Confucius

Seeing as things are progressing here and elsewhere in the world with banks having their feet up in the air and acting like vases; what would happen to people who financed their car loans, or got credit cards or personal loans or home loans when the bank they got the financing from collapses??? Are they still liable or the loans get wiped off/written off???

still.unsure

not sure about personal debts, but with places like Lehmans Bros, those owing money to it when it when bust, bascally said to the administrators, "come and get it".

so i would imagine with personal finances, the debt would be pursued as an 'asset' to the now-bankrupt-company for the administrator to find. they'd probably put the debt out for sale to recovery companies and have them chase you for it. i would imagine the interesting part is whether or not the debt companies would see interest on the loan or just the outstanding balance at the time the company went bust?

Confucius

So it can still be a grey area scenario...I hate grey areas...

lionheart

But I hear that there are some reasonably inexpensive on-line Nigerian loan providers available. Certainly no grey areas there.

Confucius

That's a black, I mean, African-American area...

The Dean

If the firm announces that they have written off all debts (i.e. they don't expect to get anything back from their borrowers), they must be stupid - nobody announces that, for prercisely the reasons you mentioned.

Eva

As a very general rule (& UK slant).....Debts due to Company in receivership/administration assigned to Creditors in order of ranking.
Again, very generally, Debts/Loans don't die with you, a claim can be made on your Estate.
hth

Confucius

Let's say, for argument sake, Citi goes under, bankrupt, and i have a Plutonium Credit Card from them, does the money that I owe them get written off and I don't owe them anything????

Confucius

Then why am I paying Insurance on Cards, and loans of any type???

The Dean

In case they don't go bust??

Confucius

I'm guessing it's the word "they" you wanted in bold???

Eva

You fell for the Sales Pitch.???


Actually, isn't that for critical illness and say if your card gets stolen and bumped and you are remiss to report?
Dunno Musicman, read the smallprint I guess.

Confucius

No, I fell for you...Smartass...

Really, I'm under the impression that they get you to pay an insurance (Credit Shield, or something) when you get the monthly statement on the card, I always thought its to pay off the debt in case the cardholder emigrates to the other planet...
And also, as for car or personal loans, IIRC, they also let you pay in advance an insurance premium in advance all in one go...
Please some banker, or an Indie, correct me if I'm wrong...

still.unsure

as nice as that would be, my understanding is that no, the debt doesn't disappear when the bank stops trading. instead, your 'debt' (i.e. USD$10k) becomes and 'asset' to the administrators of the receivership. the administrators, being responsible for repaying any of citi's creditors, would pursue you for the USD$10k (or as much of it as possible) so that they could use it to repay the creditors to citi. what i understand happens in reality is that your debt to citi is then sold to specific debt collectors (who pay maybe $0.70 in the $1 for it, allowing the administrators to get some money for it now) and then the debt collectors come after you for it.

so, to cut through all that, no, don't go nuts on your citibank card, someone will eventually come asking for you to repay it (it may just not be citibank...)

Eva

Yes there is a kinda 'guarantor' arangement too.Please I am only speaking generally here.
I don't use personal credit cards,so I can't say definitively.