Recession drags rising number of Albertans into financial ruin

[OMG!WTF!]

Originally Posted by Kavvy

You post like the lenders should have a guaranteed investment when they lend. Am I reading this right?

Kind of. That's the guarantee part of personal guarantee. What I'm really talking about though amounts to legalized fraud. For example, you pay rent in advance...on the first of the month. Then you live there for the month. When you don't pay rent and continue living in a place, you're committing fraud. You know you can't pay. So leave. No harm done. But by the time you legally have to leave you've cost someone who is totally innocent several thousand dollars which they will never get back. Personally I always got credit reports from tenants and that helps a lot. But every single person in foreclosure now had good credit at one point. While life happens and people should never be punished for losing a job or falling on hard times, it should be there responsibility to act accordingly, not willfully damage other people's well being.

And I suspect you're thinking reward is commensurate risk and there are no guarantees. That's not really true when you can not account for willful harm.

[puckedoff]

Why anyone would have emergency funds in cash (wasting away, not earning interest) when there is a Money Mart on every corner for when times are tough is beyond me.

[Cowboy89]

Originally Posted by puckedoff

Why anyone would have emergency funds in cash (wasting away, not earning interest) when there is a Money Mart on every corner for when times are tough is beyond me.

Not anymore. The NDP's rules just came into effect and it will lead to a bunch of payday loan businesses to close up shop.

[Locke]

Originally Posted by Peanut

Supporting your kids for the early years of their lives teaches them that someone will support them for life. No thanks!! My kids have to scavenge the alleys for their food.

AH! The Freegan lifestyle!

[GGG]

Originally Posted by OMG!WTF!

I actually wish there were stronger repercussions for debtors. I think it would give you much more to teach your kids than how many beans makes five. It always strikes me as strange and annoying that if you reach into someone's pocket and steal 5k you go to jail. But if you miss a couple months of rent you might get a judgment against you which you can promptly ignore. I'm not sure why but when I rented my first place it never occurred to me that paying rent was optional. When I got older and became a landlord it utterly shocked me when a tenant missed a rent payment. As a lender I'm even more shocked when someone misses a loan payment. And we don't care. Our society couldn't care less about debts or what in reality amounts to theft. It's a civil matter. So it makes perfect sense that the average person knows nothing about money. Why bother?

I agree on rent.

But most debt default is the fault of bad lending decisions. Think about how easy it is to get a loan for anything, credit cards, washing machine, furniture, hot tubs, etc. These loans are made on having x amount default. And Visa makes interest money up until the point of default.

I think the current debt model relies on people making bad choices so we shouldn't heavily penalize them for doing what the system has designed for them to do. So in general the creditor shouldn't be lending out money to people who have a high likelihood of defaulting. Instead we have creditors pursuing high risk people to get them hooked taking as much out of them until they default.

Just look at the pay day loan industry

[Locke]

Originally Posted by Cowboy89

Not anymore. The NDP's rules just came into effect and it will lead to a bunch of payday loan businesses to close up shop.

News to me, what rules are those?

[Cowboy89]

Originally Posted by Locke

News to me, what rules are those?

http://edmonton.ctvnews.ca/ndp-annou...erta-1.3011874

The rules make perfect sense from a legislative perspective, except in true NDP fashion they basically just think they can force a smaller margin on businesses and expect them to continue to provide the same breadth and depth of services.

[MrMastodonFarm]

Originally Posted by Locke

News to me, what rules are those?

http://calgary.ctvnews.ca/alberta-mo...oans-1.3011749

Acting on a pledge to end loan services that keep many Albertans in a vicious cycle of debt, the NDP government has announced it has lowered the interest rate on payday loans and ended hidden fees and charges.
On August 1, the Alberta government lowered the rate from $23 per $100 borrowed down to $15 per $100 borrowed, making it the lowest borrowing rate in the country.
As a result of the new legislation, payday lenders will also not be able to charge any fees to cash loan cheques, solicit by e-mail or phone or offer another loan when one is still outstanding.

[OMG!WTF!]

Originally Posted by Locke

News to me, what rules are those?

Bill 15. It determines the amount payday loan businesses can charge for a loan. $15 per $100 instead of the industry average of around $22. As well no fees can be charged. So that's a wrap on that industry. Some local credit unions have agreed to supply "cash crunch" loans for about 12% but they are no where near what payday loans were.

[CliffFletcher]

Originally Posted by OMG!WTF!

Bill 15. It determines the amount payday loan businesses can charge for a loan. $15 per $100 instead of the industry average of around $22. As well no fees can be charged. So that's a wrap on that industry. Some local credit unions have agreed to supply "cash crunch" loans for about 12% but they are no where near what payday loans were.

Good.

[llwhiteoutll]

Originally Posted by GGG

I agree on rent.

