# clarifying what "debt forgiveness" means



## mark12 (22 Oct 2012)

What's the point in starting this ancient discussion again? There are millions of threads on this issue some are in favour of it, others are against it.

Fact of the matter is, Debt Forgiveness is already happening every single day of the week, some examples:

1 People on interest only = Debt Forgiveness

2 Bankrupt builders returing Home from the UK = Debt Forgiveness

3 Won't pays = Debt Forgiveness


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## itsallwrong (24 Oct 2012)

Moved from another thread by mods.

1 People on interest only = (Debt has not been forgiven, it has been extended and paused)

2 Bankrupt builders returing Home from the UK = (Debt has not been forgiven, they legally washed their hands of it)

3 Won't pays = (Still have not been forgiven, and even further from it as they are willingly not paying).

The crux of the issue is wiping peoples debt.


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## itsallwrong (24 Oct 2012)

Pretty much Bronte. 
Sticky territory this one.
Imagine though what the bill to the taxpayer would be if debt forgiveness became a reality?
A damned if you do damned if you don't scenario.


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## Kerrigan (24 Oct 2012)

The tax payer is already picking up the tab. 

A property some doors away from me sold for approx 200k less than what the mortgage value on the property was.  Guess who's going to pick up the bill? 

I am a firm believer that people should be allowed stay in their properties, a total halt on repossessions and an agreement made with their lenders to rent the property back from them; whilst giving the lender full control of the building.

I cannot understand why tax payers have not grasped this concept.


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## oldnick (24 Oct 2012)

"it'sallwrong" - You're right about "damned if you do and damned if you don't."

Therefore asking a straight "D.F. good or bad?" question is far too simplistic . Actually ,it's IMO, a silly question.

*Debt forgiveness* = greatly annoys hundreds of thousands who pay their debts, and encourages many of them to stop paying. We all know that. 

*No debt forgiveness*= maybe an equal number will throw back the keys , many possibly quitting these shores. Tens of thousands of empty houses, complete crash - thus affecting everyone on the country. We all know that as well.

Which is worse ? Neither. Both.

Anyone who speaks against DF without proposing an alternative comprehensive solution is just venting spleen. Enough already of that.
Anyone who proposes DF without considering and costing the consequences is an idiot.


Actually, come to think of it, is anyone actually proposing complete D.F. ? No? Then question is even sillier than I thought.


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## itsallwrong (24 Oct 2012)

I suppose the basic answer is who will pay?
If you turf someone out of their home, they will be down to the Social looking for rent allowance, which is the taxpayer money.
If you give them MIS, it's taxpayer money.
If you write off the debt, the taxpayer pays.

No matter how its done, the taxpayer will pay most or all of the bill.
Forgiving is the easy part of the problem. Who gets the bill and are we willing to pay it by suffering 
many more years of hard times is the hard part.


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## oldnick (24 Oct 2012)

The more I read Kerrigan recent post the more it makes sense to me as the least worst solution. Better than a simple make-them-pay or forgive-their-debt solution.


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## Shivvers (24 Oct 2012)

itsallwrong said:


> Pretty much Bronte.
> Sticky territory this one.
> Imagine though what the bill to the taxpayer would be if debt forgiveness became a reality?
> A damned if you do damned if you don't scenario.



Imagine what the long-term bill to the economy and wider society will be - in terms of lost output and productivity, damaged retail sales because of a drain in consumer confidence, further lost jobs,  - if it doesn't become a reality?

There has been "debt forgiveness" (a really dumb and misleading phrase) in this country for years, in business. It's called liquidation.... or another example is examinership. It's there because it makes sense, and it helps bring about a faster recovery when things go wrong.

By the way, the taxpayers have already paid for a good chunk of what some people call "debt forgiveness". I simply call it the recognition of losses that have already occurred, allowing some people to move on with their life and become productive again. The cash to begin dealing with it is already sitting on the banks' balance sheets.

It's not about debt "forgiveness". It's about properly identifying - and then finally dealing with - some legacy debts that can never be paid off, no matter how much people want to cod themselves into thinking that the problem will go away if we continually kick a can down the road.

