vania-janet/multiturn-rag-retrieval-data huggingface dataset:
If I sell you the rights to collect a loan that I wrote, then absent of any other contract you will bear the full risk of the borrower defaulting. &gt; how can it possibly be sold in such a way that the risk of default is detached Credit default swaps and other forms of insurance contracts. I could sell you the loan as above, but then you could buy an insurance contract on the loan that pays out if the borrower defaults. In other words, either the loan stays alive and you collect interest as normal, or it defaults and you receive some payout from the insurance contract which limits your downside risk. Just about every large financial institution will have themselves hedged like this to some extent, though perhaps by other means. Regarding your overall question about student loan defaults, I'm in the camp that believes they're an overstated direct* risk. It's currently not possible to default on a student loan, and if the law allowing student loan bankruptcy came in to effect, I think we'd see a large adjustment of interest rates on student loans (and probably consumer loans, etc. as well) to compensate for the increased risk of holding these loans. *Direct risk referring to the risk to the loan holder. I think there is a risk that consumer spending becomes weighed down by the burden of large loans. However, I also don't think this would appear as a sudden market shock, and would likely manifest over an extended period of time. Just my thoughts, I'm sure there are some people who'll disagree with me on this.
But Bob now has every incentive to repay it as fast as he can - or even to refinance by taking out another loan at, say, 2%, and using the proceeds to repay the entire principal to Alice. (This risk still applies with most traditional loans, since the borrower usually always has the right to pay early, but some loans include a ""prepayment penalty"" in such cases to help compensate the lender.) Thus, when Bob has all the power to decide when to pay, Alice is sure to lose no matter which way interest rates move. A loan with a fixed term helps insulate Alice against this risk. She may be able to make a guess about the likelihood of interest rates going up to 10% in the next 15 or 30 years, and increase Bob's fixed rate to account for this; that's much easier than trying to account for the possibility of interest rates going up to 10% ever. (And if she does have to try to account for this, she's probably going to have to set the interest rate extremely high; so Bob might accept a fixed term of repayment in exchange for a more reasonable rate.) Even if we suppose that Alice has done the best possible credit check and that Bob is a perfectly trustworthy fellow who would never dream of defaulting on his loan, catastrophes do happen. Maybe Bob is robbed of all his money by an evil accountant, or has a mid-life crisis and spends it all on opera tickets. Whatever, Bob is now bankrupt and Alice is never going to get her principal back, nor any further interest payments either. Even if the loan is secured by some collateral, there's still a risk since the collateral might lose value. Alice has some chance of estimating the risk of this happening in the next 15 or 30 years, and can set the interest rate to compensate for it. But it is harder for her to estimate the risk of this happening ever, and if she tries, she'll have to set the rate so high that Bob might prefer a fixed term and a lower rate. (There's a side issue as to what happens if Bob dies with the loan still outstanding.
"Don't listen to the retarded ""do-gooder"" idiots on this site who think she shouldn't reneg because of some honor or morality bullshit.  You have a contract between two people.  It states what will happen when you pay (keep car) and what will happen when you don't (they take car). Defaulting isn't an inherent bad thing. There are consequences for it.  If you decide to default or to not pay a loan and you're ok with the consequences then do it. The person writing the loan knows the risk they're getting into and they're ok with it. So do what is best for you.  As for your original question, sorry I don't have an answer.  I don't think anything will happen to her in the U.S. but she might have trouble later on if she decides to move back to Japan or even visit Japan.  Or her family may be held accountable for it.  No idea.  I don't know how Japanese laws works. Hopefully someone here will help but the best thing would be to talk to a lawyer in both the U.S. and in Japan."
"I read up on it and saw that the IRS can ""charge"" the loan provider on interest even if the loan provider doesn't charge interest, but this is normally mitigated by the 0% interest being considered a gift and as long as it's below X amount your fine. Yes, this sums it up. X is the amount of the gift exemption, the $14K. However, you must differ between loan with no interest and loan with no paying back. With loan with no interest you're still giving a statutory gift of the IRS mandated minimum interest. However, the principal is expected to be repaid to you and you must show that this expectation is reasonably fulfilled. If you cannot (i.e.: you gave a ""loan"" with no intention of it being paid back), then the IRS will recharacterize the whole amount as the gift, and you'll be on the hook for gift tax for the amounts above the exemption. What defines a loan vs a gift in terms of the IRS, is it simply that the loan will be paid back, or is it only considered a loan if a promisary note is made? As I said - you must be able to show that the loan is indeed a loan, even if it is with no interest. I.e.: it is being repaid, it is treated as a loan by all parties, and is not an attempt to evade gift tax. Promissory note is not a must, but will definitely be helpful in showing that. But without the de-facto repayment of the loan, it will be hard to argue that it is not a gift, even if you have a promissory note. That means, you should make a loan in such a way that the borrower will (begin) repaying it reasonably soon, so that you can show payment schedule being followed and money moving back to you. Reasonably soon is not of course defined in a statute, so do consult with a EA/CPA licensed in your state on how to structure the loan so that it will not appear as an attempt to evade the gift tax. Are there any limits on how big a loan can be?
