Help me understand something about bar credit...

[TheShadow]

So I am watching a bit of "Bar Rescue" which I know is a little staged and dramatic.

So I keep hearing that these bars can be 200 or even 300 thousand dollars in debt and are still operating.

How do they get the credit to keep doing that and still operate?

At what point do the creditors just pull the plug and when they do, how do they get any of their money back?

 

[harrylee]

Oh....I thought you wanted advise on how to run a tab at your local establishment......lol

No idea, but a few hundred thousand is pocket change when it comes to debt these days. Scares the hell outa me though. I was sweating bullets when I signed a 43,000 mortgage on my 1st house.

 

[petros]

So I am watching a bit of "Bar Rescue" which I know is a little staged and dramatic.

So I keep hearing that these bars can be 200 or even 300 thousand dollars in debt and are still operating.

How do they get the credit to keep doing that and still operate?

At what point do the creditors just pull the plug and when they do, how do they get any of their money back?

By putting up secured assets like homes as collateral and high interest unsecured loans.

 

[TheShadow]

LOL!

It's been a while since I ran a tab anywhere.

But I just don't get how these places can run up huge debt like that and still function.

At some point how do they know they will never pay it back or catch up and why do creditors let it get so high?

 

[TheShadow]

By putting up secured assets like homes as collateral and high interest unsecured loans.

So at what point do the creditors say enough is enough and step in?

 

[petros]

So at what point do the creditors say enough is enough and step in?

Receivership.

 

[TheShadow]

Receivership.

The thing I keep seeing though is how creditors are "willing to help" when payments are missed etc.

 

[petros]

Look into how receivership works. Your questions will be answered.

 

[harrylee]

The thing I keep seeing though is how creditors are "willing to help" when payments are missed etc.

Sometimes it is better for them to let it slide a bit further and hope for the best, rather than coming away with nothing.

 

[TheShadow]

Look into how receivership works. Your questions will be answered.

I understand how it works.

What I am not getting is how the creditors are not following how it works.

 

[TheShadow]

Sometimes it is better for them to let it slide a bit further and hope for the best, rather than coming away with nothing.

Do you think they are letting it slide as far as possible to get the assets instead of recovering cash for the debt?

 

[petros]

I understand how it works.

What I am not getting is how the creditors are not following how it works.

Back to secured and unsecured loans.

 

[TheShadow]

Back to secured and unsecured loans.

Which makes me wonder if creditors are more predatory these days and looking to get deeper into assets rather than paying back of loans.

 

[petros]

Which makes me wonder if creditors are more predatory these days and looking to get deeper into assets rather than paying back of loans.

Creditors like Easy and Fairstone will take the risks at 45% interest rate.

Caveat emptor

 

[TheShadow]

Creditors like Easy and Fairstone will take the risks at 45% interest rate.

Caveat emptor

Isn't there a limit on how much interest you can charge on a loan?

 

[Johnnny]

The Shadow strikes again....

 

[petros]

Isn't there a limit on how much interest you can charge on a loan?

In Canada the Provinces cap rates or don't cap rates. Not sure about the US.