If you owe a bank money & it goes bust what happens?

[KatyMac]

Do you just pay someone else?
Do you get let off?
Do you have to pay it all off at once?

Good question! I hope capital one goes bust and i get let off!

What will usually happen is that the receivers would look at the bank's assets (like your debt to them) and sell them off to a purchaser.

The purchaser will buy the debt from the bank - either at face value or at a discount.

If it is bought at a discount, then it is the bank and its shareholders who suffer the cost of that discount.

You'll just carry on paying your debt as normal.

Sorry, were you hoping for good news?

doh!

No I just paid some off & then I though what if the debt was called it - how could I pay it?

You'd still owe the money, the recievers or administrators would collect it instead. And if you missed a payment you'd still be liable for penalties too.

I don't think the terms of your debt can be changed if it's sold to another company or by the receivers. If you are paying x amount for y months then you can't be made to pay any more than that. It would be an unusual debt that could be called in.

Good

Actually terms can change but not detrimentally to the customer. The transfer of undertakings and assets would include the debt and contract though. HOWEVER offers may be withdrawn with notice - if you read the small print of most mortgages fixed rates, discounts, cashbacks etc. can be cancelled at the bank's discretion (or that of it's administrators if it's insolvent) so you may find for example you can't take advantage of loan extensions, payment holidays etc any more.

You will still owe th emoney - just to someone else.

Sadly.