Well, if someone who owes me money defaults, I lose the money he promised to pay me.    To me that would be a huge moral obstacle for declaring myself bankrupt.  I was raised in believing that you keep your promises.
I imagine the same results would occur as with any other business that is owed money. For a short period the company will try to collect their debts directly from the consumer. If unsuccessful, the company may then sell their right to the debt over to a collections agency. The collection agency will then pursue more aggressive collections tactics and/or legal action to collect.
One reason to not do that is if you consider that one of the loans is at risk of being called in early.   e.g. You have a line of credit which is close to its limit, and the bank decides to reduce that limit, forcing you to quickly come up with the money to pay it down below the new limit, which can really throw a wrench into your plans.
Beg, plead, whimper, and hope they take pity on you. Sorry, but there's no way to force someone to take less than you legitimately owe them except to declare bankrupty, and even that may not do it. If they aren't interested in throwing away $3000, your best bet really is to try to arrange a payment plan, or to get a loan from somewhere and pay that back over time. Of course either of those options is likely to cost you interest, but that's what happens... I wish I could say something else, but there really isn't any good news here.
That is false. If you obtain a judgment against the debtor then you have the legal right to recoup your money through liquidation of their assets. You can freeze their bank account, garnish wages, or even file a lien on their car or home.
Yes, the borrower is responsible for paying back the full amount of the loan. Foreclosure gives the bank possession of the property, which they can (and do) sell. Any shortfall is still the borrower's responsibility. But, no, the bank can't sell the property for a dollar; they have to make a reasonable effort. Usually the sale is done through a sheriff's sale, that is, a more or less carefully supervised auction. Bankruptcy will wipe out the shortfall, and most other debts, but the downside is that most of the rest of your assets will also be sold to help pay off what you owe. Details of what you can keep vary from state to state. If you want to go this route, hire a lawyer.
You need a cosigner. Someone prepared to repay the mortgager if you should fail to. Needless to say this is going to have to be someone who knows you and trusts you very much. One way is to find someone prepared to share a house with you. Buy a bigger house than you would otherwise need. You would own half each, and the sharing agreement would specify that if one of you defaulted on their payments the other would get a larger share according to how much extra they end up paying. The other way is to find a silent partner, who doesn't live there. They put up no money unless you actually default. They would almost certainly have to be part owners, but you can structure the agreement so that you end up with the whole house if you succeed in paying off the mortgage, or miss no payments until you sell. Parents sometimes do this for their kids.
If you settle for less than the face value, that says something different entirely; not only could you not pay the original creditor, you had to negotiate to reduce the amount to pay the debt collector. That makes extending you credit very risky; not only are you a proven risk for being late to pay, not only are you a proven risk for them having to write off the debt, but if and when they sell it to a collections agency, the agency will see that a past debt was settled for less than face value and assume they'll get the same treatment, and so will offer less to buy the debt. Both of those cases are still better than an open collection; that says to someone considering loaning you money that not only will you default, not only will they have to write it off, not only will the collections agency make less profit... the collections agency is unlikely to see ANYTHING from this bad debt and may not even agree to buy it."
