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Why Lenders Settle for Pennies in the Pound
To understand why lenders (usually Banks) can be negotiated with to reduce the debt you owe
them the first thing you need to understand is this:
Banks do not lend their own money (i.e. client deposits) – there are simply not enough savers’
deposits held by Banks to fund how much people wish to borrow.
Banks literally just type the figure they are lending you into your account via a computer!
(the government licences them to do so).
They then charge you “interest” on that money! This is how banks the world over “create” and
get their hands on “real money” i.e. they give you “money they create from thin air on a computer screen” and then get back from you interest payments made of “real money”.
If you default therefore, they have not actually lost the money they “lent” you because they did not actually lend you their money; the only money they actually lose is the “real money” interest you were going to pay them on that “out of thin air” money over many future years.
Therefore, if you default the lender typically can either “settle” with you for a lesser immediate “real money” sum payable by you immediately OR they “sell” your debt on to a Debt Collector typically for 2p in the £. In other words, if the “out of thin air” money owed back to them by you is £10,000 they will sell this debt for £200 of immediate “real money” from a Debt Collector – that is £200 of “real money” they can immediately use vs £10,000 of money they will otherwise not get back.
Whatever way you look at it, £200 is better than £0.
The Debt Collector now has the right to try to seek that £10,000 plus interest you owe and it has only cost them £200!!
If they were successful in getting the whole £10,000 (plus interest) from you, that would be a 5,000% (plus interest) profit!!
Realistically however they already know you are in financial difficulty so what if they “let you off” by “allowing” you to settle the whole debt for just 10p in the £, i.e. £1,000 to get rid of a £10,000 (plus interest) debt – so they receive £1,000 in from you in return for an original outlay of £200 – that is still a 500% profit!!
What other business do you know that can make 500% - 5,000% profit every day of the week!?
So, keep these figures in mind when thinking about how to negotiate with banks and debt collectors.
OR simply email us at enquiries@princewealth.co.uk and our partners will deal with them for you.
Oh, and if this is already a great wheeze by the banks that literally make money out of “thin air”, whenever they “settle” a debt like this with you directly or via a Debt Collector they can show this as a £9,800 “loss” (£10,000-£200) on their books and thus pay less tax!!