Lenders.

He gave a wry smile and said 100k no problem, 10k, 20k, or 30k no chance.

I got his drift.

[Adam Bear]

If you are bankrupt don't they cease your assets (e.g. your house) and sell it in order to pay off your debt?

So for homeowners/BTL, bankruptcy would have to be a last resort? The receivers will sell the house for whatever they can get for it, not hold out for a market rate.

So, bankruptcy = House Price Crash

[Ursa Minor]

If you are bankrupt don't they cease your assets (e.g. your house) and sell it in order to pay off your debt?

So for homeowners/BTL, bankruptcy would have to be a last resort?  The receivers will sell the house for whatever they can get for it, not hold out for a market rate.

<{POST_SNAPBACK}>

As far as I understand it, the mortgage company retains first dibs on your property. The receiver can only get their hands on the "beneficial interest" in the property, which is what you would receive from the sale of the house after paying off the mortgage and other loans secured upon it. If the property is jointly owned it gets more complicated and other beneficial interests can temporarily prevent the sale of the house (but not indefinitely)

So, bankruptcy = House Price Crash

<{POST_SNAPBACK}>

It's just not going to happen in big enough numbers would be my guess. Bankruptcy is not easy or quick.

The Insolvency Service have a whole booklet on what happens to your home if you declare bankruptcy.

http://www.insolvency.gov.uk/pdfs/happhomeweb.pdf

Cheers,

Ursa Minor

[Bankrupt Idiot]

As far as I understand it, the mortgage company retains first dibs on your property. The receiver can only get their hands on the "beneficial interest" in the property, which is what you would receive from the sale of the house after paying off the mortgage and other loans secured upon it. If the property is jointly owned it gets more complicated and other beneficial interests can temporarily prevent the sale of the house (but not indefinitely)

It's just not going to happen in big enough numbers would be my guess. Bankruptcy is not easy or quick.

The Insolvency Service have a whole booklet on what happens to your home if you declare bankruptcy.

http://www.insolvency.gov.uk/pdfs/happhomeweb.pdf

Cheers,

Ursa Minor

<{POST_SNAPBACK}>

Has anyone who has posted on this thread ever been bankrupt? Most of you have no idea!

[zzg113]

Has anyone who has posted on this thread ever been bankrupt? Most of you have no idea!

Could you be more specific BI? Are you saying that bankruptcy is a much harsher process than most posters on this thread seem to think, or much more lenient?

[dogbox]

People are missing the point about the 1 year rule.  While you will be discharged in one year the way credit scoring works means in practice it will be at least 6 years before a main stream lender will go near her

More 'rule book' mentality.

Pilot I know was discharged 2 years ago and got a main stream deal from Bristol & West as they took a view he was a changed man.

Even if a bankcrupt is caught by higher rates, they are still likely to be far better off than would have been the case had they not chosen bankcruptcy.

Folk often use a sub - prime lender for 2 years and then remo back to a prime or near prime rate so bankcruptcy is no big deal anymore. Watch the figs next year - they will be at least double - and I know.

[schadenfreude]

More 'rule book' mentality.

Pilot I know was discharged 2 years ago and got a main stream deal from Bristol & West as they took a view he was a changed man.

Even if a bankcrupt is caught by higher rates, they are still likely to be far better off than would have been the case had they not chosen bankcruptcy.

Folk often use a sub - prime lender for 2 years and then remo back to a prime or near prime rate so bankcruptcy is no big deal anymore. Watch the figs next year - they will be at least double - and I know.

<{POST_SNAPBACK}>

And of course lenders will happily go on lending when they find that most borrowers have a bankruptcy 'get out of jail free card'. Pull the other one.