A Conversation for Credit
When you can't repy....
roll koel Started conversation Jan 26, 2000
The concept of credit is based on the idea of being able to instantly obtain a service, product or goods; rather than waiting until you can actually "afford" it outright. Before credit was offered to the masses people had to scrimp and save, which could take months or even years to build up enough savings to purchase what they desired.
But people rarely got into the kind of problems commonly seen in today's society. Turn on the television and you'll see chatshows featuring women who spent £12,000 on clothes shopping only to default the repayments on their five credit cards. Or men who bought a flash car and after three repayments were made redundant.
Different countries have different attitudes to credit. France has laws regarding debt, for example in France it is illegal to operate an overdrawn bank account so these kind of problems rarely arise.
In Australia most people "live" on credit, with massive mortages on their homes, cars and boats. The UK is moving towards this lifestyle, or living in the here and now and worrying about the repayments later.
So what happens when you can't repay?
The first step in the UK is the warning letter. Credit card companies operate a tally of missed repayments and after six misses legal action is taken, depending on the outstanding amount. CCJ (county court judgements) are then made if a satisfactory repayment plan cannot be worked out/ or if the repayee is unwilling to communicate with the lender. The UK has two credit control agencies, Experian and Equifax, who hold information cross-linked to National Insurance numbers, last known address and known name. Organisations like banks and credit card companies have access to this information through computer operated credit systems that "rate" an individual's credit worthiness after checking several criteria.
The bottom line is that if you miss your repayments and end up with a CCJ you will be "blacklisted" by Experian and Equifax. When the mobile phone/mortage/credit card company checks your new application you will be refused and you will not able to get credit for up to four years of the CCJ being served. After this time the CCJ becomes void; but this can be shortened by full repayment of the debt at which point the lender contacts Experian/Equifax and strikes off the CCJ.
The most important thing to do to prevent it going this far is to stay in contact with the lender. If you lose your job or fall ill and can't work then tell them. Most companies are pretty reasonable if you are honest with them and would rather recieve £20 per month for ten years than write off your debt or push it to CCJ status (which costs them extra time and money).
Credit or Debit?
Flyboy Posted Jan 26, 2000
Not to accuse anyone, but the original article is carefully worded and rings of propoganda. Here in the US it isn't run quite that nice. If you get in debt they give you MORE credit so you can get deeper in debt. The worse your credit rating the more they can charge you in interest and fees. If you hit your credit limit they charge you a fee, then raise the limit. And instead of waiting for you to pay back what you owe, they nickel and dime you to death with fees. When they think they have you tapped out the come and repossess everything.
Some consumers have been able to file bankruptcy to get out from under the thumb of credit card companies, but the companies have been trying to pass legislation that would keep debtors from ever filing bankruptcy to get out of credit card debt. In effect debtors would be indentured servants to the companies. As it is now bankruptcy hurts a person hard enough. It makes it difficult to get credit without lots of fees, makes it harder to get a job, and attaches a bad stigma to every business dealing that person has.
And the credit card companies keep pushing the consumers harder. They have massive drives on college campuses to get college students to sign up for credit. Most students don't have much of an idea how credit cards work and find the instant cashless purchase handy. When they graduate they often have racked up huge debts.
The best way to keep people out of credit trouble is to educate them. The down side is credit card companies are now flooding consumers with 'information' on how to manage credit cards, often encouraging them to use credit cards more.
There are many good consumers out there who use credit cards responsibly, but if you make purchases with your card and pay it off each month before any interest accrues they will either start charging a monthly fee or dump you.
As a final note I have no personal gripes with the credit card industry. I have never had a credit card, but that is due to both the cost of using one and the recent increase in security problems with credit card numbers. I will admit they provide a handy service, but I wonder at what cost to our society.
Credit or Debit?
Jazz Posted Jan 26, 2000
I have a number of credit cards which I find most useful but I make a point of paying off the outstanding amount every month so that I never have to pay interest. Using cards this way you have credit for a little over a month without any cost to yourself other than a small annual fee. Not very long before I was born, if you got into debt you were sent to jail - or if you were lucky you went to Australia|
Credit or Debit?
Voltaire's Frog Posted May 22, 2000
We are the credit generation and I find it very very scary.
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