On Benefits, Has Loans, In Debt = Bankruptcy
By gemini_rose
@gemini_rose (16264)
July 25, 2008 2:57pm CST
I have a friend, she used to be a best friend but since her move two years ago I very rarely see her. She came down a couple of weeks ago and I was shocked to hear that she is due to go bankrupt, when I asked her how come this was she told me that she is in debt to the tune of £10,000.00 to the bank and she cannot make the repayments and they are threatening legal action.
This is not unusual, most of us have loans or mortgages or credit cards, but what is unusual is that she lives totally on benefits. She is a mum of five, single parent (sort of, but very LONG story) and does not work, and the bank has given her loan after loan after loan in the past two years. This is because they were classing benefits as income, and so they were lending her money to fit in with the amount of benefits she was getting, well because her eldest daughter quit school, had a baby and left home she has now lost a percentage of her benefits, plus the interest rates have gone up and she cannot make the payments.
No one can believe that she has actually survived for so long as she has because she is just not receiving enough money. So now she has to declare bankruptcy which gets her out of the mess sure but means she cannot have bank accounts or anything for a few years and so it is all a bit of a mess for her. The only good thing is that she cannot loose the roof over her head as she is in council property and because she is going bankrupt she will at least have a bit more money to take care of her five children. It is really sad.
I think it is wrong that the bank did this, I think it is poor responsibility on their behalf, they should have lent her so much and then no more until she paid it back.
What are your thoughts about this? Is anyone else in real financial trouble because of this sort of situation?
8 people like this
6 responses
@Monkeyrose (2840)
• Canada
26 Jul 08
I have a lot of debt right now too. I'm trying to pay it off.. but its going to take me 2 or 3 years. I'd like to go back to school and travel... but I can't do any of that until my debt is paid.
Benefits aren't income... thats completely silly.. I don't think they can do that in Canada.
People need to learn better finiancial planning skills though and how to save. Sometimes we have to make due without things. I'm going to have to uninsure my car after my mom borrows it in august.. I can't affort the car payment and the insurancee payment.
@Monkeyrose (2840)
• Canada
26 Jul 08
Thats awesome! Everyone's living on credit these days.. including myself. Thats great that you have no debt! It also must be such a relief.
I think they should teach finincial planning or budgeting in school. When I went to school I didn't really learn anything that prepared me for real life.
@Monkeyrose (2840)
• Canada
3 Aug 08
Thank you very much for the best response! This was a very good topic and discussion.
@gemini_rose (16264)
•
26 Jul 08
You are right people do need to learn better financial skills, I have started teaching mine the skills I have learnt. I have only realised my mistakes in the last 2 years and pulled my families act together, it has taken time but now we spend within our means, no loans, no credit cards, or nothing and I tell you I can see the difference.
2 people like this
@cinderella2007 (2662)
•
26 Jul 08
Sorry but if you can t pay off the first loan then they shouldnt issue another loan. I think the bank has part of the blame to this, but also your friend should be aware of the credit crunch and that prices are going up and that she should only spend what she needs regardless of what the children ask for!!
Im glad that she hasnt got to loose her home but if I was you I would be there for her despite the distance. Ring her occansionally and tell her you are there for her if she needs someone to listen and share her problems.
Sorry to hear that your friend is in trouble and hopefully she will overcome this!!!
1 person likes this
@gemini_rose (16264)
•
26 Jul 08
No, you are right they should not, and this is a well known bank too. I guess greed comes first. She has always been very good with money, indeed to say she is on benefits she has always had more money than my hubby and I ever did, I used to laugh at her and tell her she should be an accountant because she really has a head for figures.
As for being there for her, she knows I am but she also knows I know why she is in this mess and she thinks that I will judge her even though she knows deep down I would not. Unfortunately that is a long story, but she will come through and she knows where I am if she really needs me.
1 person likes this
@KrauseHome (36447)
• United States
26 Jul 08
Well, that is part of the problem indeed here in the USA as well, and has actually increased the amount of people with BAD Credit, and having problems making ends meet is these type of places continuing to give everyone Credit and never taking time to check out their amount of Income vs Debt as well. Why they do not care and end up hurting so many people is beyond me as well. Especially when it is a Bank.
Here in the USA they had major problems with home Loans, etc. that have turned into Foreclosures, and it is all because everyone offered to people more than they could really afford as well. So it is an issue that these places need to really consider more instead of continuing to give out not caring about who they continue to hurt in the process.
1 person likes this
@gemini_rose (16264)
•
26 Jul 08
The banks do offer to lend vast amounts, we are always being offered loans for way more than we would ever afford to be able to pay back. I always turn them down.
1 person likes this
@checapricorn (16061)
• United States
27 Jul 08
Hi gemini,
Too sad for you friend..I admire though his toughness with those situations..I know how it gave her headache yet she survived!
I also believed that one needs to have self-discipline in borrowing money..If she just maybe look for another alternative instead of running to the bank and put her into this situation!
On the other hand, I also do not like the policy of the bank..Wish even a little percent they will sympathize their clients that not inviting them to loan and drag them into this horrible situation!
@gemini_rose (16264)
•
27 Jul 08
She will survive, and hopefully she will go back to her careful ways now.
@sunkissed (4330)
• United States
25 Jul 08
gemini,I can understand why your friend would have to file bankrupsy.If she lives only on benifits, why did they keep giving her these loans?This is how credit card companys do also, that is why so many people get in debt today. With the economy the way it is I think that there will be a lot more people having to file for bankrupsy in the future.At least your friend will still have a roof over her head, that is one good thing, and a bit more money to work with.I too am on social security disability and I am having a hard time making ends meet. I have so many doctor bills and my medication is pretty expensive too, it is really a matter of time till I myself may have to file bankrupsy myself.
1 person likes this
@gemini_rose (16264)
•
27 Jul 08
In our country the doctors do not have to be paid for by us, we have the NHS and also if a person is on any kind of benefits then the majority of them do not have to pay for their medications either.
@kenzie45230 (3560)
• United States
26 Jul 08
What a shame. Here in the US, the loan companies talked people into buying homes they had no business buying. They were too expensive. Then the interest rates went up and suddenly these folks were paying 50% or more of their income just for housing.