It's not just about morals. It's basic economics.


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## PiedPiper (24 Oct 2012)

*in answer*

The tax payer is picking up the tab,  Because of bad government thats not the fault of the mortgage holders.

The tax payer is picking up the debt of bond holders all over europe.

The taxpayer is pouring money into AIB so it can be sold, there is no Bank of Ireland it foreign owned.

It's grossly unfair to blame people for bad goverment other than for being stupid enought to vote for them and being sold a pup in the first place.


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## GDUFFY (24 Oct 2012)

PiedPiper said:


> The tax payer is picking up the tab,  Because of bad government thats not the fault of the mortgage holders.
> 
> The tax payer is picking up the debt of bond holders all over europe.
> 
> ...


 
Couldn't agree more !

All of these debts would have been suffered by German & French banks and any other lenders/ Bondholders (who were getting an interest rate by the way to reflect their gamble) on lending to these Banks. The real villains are the morons who bought a pig in a poke on your behalf. The banks have already received the money to sort this out but greedy pigs have been allowed to hoard it by the present government .There has been a coup d'etat in this country right under our noses , we don't have a government anymore.  Rant over.


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## itsallwrong (24 Oct 2012)

Water will always be wet and the public will always be the lambs to the slaughter.
Where is Elliot Ness when you need him....


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## Kerrigan (24 Oct 2012)

oldnick said:


> The more I read Kerrigan recent post the more it makes sense to me as the least worst solution. Better than a simple make-them-pay or forgive-their-debt solution.



I shudder to think what will become of this already depressed economy if we see mass evictions next year.


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## Kerrigan (24 Oct 2012)

GDUFFY said:


> Couldn't agree more !
> 
> All of these debts would have been suffered by German & French banks and any other lenders/ Bondholders (who were getting an interest rate by the way to reflect their gamble) on lending to these Banks. The real villains are the morons who bought a pig in a poke on your behalf. The banks have already received the money to sort this out but greedy pigs have been allowed to hoard it by the present government .There has been a coup d'etat in this country right under our noses , we don't have a government anymore.  Rant over.



+1 

Well said.


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## Bronte (25 Oct 2012)

Kerrigan said:


> I shudder to think what will become of this already depressed economy if we see mass evictions next year.


 
That's not going to happen, it would only make things worse for everybody, the banks, people trying to sell, taxpayers and those actually living in the properties.  

We need a solution that is to the greatest benefit of all of society.


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## shigllgetcha (25 Oct 2012)

I think pausing/putting on hold debt is a better option in most cases. Allow the house holder to pay what they can afford and dont charge interest on the paused amount and in 5/10 years time review what the can afford. It would give people breathing space and they would have more money to stimulate the economy not to mention the benefit on a personal level for these people

Let inflation bring down the cost of the mortgage and let the housing market recover over time to take them out of NE and use some kind of bond (from the ECB at 0%) to make up the difference.

Alot of peoples problems are from decreases in pay and unemployment. Over time these problems should be solved and these people will be able to pay again. Some peoples problems are only going to be temporary, debt forgiveness shouldnt be offered to anyone. Offering debt forgiveness to large numbers means when the economy picks up and their income goes up they will have gained compared to someone who kept paying

*There are some people though that are way over their heads and will never be able to pay back what the bank lent them. Debt forgiveness should only go to people with no prospect of repaying, not just people who are in temporary trouble, someother mechanism should be used for thses people

** for my arguement ive assumed the economy will improve, if it doesnt all bets are off, everyones in trouble

If the banks hadnt been guaranteed and the irish banks folded and our mortgages became property of the german/french banks that bought the bonds, would there have been mass debt forgiveness or the iron fist with huge interest rates to compensate for those who could pay?


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## commonsense (25 Oct 2012)

itsallwrong said:


> Moved from another thread by mods.
> 
> 1 People on interest only = (Debt has not been forgiven, it has been extended and paused)
> 
> ...



