Northern Rock - What happens to my loan?

Question

Afternoon all,

I've got an unsecured personal loan from Northern Rock, and so I've been watching the situation with interest. I don't want them to go bump, because it's a bit harsh on all the people with savings, but it got me to thinking.

If NR goes bust, what happens to my loan? I understand that if they get taken over, it would transfer to the new owner, but what about if no-one takes it over (which seems a possibility in the current financially troubled world)? Is my loan written off as bad debt, or would administrators become involved?

Answer 1

Funny, I was wondering about that myself. I took out an unsecured loan with them recently, but I paid it all back, as I no longer needed it.

If I was you, I would have a look at the contract that you signed. I don't mean to scare you, but I had wondered if they would expect all of the money back at once?

Answer 2

Hello,

(ANS) The real answer is NOTHING!! is going to happen to your unsecured loan, you will have to go on paying it back as normal, as if nothing has happened. Your unsecured loan is NOT affected in anyway what so ever, the NR terms & conditions of your loan will not have changed one jot.

**NOTE: So much of what is being reported & so much of what is happening is just hype & hysteria.

**The more people & investors & shareholders that panic and start to withdraw money from NR the worse they will make the situation.

**Northern Rock are being backed by both the Government and also the Bank of England, so NR are NOT about to run out of money, funds or cash. The government is acting as a guarantor so they wont go bust at all.

**The ONLY reason that NR is having a problem at all is that it is probably exposed to the sub prime housing market in the USA. Meaning that Northern Rock may have lent money to other companies who are holding morgage related debits based in the US. The credit problem is down to lending & borrowing between big banks & building societies, i.e. inter bank cash flow, meaning credits & debits between lenders.

**My advise is too sit tight & stop worrying this will blow over in the short term as the markets resolve the US sub prime crisis.

Ivan

Answer 3

If they went bust the assets of the company would be sold to the highest bidder. One of these assets is the debt they have accumulated from all of their borrowers. You would then have to pay the new owner. Your terms that you signed should have your rights should this happen.

Think about it this way. I loan my friend $100. I go bankrupt and decide that I need to liquidate everything I own. You still owe me $100 so somebody buys your debt from for $50. I ge the $50 and get some money back quickly and the new owner gets the payments ongoing.

Answer 4

Northern Rock could just stop lending money and just sit back and rake in the profits from their mortgages, loans and PPI's (personal protection Insurance)
I mean come on - the bank said underlying pre-tax profits this year would be £500m to £540m, down from £588m last year and versus market expectations of £647m!
This isn't a company about to go bust!
Taken over is a big possibility though.

Answer 5

Northern Rock isnt going to go bust there are absolutely no indicators saying that. Try and ignore the press and GMTV they only paint a sensationalist view of whats happening. If they were to change ownership your terms and conditions remain unchanged. for further info speak direct to northern rock or contact the financial service authority for advice. Just dont panic.

Answer 6

Administrators would step in and take over. However there is for one, no chance they will go bankrupt! they have just increased the amount of the borrowing limit from the Bank of England.


They have anounced a decrease in annual profits by £100m This will affect share prices massively as their dividend pay outs will be alot lower. But afraid to say there is absolutely no chance you will get out of paying that loan back.. be nice tho wouldnt it!!

Answer 7

Northern Rock wont go bust, they have just got a short term cash flow problem because no-one will lend to them.

if they did you will still owe your loan, probably to the administrators as your loan would be an asset owed to them.

Answer 8

Its early days, I am sure Northern Rock won't go bust.

Answer 9

considering you would be employing their money and not any different way around then there should not be a difficulty. merely element is that in case you default they could be slightly keener than some to get their money returned on the 2d.