This is probably some lower level employee trying to cover their mistake. So this office tells creditors to leave me alone but I also CANNOT pay my loan because the credit collection agency has slapped a 5k fee on the 7k loan. So my loan spent 5 years (kid you not) like this. It was interest free since the employee stopped the loan processing. Point being is that if you don't pay the lender will either put your loan into deferment automatically or go after you. MOST (not all) schools will opt for deferment, which I believe is 2 years at most places. Then after that you have the optional deferment. So if you keep not paying they might throw you into that bucket. However if you stop paying and you never communicate with them the chances of you getting the optional deferment are almost none - unless school doesn't know where you live. Basically if you don't respond to their mail/emails you get swept into their credit collection process. So just filling out the deferment stuff when you get it - even if they deny it - could buy you up to 10 years - kid you not. Now once you go into the collection process... anything is game. As long as you don't need a home/car loan you can play this game. What the collection agency does depends on size of loan and the rules. If you are at a ""major"" university the rules are usually more lax, but if you are at the smaller schools, especially the advertised trade/online schools boom - better watch out. Wages will be garnished very soon. Expect to go to court, might have to hire an attorney because some corrupt lenders start smacking on fees - think of the 5k mine smacked on me. So the moral of the story is you will pay it off. If you act nice, fill out paperwork, talk to school, and so on you can probably push this off quite a few years. But you are still paying and you will pay interest on everything. So factor in that to the equation. I had a 2.3% loan but they are much higher now. Defaulting isn't always a bad thing.
You may have a few options if the company continues to ignore your communication.  Even if none of these works out, the debt should still probably be paid out by the estate of your friend.
"Never forget that student lenders and their collection agencies are dangerous and clever predators, and you, the student borrower, are their legal prey. They look at you and think, ""food."" My friend said she never pays her student loans and nothing has happened.  She's wrong. Something has happened. She just doesn't know about it yet. Each unpaid bill, with penalties, has been added to the balance of her loan.  Now she owes that money also. And she owes interest on it. That balance is probably building up very fast indeed. She's playing right into the hands of her student lender. They are smiling about this. When the balance gets large enough to make it worthwhile, her student lender will retain an aggressive collection agency to recover the entire balance. The agency will come after her in court, and they are likely to win.  If your friend lives in the US, she'll discover that she can't declare bankruptcy to escape this. She has the bankruptcy ""reform"" act of 2006, passed during the Bush 43 regime, to thank for this. A court judgement against her will make it harder for her to find a job and even a spouse. I'm not saying this is right or just. I believe it is wrong and unjust to make university graduates into debt slaves. But it is true. As for being paid under the table, I hope your friend intends on dying rather than retiring when she no longer can work due to age. If she's paid under the table she will not be eligible for social security payments.  You need sixteen calendar quarters of social security credit to be eligible for payments.  I know somebody like this. It's a hell of a way to live, especially on weekends when the local church feeding programs don't operate.  Paying people under the table ought to be a felony for the business owner."
There is no law requiring someone to return a refused check. You need to clarify whether this payment is to establish a retainer, or to pay for services rendered. Either way you should stop payment on the check and send them a certified letter explaining that you are stopping payment on the check because they refused it. If the payment is to establish a retainer, then the issue is simple: the lawyer requires $10,000 as a retainer before you can engage them and until then you have no relationship with them. If that is the amount they want, then less than that is not accepted. If the payment is for services rendered already and you owe them money, then it is a completely different situation. Refusing partial payment means they are getting ready to sue you. In a collection suit, the larger the amount is, the better. Normally, someone owed money will only refuse a partial payment if they anticipate having to sue the debtor and they want to maximize their leverage in case of a court judgement in their favor. A creditor has the right to refuse a partial payment.
"As I understand it, if the ""borrower"" puts a down payment of 20% and the bank puts down 80%, then the bank and the ""borrower"" own the home jointly as  tenants in common with a 20%-80% split of the asset amongst them. The  ""borrower"" moves into the home and pays the bank 80% of the fair rental  value of the home each month.  {Material added/changed in edit: For the purposes of illustration, suppose that the ""borrower"" and the bank agree that the fair rental per month is 0.5% of the purchase cost. The  ""borrower"" pays 80% of that amount i.e. 0.4% of the purchase cost  to the bank on a monthly basis.  The ""borrower"" is not required to do  so but may choose to pay more money than this 0.4% of the purchase cost each month, or pay some amount in a lump sum. If he does so, he will own a larger percentage of the house, and so future monthly payments will be a smaller fraction of the agreed-upon fair rental per month. So there is an incentive to pay off the bank.} If and when the house is sold, the sale price is divided between ""borrower"" and bank according to the percentage of ownership as of the date of sale. So the bank gets to share in the profits, if any. On the other hand, if the house is sold for less than the original purchase price, then the bank also suffers in the loss. It is not a case of a mortgage being paid off from the proceeds and the home-owner gets whatever is left, or even suffering a loss when the dust has settled; the bank gets only its percentage of the sale price even if this amount is less than what it put up in the first place minus any additional payments made by the ""borrower"". I have no idea how other costs of home ownership (property taxes, insurance, repair and maintenance) or improvements, additions, etc are handled. Ditto what happens on Schedule A if  such a ""loan"" is made to a US taxpayer."