Mark12 is actually correct. Any alteration of the original terms of a mortgage to the benefit of the mortgagee is a form of debt relief. Whether it's restructured, extended or partially written off.

Debt forgiveness is defined as:



" the partial or total  forgiveness of debt, or the slowing or stopping of debt growth, owed by  individuals, corporations, or nations."
When we talk of debt forgiveness, those for it should realise that it's not a get out of jail free card, and those against it should realise that those who can avail of it won't do so without some price being paid, usually in the form of being blacklisted from lending, paying something off the original debt and maybe having a lien on the property that is collectable upon sale or death. 


What banks won't do however, is relieve someone of a mortgage if the clients have other non secured debt. This is because the money will be diverted to these loans, not back into the economy.


Mortgage debt is only one part of the problem, a big part I acknowledge, but we have a very high level of personal debt (non mortgage) in this country and that also has to be addressed, by those in trouble first of all.


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## shigllgetcha (25 Oct 2012)

commonsense said:


> Mark12 is actually correct. Any alteration of the original terms of a mortgage to the benefit of the mortgagee is a form of debt relief. Whether it's restructured, extended or partially written off.
> 
> Debt forgiveness is defined as:
> 
> ...


 
But just extending the loan isnt adding to your debt. You owe the same just over a longer period.

My only point with extending a mortgage amounting to debt forgiveness is that if you and I earn the same and borrowed the same, you decided you want 15 years and I want 25 years at the start, if you later realise that you cant pay back at the speed and extend to 25 years, we are the exact same but in your eyes you are getting debt fogiveness and I am not. 

If you are extending to a lenght that you could have taken when you took out the mortgage in the first place I wouldnt call it debt forgiveness. Others might see it a different way though.


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## commonsense (25 Oct 2012)

shigllgetcha said:


> But just extending the loan isnt adding to your debt. You owe the same just over a longer period.





 Extending the loan is a form of debt relief. You highlighted the relevant part. 







shigllgetcha said:


> My only point with extending a mortgage amounting to debt forgiveness is that if you and I earn the same and borrowed the same, you decided you want 15 years and I want 25 years at the start, if you later realise that you cant pay back at the speed and extend to 25 years, we are the exact same but in your eyes you are getting debt fogiveness and I am not.
> 
> If you are extending to a lenght that you could have taken when you took out the mortgage in the first place I wouldnt call it debt forgiveness. Others might see it a different way though.




That is the definition, you may not see it that way, but that is a form of debt relief. If you ask me for a loan of 5k and I take it off my credit card (for example) and you promise to pay me back in 12 months, if you don't pay me and I can't repay it then I incur extra interest charges, I don't pass these too you, hence debt relief.


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## shigllgetcha (25 Oct 2012)

> *or the slowing or stopping of debt growth*


 
Your debt isnt growing if you extend the lenght of your mortgage



commonsense said:


> That is the definition, you may not see it that way, but that is a form of debt relief. If you ask me for a loan of 5k and I take it off my credit card (for example) and you promise to pay me back in 12 months, if you don't pay me and I can't repay it then I incur extra interest charges, *I don't pass these too you, hence debt relief*.


 
You lent me money at a higher rate than you borrowed it for. If we agree that I pay it back over 24 months instead of 12 I pay you interest for an extra 12 months, you make more money by me paying money back over longer.

I pay more back to you because ive taken longer, thats how you pass it on to me. but my debt doesnt increase which is the definition you gave. 

Were arent talking about not paying anything or paying nothing until the end of the mortgage term we are talking about agreeing to repay slower which is very different



> In modern times, the most common alternatives to debt relief in cases where debt cannot be paid are forbearance and debt restructuring.


 from wikipedia, your own source

It calls restructuring an alternative, hences it is not a form of debt forgiveness


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## commonsense (25 Oct 2012)

shigllgetcha said:


> Your debt isnt growing if you extend the lenght of your mortgage




Yes it is. 

Let's say I took out a FTB mortgage of 185k over 25 years, total repayable inc interest is 277k.

If I extend that to 30 years the repayment is 298k.