But most debt default is the fault of bad lending decisions. Think about how easy it is to get a loan for anything, credit cards, washing machine, furniture, hot tubs, etc. These loans are made on having x amount default. And Visa makes interest money up until the point of default.

I think the current debt model relies on people making bad choices so we shouldn't heavily penalize them for doing what the system has designed for them to do. So in general the creditor shouldn't be lending out money to people who have a high likelihood of defaulting. Instead we have creditors pursuing high risk people to get them hooked taking as much out of them until they default.

Just look at the pay day loan industry

The system does not make people make poor decisions. The only person at fault in the situation of a loan that will eventually be defaulted on is the person seeking it. If they used a bit of critical thinking, they wouldn't be applying for a loan they can't afford in the first place.

The biggest area that needs reform is the tenant laws regarding non-payment of rent. As it stands now, I can not pay my rent and once the landlord threatens to evict, I an just pay the rent and stay. I can keep doing this until the landlord spends time and money to go to court and maybe get a judgemebt that is hard to enforce.

It needs to be rewritten so that it allows an eviction notice to be issued after 7 days of non-payment and that notice can only be withdrawn by the landlord, otherwise the locks can be changed 14 days after the notice is posted. Then use the criminal court to deal with the people who destroy properties on their way out.

[OMG!WTF!]

Originally Posted by GGG

I agree on rent.

But most debt default is the fault of bad lending decisions. Think about how easy it is to get a loan for anything, credit cards, washing machine, furniture, hot tubs, etc. These loans are made on having x amount default. And Visa makes interest money up until the point of default.

I think the current debt model relies on people making bad choices so we shouldn't heavily penalize them for doing what the system has designed for them to do. So in general the creditor shouldn't be lending out money to people who have a high likelihood of defaulting. Instead we have creditors pursuing high risk people to get them hooked taking as much out of them until they default.

Just look at the pay day loan industry

I guess I'm not talking about credit cards or retail debt. I'm mostly considering secondary market lending. There are so many lending scenarios that allow for fraud. Generally speaking borrowers are allowed to defraud lenders and unless there are millions of dollars and more importantly multiple victims the police will not ever pursue it. They will admit fully that a crime has been committed but there is no way they will chase anthing less than a massive multi million dollar fraud.

I was in the payday loan business for three years and if anything, it is a good indication of what it takes to provide unsecured loans. When First Calgary says they will provide the same service for 12%, they fully understand they will lose money doing so. They're just playing nice at the request of the government.

[polak]

I call BS on locking people up for not paying debts. That liability should be 100% on the lender as they're the ones making money HAND OVER FIST on these people. Want to continue in that line of business, you take on that risk. No one is forcing you to give out sketchy loans or credit cards. They prey specifically on people who don't pay off their debt as quick as possible. You think they give you higher and higher credit limits to be a nice guy?

We have a pretty good system the way it is. It's not like defaults on debts are through the roof or normal people are declaring Bankruptcy for kicks.

[CliffFletcher]

Originally Posted by GGG

Think about how easy it is to get a loan for anything, credit cards, washing machine, furniture, hot tubs, etc. These loans are made on having x amount default. And Visa makes interest money up until the point of default.

I think the current debt model relies on people making bad choices so we shouldn't heavily penalize them for doing what the system has designed for them to do. So in general the creditor shouldn't be lending out money to people who have a high likelihood of defaulting. Instead we have creditors pursuing high risk people to get them hooked taking as much out of them until they default.

Governments and banks are complicit in this. They're so desperate to keep the consumer wheel turning in a climate of long-term economic stagnation that they're using every lever possible to get people to borrow money to fuel spending. That's why it's so ridiculous when the Bank of Canada issues warnings about consumer debt, while driving prime interests rates ever closer to zero.

Unsurprisingly, social attitudes towards debt have changed dramatically. It used to be considered irresponsible to borrow for pretty much anything besides a house. Now middle-class people have no qualms at all about borrowing for cars, furniture, and appliances, and perpetually carrying multi-thousand dollar credit card balances.

I'm not sure what it would take to get people to dread debt again. Massive default and bankruptcy? But is the cure worse than the disease?

[llwhiteoutll]

Originally Posted by CliffFletcher

Unsurprisingly, social attitudes towards debt have changed dramatically. It used to be considered irresponsible to borrow for pretty much anything besides a house. Now middle-class people have no qualms at all about borrowing for cars, furniture, and appliances, and perpetually carrying multi-thousand dollar credit card balances.

I'm not sure what it would take to get people to dread debt again. Massive default and bankruptcy? But is the cure worse than the disease?

I'd say that a major driver in this is that people want something right now, feel they are entitled to have it and don't care about what it takes to get it. They are perfectly happy paying much more than the sticker price just to have it sooner. I'd also be willing to bet that a lot of people can't tell the difference between a want and a need. The vast majority of things that people go into debt for are wants.

You can still live debt free, aside from a mortgage. It just takes discipline to do it and a lot of people simply don't have/understand that.

Originally Posted by polak

I call BS on locking people up for not paying debts. That liability should be 100% on the lender as they're the ones making money HAND OVER FIST on these people. Want to continue in that line of business, you take on that risk. No one is forcing you to give out sketchy loans or credit cards.

We have a pretty good system the way it is. It's not like defaults on debts are through the roof or normal people are declaring Bankruptcy for kicks.

So you basically feel that people should be allowed to make piss poor decisions in life and have someone else face the consequences?

The way the world is going, we'll be living Atlas Shrugged soon enough.

[Red]

Originally Posted by llwhiteoutll

The system does not make people make poor decisions. The only person at fault in the situation of a loan that will eventually be defaulted on is the person seeking it. If they used a bit of critical thinking, they wouldn't be applying for a loan they can't afford in the first place.

The biggest area that needs reform is the tenant laws regarding non-payment of rent. As it stands now, I can not pay my rent and once the landlord threatens to evict, I an just pay the rent and stay. I can keep doing this until the landlord spends time and money to go to court and maybe get a judgemebt that is hard to enforce.

It needs to be rewritten so that it allows an eviction notice to be issued after 7 days of non-payment and that notice can only be withdrawn by the landlord, otherwise the locks can be changed 14 days after the notice is posted. Then use the criminal court to deal with the people who destroy properties on their way out.

If we look at how effective propaganda is then the system is not really helping the public. Just about everything on tv is being advertised in monthly payments and not the actual price. Many people have no idea what they paid for their cars.
Teaser rates on CCs don't help.
Borrow your RRSP contribution now and pay later...list is long.
It's all set up for you to borrow more and more. And the governments do nothing about it.
When you are 18 years old now you must think it is normal that car prices are not being advertised. Wasn't like that 25 years ago.

[llwhiteoutll]

Originally Posted by Red

If we look at how effective propaganda is then the system is not really helping the public. Just about everything on tv is being advertised in monthly payments and not the actual price. Many people have no idea what they paid for their cars.
Teaser rates on CCs don't help.
Borrow your RRSP contribution now and pay later...list is long.
It's all set up for you to borrow more and more. And the governments do nothing about it.
When you are 18 years old now you must think it is normal that car prices are not being advertised. Wasn't like that 25 years ago.

None of those things force a consumer into taking on more than they can handle. You can contribute cash to tour RRSP, the dealership will tell you the total cost of your car and you shouldn't be worried about the interest rate on tour CC since you shouldn't carry a balance on it.

Even with the ads companies put out, the final responsibility is with the person making the decision, not with the company. I know I could go and get a $90k truck financed for 84 months, and the payment might look great. But I have to be responsible enough to understand what taking that debt on means to my life and finances, it's not the dealer's responsibility to pour over all my financials and tell me if it is a good idea or not.

[Cowboy89]

Originally Posted by Red

If we look at how effective propaganda is then the system is not really helping the public. Just about everything on tv is being advertised in monthly payments and not the actual price. Many people have no idea what they paid for their cars.
Teaser rates on CCs don't help.
Borrow your RRSP contribution now and pay later...list is long.
It's all set up for you to borrow more and more. And the governments do nothing about it.
When you are 18 years old now you must think it is normal that car prices are not being advertised. Wasn't like that 25 years ago.

How much of that is up to individual responsibility vs. the government though?

Quite frankly if people want to leave money on the table in all of their purchases because they refuse to read agreements, do due diligence before buying things et al, then I think it should be perfectly legal for businesses to prey upon this willful ignorance. That said where government has a role to play is to ensure transparency wherever possible to keep terms and conditions simple enough so people can make informed decisions should they choose to actually pay attention.

[polak]

Originally Posted by llwhiteoutll

I'd say that a major driver in this is that people want something right now, feel they are entitled to have it and don't care about what it takes to get it. They are perfectly happy paying much more than the sticker price just to have it sooner. I'd also be willing to bet that a lot of people can't tell the difference between a want and a need. The vast majority of things that people go into debt for are wants.

You can still live debt free, aside from a mortgage. It just takes discipline to do it and a lot of people simply don't have/understand that.



So you basically feel that people should be allowed to make piss poor decisions in life and have someone else face the consequences?

The way the world is going, we'll be living Atlas Shrugged soon enough.

No consequences? Their consequence is that their credit is ruined and they're taken out of the game just like it should be.

[Red]

Cowboy89 and llwhiteoutll, I dont disagree. I just think the system favors debt. My position here has always been anti debt.

But the problem at hand is that it is now considered normal to buy everything on credit. I believe that that's what advertising has accomplished over time. And to fix that we would have to get the government to step in. But they won't for many reasons. Rightly or wrongly.

Individuals ultimately have the last say, but we are only human and give in to temptations.
A friend just bought a trailer, took on a 0 $$ up front, 17 year loan. Loans like that should not be allowed. But ultimately the stupidity is on him.