clarifying what "debt forgiveness" means

[commonsense]

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?

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?

 

[commonsense]

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

Thank you.

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.

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.

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.

 

[shigllgetcha]

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

 

[mark12]

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.

 

[orka]

Debt forgiveness is not an event, it is a process

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

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.

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.

"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]

 

[ontour]

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?