So if the bank extend your loan and don't charge you more/higher interest rates, meaning you are repaying what you would have repaid in the first place, then you are getting debt relief.


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## commonsense (25 Oct 2012)

shigllgetcha said:


> Your debt isnt growing if you extend the lenght of your mortgage



Yes it has. 





shigllgetcha said:


> You lent me money at a higher rate than you borrowed it for. If we agree that I pay it back over 24 months instead of 12 I pay you interest for an extra 12 months, you make more money by me paying money back over longer.



Then it has cost you more than the amount you originally signed for. 



shigllgetcha said:


> *I pay more back to you *because ive taken longer, thats how you pass it on to me. but my debt doesnt increase. Were arent talking about not paying anything or paying nothing until the end of the mortgage term we are talking about paying slower which is very different



If you pay back more, then your debt increased.



shigllgetcha said:


> from wikipedia, your own source
> 
> It calls restructuring an alternative, hences it is not a form of debt forgiveness



Could you oblige and post the full paragraph where you picked that particular sentence from please? I cannot as I am new.


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## orka (25 Oct 2012)

commonsense said:


> If you pay back more, then your debt increased.


No it hasn't. You are confusing 'debt' with 'total repayable over time'.

If you take out a 25 year mortgage today for 100K at 4%, you will pay 528 per month and end up paying a total of 158,352 to the bank (the 100K capital plus 58,352 interest). But your debt TODAY is 100K. 

If you take out a 30 year mortgage today for 100K at 4%, you will pay 477 per month and end up paying a total of 171,871 to the bank (the 100K capital plus 71,871 interest). But again, TODAY your debt is 100K.

As long as you pay interest on your outstandings (which those extending their terms do), there is no debt forgiveness - your debt before and after restructuring is the exact same. The total amount you repay actually increases but because it is a lower monthly amount, it is an attractive option to some people.


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## shigllgetcha (25 Oct 2012)

commonsense said:


> Could you oblige and post the full paragraph where you picked that particular sentence from please? I cannot as I am new.


 
You quoted the same page yourself but here you go:



> Alternatives
> 
> Contemporary
> In modern times, the most common alternatives to debt relief in cases where debt cannot be paid are forbearance and debt restructuring. Forbearance meaning that interest payments (possibly including past due ones) are forgiven, so long as payments resume. No reduction of principal occurs, however.
> ...


http://en.wikipedia.org/wiki/Debt_relief

I wouldnt usually use wikipedia a a source for this type of thing but your quote came straight from that page so I used it aswell


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## mark12 (25 Oct 2012)

Why keep talking about something that already exists?


We already have debt forgiveness in this country for anyone who wishes to avail of it, and yes you can actually keep the asset as bankrupt builder John Fleming has just proven, he lives in the same house as before, and his debts are cleared.

If this is not Debt Forgiveness, i don't know what is.


When you go on long term interest only and get to live in the house, is this not partial debt forgiveness as well?


When you decide not to pay, but get to live in the house for years and avoid repossession, (because the loss to the bank from a fire sale would be too high), is this not debt forgiveness as well?


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## orka (25 Oct 2012)

mark12 said:


> Why keep talking about something that already exists?





mark12 said:


> We already have debt forgiveness in this country for anyone who wishes to avail of it


Yes we do have debt forgiveness in this country and always have; people have always had probably repaying debts and have gone bankrupt – walking away from their debts and assets.  I think what people mean when they ask now ‘will there be debt forgiveness?’ is whether there will be a formulaic or standard approach agreed by or imposed on the banks to help those who are struggling to pay their mortgages.  I can’t see the banks ever agreeing anything except on a case by case basis and I can’t see any true debt forgiveness (ie you owe less tomorrow than you did today) that lets the borrower retain 100% of the asset.



mark12 said:


> ...yes you can actually keep the asset as bankrupt builder John Fleming has just proven, he lives in the same house as before, and his debts are cleared.


He gets to live in the house but it is not his unless his son-in-law gives/sells it to him.  And yes, anyone with a relative willing to buy back their house can stay in their house – but that is not debt forgiveness.  The bank is in no worse a position for the son-in-law having bought the house and let his father-in-law live there.



mark12 said:


> When you go on long term interest only and get to live in the house, is this not partial debt forgiveness as well?


No. As long as you are paying the interest, there is no debt forgiveness – the debt is still owed.  





mark12 said:


> When you decide not to pay, but get to live in the house for years and avoid repossession, (because the loss to the bank from a fire sale would be too high), is this not debt forgiveness as well?


This depends on what the bank eventually gets back.  In theory, the arrears continue to mount up, adding to the debt and until some/all of the debt is written off, there is no debt forgiveness.  I would only call something debt forgiveness when there is an acceptance of non-recoverability so that no matter what changes in the borrower’s circumstances (e.g. an inheritance), the debt can never be reactivated.


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## Wishes (25 Oct 2012)

mark12 said:


> Why keep talking about something that already exists?
> 
> 
> We already have debt forgiveness in this country for anyone who wishes to avail of it, and yes you can actually keep the asset as bankrupt builder John Fleming has just proven, he lives in the same house as before, and his debts are cleared.
> ...



I agree with most of your posts Mark but I think you have painted a very rosy picture here.  

I thought Fleming's son purchased the house??  If there were debt forgiveness here surely Fleming wouldn't have had to go to the UK.


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## manninp2 (25 Oct 2012)

I think what gets up peoples noses about debt forgiveness is the possibility of someone agreeing a debt settlement for less than the outstanding amount with the possibility of them gaining at some time in the future.

If someone loses the house, they can't gain from any upswing. They also more than likely exclude themselves from ever being able to buy a house ever again. They'll still be renting when they're on a pension (if they even have one), it's a lot to lose.


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## commonsense (26 Oct 2012)

orka said:


> No it hasn't. You are confusing 'debt' with 'total repayable over time'.
> 
> If you take out a 25 year mortgage today for 100K at 4%, you will pay 528 per month and end up paying a total of 158,352 to the bank (the 100K capital plus 58,352 interest). But your debt TODAY is 100K.
> 
> ...



And you are confusing principal with debt. 

Debt is "an obligation to repay a sum of capital, plus interest."

A mortgage is a legal document specifying a  certain amount of money to purchase a home at a certain interest rate,  and using the property as collateral.

Capital is what you borrowed, capital + interest is what you owe - the debt.


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## Bronte (26 Oct 2012)

commonsense said:


> Let's say I took out a FTB mortgage of 185k over 25 years, total repayable inc interest is 277k.
> 
> If I extend that to 30 years the repayment is 298k.
> 
> So if the bank extend your loan and don't charge you more/higher interest rates, meaning you are repaying what you would have repaid in the first place, then you are getting debt relief.


 
You are incorrect. Because when you extend the term you have to pay more interest. The interest rate can stay the same but you will pay more. There is no debt forgiveness in that scenario. It's just a restructuring. So the bank is not at a loss.  And if the extension of the loan results in higher borrowing costs for the bank, then they have the option of increasing the interest rate to the borrower.

To me debt forgiveness is when some of your debt is written off. 

Do I agree with debt forgiveness, yes I do. Am I mad about it. Damn right I am, but not in all cases. But in any case when one adds in all the reasons we are in this mess then does it really matter anymore. The banks were wrong, the regulator was wrong, the borrowers were wrong, so what are we to do. There is absolutely no point at this stage in not moving forward.


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## commonsense (26 Oct 2012)

shigllgetcha said:


> You quoted the same page yourself but here you go:
> I wouldnt usually use wikipedia a a source for this type of thing but your quote came straight from that page so I used it aswell



I did quote the page but I couldn't copy and paste it here (still cannot until I make 15 posts) as I am new, so thanks.

We are talking about debt that can be (must be?) repaid. In our example of someone extending the loan, this is also called refinancing to achieve smaller repayments at (possibly) more attractive interest rates, this is a form of debt relief. 

Debt relief is not only the partial or full wiping of debt. Rescheduling, refinancing and reorganisation of debt is also classed as debt relief. 



 
​


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## Bronte (26 Oct 2012)

commonsense said:


> . Rescheduling, refinancing and reorganisation of debt is also classed as debt relief.


 
What if you reschedule your mortgage to reduce the term, and therefore the amount repayable, what would you call that?


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## commonsense (26 Oct 2012)

Bronte said:


> You are incorrect. Because when you extend the term you have to pay more interest. The interest rate can stay the same but you will pay more.



I am not incorrect, I have posted the definition, which you disagree with. 




Bronte said:


> There is no debt forgiveness in that scenario. It's just a restructuring. So the bank is not at a loss.  And if the extension of the loan results in higher borrowing costs for the bank, then they have the option of increasing the interest rate to the borrower.



Which is a form of debt relief. 



Bronte said:


> To me debt forgiveness is when some of your debt is written off.



That is your opinion, it's not the true definition of debt forgiveness though.


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## Bronte (26 Oct 2012)

And  again, if you restructure to reduce the debt what do you call that?


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## commonsense (26 Oct 2012)

Bronte said:


> And  again, if you restructure to reduce the debt what do you call that?




Sorry for not responding immediately to you, I didn't realise that this was the way this forum works.


I know what you are trying to do and I won't fall into your trap. 

You have an issue with the definition of debt forgiveness, you refuse to acknowledge that restructuring falls under the term, I can't help you with your interpretation. 

Any modification of your loan that changes the terms and conditions which result in you not fulfilling your debt oligations, that you signed up for, is a form of debt forgiveness.

If you cannot repay the debt within the terms of the contract and have to draw up a new one extending the terms, then you have not met the obligations you agreed to.


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## orka (26 Oct 2012)

commonsense, you originally gave your definition of debt forgiveness as:



commonsense said:


> Debt forgiveness is defined as:





commonsense said:


> " the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations."


First of all, what sort of definition gives the phrase as its own definition? Debt forgiveness is the forgiveness of debt? Really? And you base your answers on this? What you are actually quoting from is the Wikipedia definition of ‘debt relief’ which you are using throughout your posts interchangeably with debt forgiveness even though they are slightly different things. Debt relief could possibly include any measures to give relief to the debtor; debt forgiveness is, well, debt forgiveness – some of the debt is forgiven (that means written off) – the clue is in the phrase. It should also be clear from the thread title that people want to understand what debt forgiveness means – not debt relief (although in reality there is much more likely to be a debt relief regime introduced than a debt forgiveness one).

So by your definition, debt relief is the forgiveness of debt OR the slowing/stopping of debt ~ that implies that the slowing/stopping of debt growth is different to debt forgiveness doesn’t it?

Looking at your definition of debt, you again provide a quote 





commonsense said:


> Debt is "an obligation to repay a sum of capital, plus interest.".


Yes, but the interest is the amount accrued at a given point in time – it does not include all future interest. Debt is a point-in-time amount – it does not look forward to ‘what will I ultimately have to pay’ but ‘what do I owe today’. When companies prepare their accounts, the debt amounts are the amounts owed at the balance sheet date – they don’t include future interest payments. In your example:





commonsense said:


> Let's say I took out a FTB mortgage of 185k over 25 years, total repayable inc interest is 277k.





commonsense said:


> If I extend that to 30 years the repayment is 298k.


what is your debt the day after you take out the mortgage? If you inherit 300K and want to pay off your debt the day after your mortgage, would you expect to repay your 'borrowed the day before' 185K or is the debt 277K/298K?


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## commonsense (26 Oct 2012)

orka said:


> I am slightly wary of feeding what is increasingly looking like a troll but anyway...



I am not a troll. I have an opinion that I have politely put forward to you and others here. I have stayed within the remit of the topic and that topic is "clarifying what debt forgiveness means".

I have not posted any inflammatory messages, I have not disrupted the topic in any way shape or form and have not set out to provoke anyone.




orka said:


> But humouring you for a moment



Please don't, this is a "discussion forum," not a "humour someone forum". 

You do not agree with my opinion that is your perogative, I won't engage in any further discussion with you.


Regards.

CS.


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## Wishes (26 Oct 2012)

Hi Commonsense, 

No offense but you have a very black and white outlook.

I have yet to meet anyone that is looking for a mortgage write down.  Everyone I have spoken to is looking for a restructure with the view of paying every last cent they borrowed back.

Do you know what I was told recently by a professional?  'What ever you do, do not ask for a write down or it will be the rock you will perish on'.

I continue to meet mortgage repayments and keep my mouth shut.  Does that sound like a write off to you?


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## shigllgetcha (26 Oct 2012)

mark12 said:


> Anyway, why do we even care anymore, all future losses in our Banks are covered by the ESM European Stability Machanism


 
Losses are covered but does that mean profit losses rather than bad debts? 

If its profit loses that still effects everyone that has a mortgage with that bank as they are paying more in interest to cover some of the losses as the banks need to/want to get back to a profitible state and will increase rates to get there and try to reduce losses



Wishes said:


> Do you know what I was told recently by a professional? 'What ever you do, do not ask for a write down or it will be the rock you will perish on'.


 
_I guess they meant that a writedown would close the door to anyother options? Just curious_


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## Wishes (26 Oct 2012)

shigllgetcha said:


> I guess they meant that a writedown would close the door to anyother options? Just curious



And could also trigger a repossession order.  Its all a game of cat and mouse; who's going to make the first move.  I've personally been advised to pay what I can and generally keep out of the way.


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## orka (26 Oct 2012)

commonsense, I apologise for having offended you; I have removed the offending words from my post.

However, it’s not really true that you haven’t disrupted this thread.  Current and future readers will come to this thread to find out what debt forgiveness means and will leave none the wiser and not even knowing anymore what debt itself means – that is not helpful.  What you now say are your ‘opinions’ were presented as facts (looked up on Wikipedia) and argued repeatedly and quite strongly ‘Yes, it is’, ‘I am not incorrect’, ‘that is your opinion, it’s not the true definition of debt forgiveness though’.  No-one agreed with your definition and while there seemed to be some consensus that debt forgiveness meant some/all of debt is written off, that is now lost in this mess of a thread.


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## commonsense (26 Oct 2012)

Wishes said:


> Hi Commonsense,
> 
> No offense but you have a very black and white outlook.
> 
> ...



I don't think I'm being black and white at all, there is a grey area over exactly what debt forgiveness is, to some here it is only, exclusively a partial or full wite down of debt - to me they are very black and white.

Debt forgiveness is not an event, it is a process and many people have already begun that process by restructuring their mortgages in some way.

In time, the banks will have to accept that the process will have to extend to write offs, either partial or full.

This will mean that some people will lose their homes, they will be forgiven their mortgage debt but they will effectively be frozen out of the lending market for many years.

Others, those eligable for a partial write - down, may also lose their homes, part of their deal could be funding for a smaller property or a property in a less affluent area.

Do you think that the professional you spoke to may have been looking at the effect on your credit history?


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## commonsense (26 Oct 2012)

orka said:


> commonsense, I apologise for having offended you; I have removed the offending words from my post.



Thank you. 




orka said:


> However, it’s not really true that you haven’t disrupted this thread.  Current and future readers will come to this thread to find out what debt forgiveness means and will leave none the wiser and not even knowing anymore what debt itself means – that is not helpful.





Orka, we form opinions based on how we interpret facts and sources. You and others believe that Debt forgiveness is exclusively and only the cancellation of some or all of the debt, I posted one source and when I can, I will post more. As I said in a recent thread, it is a process, not an event.  






orka said:


> What you now say are your ‘opinions’ were presented as facts (looked up on Wikipedia) and argued repeatedly and quite strongly ‘Yes, it is’, ‘I am not incorrect’, ‘that is your opinion, it’s not the true definition of debt forgiveness though’.




