The Who’s Who of the Credit Food Chain
If you were to think of your creditors as a list of VIP’s, your credit card lenders are the trashy gatecrashers who will grovel and scrape. Your first mortgagee on your home loan is the guest of honour and your lender on your car loan is on the A-list.
There is a difference between secured and unsecured creditors and as such their behaviour and willingness to co-operate with you is quite predictable.
A secured creditor has an asset they can sell to get their money back if you default under your loan obligations.
A first mortgagee is in the best position so will usually play hardball (because they can afford to!). Property goes up in value over time. A first mortgagee has the right to sell an asset which has gone (or will go) up in value so there is little cause for panic and not much impetus to compromise if you stop paying your mortgage. visit:- Dominique Grubisa Program Review
A secured lender on a car loan is perhaps a little less comfortable and may begin to get a tad nervous if you default on your loan. Yes they have the car to sell, but it’s lost a lot of value since they lent you the money and is worth less and less each day. They will not get back the whole amount owing to them if they sell the car. They will be more willing to take what they can get from you and cut their losses.
But the credit card lender is unsecured. They have nothing to sell and if they want a cent from you they’ll have to chase you and shake you down. They can’t just swoop on an asset to satisfy the debt. They have to take a number and line up with all the other unsecured creditors (without knowing how many others there are !) and take whatever crumbs are left after the secured creditors have raided the place and taken the lion’s share of the assets. What if there’s nothing left? Too bad for them – you can’t get blood out of a stone!
Are unsecured creditors motivated to do a deal with you when you can’t pay all that you owe? You bet. They operate on the principle of a bird in the hand. They don’t want to bankrupt you. Why would they spend all that money in legal costs and then stand back and let the secured creditors pick the eyes out of your estate leaving them ten cents in the dollar of what is owed to them. Would they take 50 cents in the dollar now if it’s on the table and you’re going under but it’s all that you have? Would Paris Hilton go to the opening of an envelope?
Dominique Grubisa is a practising Barrister with a commercial law background who is dedicated to helping indebted consumers in this current time of economic crisis.