Well, he could negotiate with the bank to pay off the loan before the foreclosure takes effect. That would obviously cost him a large pile of cash but might remove the foreclosure, and possibly the late payments, from his record. But the real answer is that, having signed the note, he should have been making sure payments occurred so it never got close to foreclosure. That's what he promised the bank he would do. Having failed to do so, he really isn't in a position to complain when they tell other businesses that he didn't meet that promise.
The home owner does not start foreclosure, the bank decides when to foreclose. Therefore you cannot really decide a time to foreclose if you are trying to time the decision. The process You miss payments, and the banks will send you a late notice for the missing payments. Expect many notices. The bank will call you at home, on your cell phone and at work. They will mail you letters regarding the missing payments. If you continue to miss payments, the bank will probably demand the loan be paid in full. You will owe the bank the full balance of the principle, all past due interest, all past due late charges and junk fees. The bank won't even take a normal monthly payment from you should you try to pay your regular payment again. Some law enforcement will notify you on the bank's intent to foreclose. The bank has begun legal proceedings. Legal notices are published in the local newspaper. Soon the notices and the legal waiting period will expire. Court proceedings happen. The court will then allow the bank to foreclose. Notices to into the paper again about the updated status of the foreclosure. The house is sold at auction. Money from the auction is used to pay taxes owned, then mortgages, then other liens or creditors who file. Further debt for the home owner Taxes When sold, if the mortgage debt exceeds the home's fair market value, US Federal Tax rules say the selling price as the fair market value. The fair market value can still be higher than the tax basis (which I think is the value of the house at the time of original purchase plus improvements.). If the fair market value is higher, you will own taxes on sale. However tax rules in the US say if you have owned the home more than two years and make less than $250,000 in the transaction ($500,000 if married) you will not owe any tax. State taxes can be different. Additionally, if the mortgage lender forgives the debt and doesn't create a deficiency, that income is taxable as well. This is more an more common these days. There are exceptions if the home is your primary residence.
Generally speaking, an interest-free loan will be tied to a specific purchase, and the lender will be paid something by the vendor. The only other likely scenario is an introductory offer to try to win longer-term more profitable business, such as an initial interest-free period on a credit card. Banks couldn't make money if all their loans were interest-free, unless they were getting paid by the vendors of whatever was being purchased with the money that was lent.
No offense to any bankers who are reading, but i find it remarkable that they can confuse what I'd expect to be an otherwise simple explanation. If at the end of each day the interest is added, you go to sleep with a new balance. At the moment it's added, you have no interest due, just a higher principal amount than when you went to sleep last night. When I view my loan, I know how much interest added to principal since the last payment. Any amount I pay over that has to go to principal. Forgive me, but the rest sounds like nonsense.
One issue is whether it is a scam or the collector has a right to collect. Another issue is the statute of limitations period on the debt.  If it has expired, the creditor cannot get a court judgement against the borrower (if the borrower contests it).  However, if the borrower makes a payment, or promises to pay, the time resets to zero, starting a new period subject to valid court action.  In the U.S. the length of this period varies by state.  (This period is different from the amount of time a debt can be listed on a credit report.)
"That ""something"" you are signing means you are liable for the mortgage payments - yes, all of them - if he can't or won't pay at any point.  The limit on what the bank will lend him based on his salary is there for a reason - they don't expect him to be able to keep up repayments if they lend him more (or more precisely, there's a big risk that he won't). Don't forget that even if he swears up and down to you that he can afford them, interest rates can rise; this is a 25 or 30 year commitment you would be making. Interest rates are at a historic low and the only way from here is up; in my living memory rates have been 12% or even 15%. As a very rough rule of thumb, for every £100k borrowed, every additional 1% on the interest rates costs an additional £100 on your monthly payment.  Also, the ""Transitional Arrangement"" is not without its own fees and the bank won't let him simply take you off the mortgage unless they are convinced he can keep up the repayments on his own, which they clearly aren't. Also thanks to @Kat for the additional good point that being on the hook for your friend's mortgage will prevent you from being able to get a mortgage yourself while the liability still exists, or at least severely limit your options. No matter how many times you protest ""but I'm not paying any money for that!"" - it won't help.  Another point: there are various schemes available to help first time buyers. By signing up for this, you would exclude yourself from any of those schemes in the future."