Well Orka on the other side of that is people telling me very clearly that I am incorrect and then stating - "In my opinion, debt forgiveness is when some of your debt is written off". I have yet to see a link or any evidence that clearly defines and confines debt forgiveness to this. 





orka said:


> No-one agreed with your definition and while there seemed to be some consensus that debt forgiveness meant some/all of debt is written off, that is now lost in this mess of a thread.



Which was not of my doing, I defended Mark12 with his interpretation of Debt forgiveness. I then defended myself when that was challanged.

And just to clarify further. The mere mention of debt forgiveness enrages some people when it is confined to write offs. It is such an emotive issue for so many people and that is why I put forward my interpretation. To give more balance and to make people, vehemently against the idea realise that this process is inevitable (as it's already started), because there are people who are in deep deep trouble and keeping them on the hook for unsustainable debt is akin to torture. I am not in NE, I have a reasonably small mortgage, but I lost a huge chunk of money that I used as my deposit. I don't resent the state/banks helping people, but it will not be free for those who helped and there will always be a section of people who want their pound of flesh. 
I get quite concerned when I hear people say "why should he/she/they" get something for nothing, it's almost as if they prefer to see people suffering further through emotional hardship. 
We will all have to pay some cost, but I'd rather see homeowners in trouble helped back on their feet then continually tortured.


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## shigllgetcha (26 Oct 2012)

Wishes said:


> And could also trigger a repossession order. Its all a game of cat and mouse; who's going to make the first move. I've personally been advised to pay what I can and generally keep out of the way.


 
Get you know even asking could prompt them to pull the pin


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## mark12 (26 Oct 2012)

Not if there is massive negative equity, the bank will always sweet talk you into paying something rather than taking you to court, anything above 150K is regarded by the bank as massive negative equity.


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## orka (26 Oct 2012)

commonsense said:


> Debt forgiveness is not an event, it is a process


Debt relief is a process. Debt forgiveness is an event. 



commonsense said:


> I defended Mark12 with his interpretation of Debt forgiveness.


You defended Mark12’s interpretation of debt forgiveness by agreeing that they were examples of debt relief. You have used debt relief and debt forgiveness interchangeably when they are not the same thing.



commonsense said:


> You and others believe that Debt forgiveness is exclusively and only the cancellation of some or all of the debt, I posted one source and when I can, I will post more.


You posted one source defining debt relief, not debt forgiveness.



commonsense said:


> "In my opinion, debt forgiveness is when some of your debt is written off". I have yet to see a link or any evidence that clearly defines and confines debt forgiveness to this.


Here you go. 

From businessdictionary.com “Debt forgiveness: Writing-off of a portion of one or more loans to a financially troubled firm by its lender(s). The objective is to help that firm in its debt restructuring so that it remains viable and is able to pay off the remaining part of the loan(s).” 

Also, if you look through some of the IMF’s papers on debt relief, you will see that the term debt forgiveness is used interchangeably with debt cancellation and is considered a part of debt relief provisions, not the same.

In the US, they have a mortgage debt forgiveness act which treats debt forgiveness and cancellation of debt as having the same meaning. [The Act is primarily designed so that any perceived income from the cancellation of mortgage debt is not taxed as income – ie without the Act, cancellation/forgiveness of debt would be considered a ‘gift’ from the lender to the borrower and taxed as such]


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## ontour (27 Oct 2012)

Why is there a need for debt forgiveness?  Surely the process of dealing with unsustainable debt is is an effective personal bankruptcy system.  If a builder goes bankrupt they lose their property, probably a lot of personal assets and the debt they have accrued.  They reset to zero and start again.  

By creating a complex new concept that can not be defined or implemented in any simple form, a conversation has beeen created which goes on for years.  The intent would appear to be that this distraction is 'buying time' in the hope that the problem will solve itself.  5 years in to a crisis and there is no way to deal with personal unsustainable debt, no change to the way the property market is managed by government and no change to building regulations.   

Inaction is what is killing the potential for this country to recover.  Now back to defining debt forgiveness, I am going to try to guess the next distracting term, 'social burden sharing' perhaps?


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