Not so sure... Northern Rock..

[Skippy]

I cannot see any logic in NR turning down an IVA (when they will get a return of some sort) and someone into BR where they will get nothing.

Yes, some people do borrow money knowing they cannot repay it but the majority of people borrow to consolidate to get themselves out of a huge hole and then find they cannot meet their commitments. Surely there should be tighter regulations in place to prevent people from borrowing more than they can afford - it shouldn't be that difficult to put that in place.

And before anyone jumps on me and says that no-one forces anyone to borrow money I totally agree. I just think it should be harder to borrow.

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[OPTIMIST12]

Well said Skippy. I am sure with the way things are going there WILL be a big reduction in the way that easy credit is thrown around. And about time too!!!!

[Skippy]

I was honest about what I already owed on all of my application forms and they still gave me credit! I know I shouldn't have applied for it, but up until last July I was just about keeping my head above water. Once MBNA put my interest rate up from 0% to 27.9% I knew I couldn't manage any more.

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[Adam Davies]

Hi
Do you think NR reject most IVAs because once accepted the whole loan is written off,as in bankruptcy, and thus hurts the bottom line.Most people will actually plod on with a neverending DMP and this is what NR hope for when they reject,it also gives them the option to secure the debt.
Whatever way I look at it I can,t agree with NR stance on IVAs,and I am unbiased.
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[Skippy]

Same here Andy - they weren't one of my creditors, I just don't understand their logic!

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[OPTIMIST12]

I am sure I read or heard somewhere that banks / companies are allowed to make provision for bad debts in their tax returns and that at least some of the money that they have to "write off" in cases of - for example - IVAs and BR - can be set against their tax bill (thereby reducing the amount of tax they have to pay).

Are there any tax experts out there who know if this is actually correct?

Given that all the UKs banks and other lenders are in basically the same business it is certainly a mystery that their attitude to IVAs seems to vary so widely.

[Dominic]

i find it impossible to feel sympathy for s profi making organization, thier employees jobs and their saves are another matter i will feel sympathy for them, but the management that operated in the wya they have do not deserve any, they might well have jeapordised the savers money and their employees careers. They should have never demutalised, building socieities were something to be proud of once.

[mikebdomain]

Domonic - I do not believe Northern Rock were ever a building society.

They started off by buying bad debt, their movement into the mortgage market was after years of experience of dealing with adverse credit lending.

When they first entered the sub prime market, they were seen by all (in and outside the business) as a fresh hope for many people, whom otherwise could not raise the money to buy a property.

For every customer of theirs who failed with their finances 80 or so didn’t and are still enjoying the benefits of Northern Rocks products…

As for their business model – well, hindsight is a wonderful thing.


FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf

[MelanieGiles]

Mike

Northern Rock were a building society until they incorporated in 1997.

And to the earlier poster, all banks have the ability to provide for bad debts within their business profits and balance sheets It has become increasingly common for them to want to limit these provisions, and this can be done in a variety of ways - all fairly legal and in accordance with tax law. Of course, when a customer enters bankruptcy proceedings, they are then pretty much obliged to write the debts off.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[mikebdomain]

well, you learn something new everyday - thanks Melenie

FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf

[OPTIMIST12]

Mike -

I was interested to read the figures you quote in your earlier post regarding the approximate number of customers who hit problems compared to those who do not.

Do you know if that figure is roughly illustrative of the whole banking / financial sector - or does it vary greatly from company to company?

[mikebdomain]

OPTIMIST12

From experience it varies - As a responsible broker, we request feedback every 12 months from our lenders about our customers payment profiles. Basically, this is to find out how they (our customers) have managed over the last twelve months making payments against the mortgage products we have recommended. We use this and combine it with other information to help us improve future recommendations.

We use a carefully considered lender panel that is obviously designed specifically to cater for our specialist target market (adverse credit lending), although we can and do provide ‘clean’ mortgage products to applicants that meet ‘clean’ criteria.

To be honest, I find the results we get, sometimes, very surprising… We get more ‘clean’ clients that default on ‘clean’ (high street products) than we do our adverse clients who have been advised on adverse products.

We now, as a company do not provide 98% + mortgages, ever, as our data results show that people who borrow over and above 98% seem to indicate they have more chance of defaulting. We mainly advise these customers that we feel it is ‘not in their best interest’ (only to find another broker will offer them the same product we have advised against…. That’s the data that I would like feedback on)

Based on our research, and data results, I would suggest that those companies that provide lending of more 100% and lend based on criteria where they consider over 3.5x income to be ok, are more likely to have applicants default.

So your NRs with 125%+ products are going to have more applicants with more problems.

Most lenders change their products periodically, this includes the product criteria, including income multiples and maximum loan to values – so it is difficult to work out, when, what lenders are offering products that default more often than others

Mind you might be a worthwhile data request project from all the main lenders…

FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf