Your feelings on paying back debt

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I had a long car trip today, got bored listening to music, so I started skipping around the AM stations, for entertainment.

Segway; sorry that's not a very interesting way to be bored, but I'm not a "new busy"

Anyway, I land on the show by that Dave Ramsey guy. I'd heard of him, but never listened to him.

As I listen to him speak to several people, I started to feel disquieted. Don't get me wrong, I'm all for people getting out of debt. I think it's especially great when people learn the lesson that spending is not the way to happiness.

However, several times Ramsey mentioned the tactic of bargaining down your debt "Tell them you know you owe them $11,000, but you only have $4000 to give them, so they can either get $4K and call it even, or they won't get anything. Tell them you won't do one of those $2 a month plans....."

Pardon my french, but to me that is just ******* wrong.

So you use the services of, or buy merchandise from someone, signing a contract that you owe them X amount of dollars, and you feel ok with telling that person to either take what you can give them right now, and forgive the rest, or take a flying leap and get nothing?

Why not, "I owe you $11,000, and I can give you $4,000 now, if you give me 6 months where I only give you $50 a month, then I can start paying off the $7,000 I owe you, at a few hundred a month. Can we work with that?"

There was one guy who said he and his wife paid off their $31K debt in 24 years. Did they really pay off $31K, or did they screw business (even a credit card, hey, you signed the receipt, that's an obligation) out of half of what they were owed? When Ramsey asked them what the hardest part was about doing this, the wife actually giggled and said "It was hard not buying things I wanted, like shoes"

Where the hell is personal accountability?

Oh yes, and I know all about the people with catastrophic illness, who were swindled out of all their money (perhaps because they were greedy?) and all the other stories about how bankruptcy just couldn't be avoided.

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[+4] - ebrown p - 04/24/2010No No No Chai, you are missing the whole point (I am not sure if asking you to go back and read again will do any good). I am saying that creditors and debtors have both entered into a contract,...

@chai2,

You are so right!

I've been hearing about how much we've reduced our personel debt this past couple of years. Bully for us. I have to wonder if "reduced" is anything resembling "paid off". Mortgage defaults, cars reposessed, and credit card bills negotiated or beat to death in bankruptcy court doesn't have quite the noble sound as "reducing our debt."

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Late edit.

In my post above, I meant to say the couple paid off $31K in 24 MONTHS.

Yesterday, I went to lunch with a dozen people that worth with the same company I work for. Since I work at a regional office, I said I'd just pay the check, since it was going to be charged to our office anyway.

The woman next to me, who makes a lot more than I do, looked on amazed when I handed over my credit card. I don't even know how much it was, not much, a couple of hundred dollars.

"How are you going to get paid back for that? Won't you have to send in a check request?"
I looked at her and said, "No, I just submit an expense report online. The money will be in my checking account in a couple of days." She should have known this.

"Yes, but how will you make sure the money is in your account when you get the bill?"

um.....because it's going to be in my account by Monday, and I won't get the bill for this for at least a couple of weeks?

"That's what I mean, won't you have spent it? You must be very strong willed."

Why would I have spent it? Just because it's in my account?

She seemed as confused by me, as I was by her.

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@chai2,

You're absolutely right.

My feeling on paying back debt is that you have to...no ifs and or buts.

If you can't put your head around this notion, don't borrow, and if you do borrow with the thinking that you can ultimately dodge some or all of your debt, you are a thief --- plain and simple.

Can't blame the debtors who accept that a return of 60 cents on a dollar is better than none, and that it isn't worth spending $10,000 in legal fees to collect $5,000 in debt.

The fact is that they factor the cost of all the dead-beats into the price they charge for capital, so you and I, regardless of our credit rating, are going to pay more than we should in interest.

What's more they have to put up with ass-wipes from Acorn and the Social Democrat run congress telling them they should forgive the dead-beats' debt.

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My wife works as financial councellor.
Sometimes all people need is a bit of a hand up to get back on their feet.

Businesses screw the life out of people. Sign them up over the phone but need a cancellation in writing sent to a particular department or person who's address is very difficult to find.
Lots of times it's people who arnt intelligent enough to be able to recognise scamming.

One client she worked with offered the debtor a payment plan of 10.00/month until the full amount was paid. My wife and the client had worked out a budget and this amount was affordable. This was rejected by the debtor on the basis that "their system would not handle such small amounts" You'll have to make it $50.00/month.

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This thread is based on a weird injustice.

How is it fair that creditors or corporations are supposed to be solely driven by profit, where debtors/customers are bound by some sort of moral "duty".

It really makes no sense when you think about it, people have more concern about the profits of corporations (quite often already quite profitable) then about the concerns of families and people who have fallen on hard times.

I have no sympathy for lenders who lend money to people who aren't in a position to pay them. It is bad business... Often this practice is predatory-- having people unable to pay their debts is part of the business plan. They ruin the lives of thousands of families with such obscene interest rates that the fact that a large percentage will never be able to pay off is irrelevant.

The system should at least be fair, meaning that lenders are not able to lord over their customers. Creditors should at least be on equal footing.

Creditors need to accept the risk they are taking on (and often they use risk to justify usurious interest rates). It is only fair that when a mistake is made, they should at least share the cost.

Personally I have far more sympathy for working class families who are having their blood sucked dry by these leeches.

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@dadpad,

This is the gist of a clearly fundamental argument:

Don't borrow if you know you can't repay.

If you borrow, do whatever it takes to repay.

If you lend, you have no obligation to consider that your borrower has no principles.

Let's realize a very clear fact:

When you borrow, you are taking money you don't have from someone who is willing to lend you the money because he or she stands to make a profit.

The lenders are not (or should not) be required to give you their money, and if they do it is entirely reasonable for them to expect a return...a (OMG!) profit.

Replace the institutional lender with a member of your family who wants nothing more than your return of the amount lended.

Are they vile scum because they are not happy when you tell them you can't repay your loan?

Do you really expect them to sigh and move on?

Would you? I very much doubt so.

But then, the folks that are all about loose lending seldom have any money to lend.

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@Finn dAbuzz,

Quote:

If you lend, you have no obligation to consider that your borrower has no principles.

This is exactly the problem Finn... the implication is that the borrower does have an obligation to consider that your lender has no principles.

This is the basis of an unfair system where one side of the game holds all of the cards.

In a fair system, both sides take on risk and both sides benefit from the deal.

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@ebrown p,

ebrown p wrote:

Quote:

If you lend, you have no obligation to consider that your borrower has no principles.

This is exactly the problem Finn... the implication is that the borrower does have an obligation to consider that your lender has no principles.

This is the basis of an unfair system where one side of the game holds all of the cards.

In a fair system, both sides take on risk and both sides benefit from the deal.

Utter nonsense.

The risk the lender assumes is not that the borrower just doesn't want to pay and the government will support his dead-beat ass.

The lender assumes a risk that some borrowers will (for whatever reason) default on their loans.

A smart lender has collateralized his loan and so will recover some percentage of his loss.

The lender also passes on the cost of this risk to all of his clients, including those who would rather die than not pay back their loan.

Your point about the jeopardy of a borrower assuming a lender has principles has some relevance if we were living in 19th century America. There are so many federal regulations imposed upon 21st century lenders that it is reasonable that borrowers trust their principles.

As much as you might like to paint a false picture, the current financial situation has nothing to do with lenders violating regulations relative to borrowers.

The problem is clearly one sided: Lenders loaned money to people who never had any intention or means to pay them back. Perhaps they were stupid for doing so, but its pretty tough to make a case for mendacity.

In reality, the government pressured the lenders to loan money to risky borrowers, and the lenders said "OK rather than fight the government, let's figure out a clever way to do what they demand and still make money."

Unless you believe that making money is a sin, the lenders have done nothing wrong so far.

In reality, the clever way they figured out was bullshit and it enabled folks who were all too willing to take advantage of the government pressure to make a fast buck to prosper.

There is plenty of blame to go around here, but the borrowers are not exempt.

Unfortunately, left-wing policies have created a class of Americans who believe that something for nothing is perfectly realistic.

Government tells me I should own a house and therfore I should. The fact that I cannot afford the house I've bought is immaterial, because the Government will see to it that I get to keep my house.

Government tells me I will be getting free healthcare and so me and hundreds of thousands of other like me are calling insurance companies, hospitals, local governments, and doctors and demanding to know how we can sign up for free Obamacare.

The mere fact that governmental support and involvement in our daily lives is so f*cking complicated should tell us it not good.

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Finn dAbuzz wrote:

If you lend, you have no obligation to consider that your borrower has no principles.

If you lend you have an obligation to yourself your company or shareholders to ensure the borrower understands the contract and has the ability to repay.

I include offering 30 day trading accounts as lending.

Once upon a time you went to the bank and asked for a loan. You couldnt get one if you didn't have a stable job history and were not able to show your income, expenses, and savings pattern for the last 12 months if not more.

Once upon a time you could not get store credit unless the owner knew you personally. Once upon a time if you were struggling for a period store owners cut you some slack.
Small business carried many many creditors during the depression.

I believe that if you are offered credit by someone that has not investigated your ability to meet payments then it is the credit providor that is taking the risk. If you have offered credit to a client and subsequently find they cannot meet the expected payments it should be your responsibility to work out with the creditor the best ioptions for payment.
That may be (legally) selling their property or working out a payment plan. However the basic needs of the client do need to be taken into account

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@Finn dAbuzz,

Quote:

In reality, the government pressured the lenders to loan money to risky borrowers, and the lenders said "OK rather than fight the government, let's figure out a clever way to do what they demand and still make money."

This pretty much ends the argument. LOL

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@dadpad,

dadpad wrote:

Finn dAbuzz wrote:
If you lend, you have no obligation to consider that your borrower has no principles.

If you lend you have an obligation to yourself your company or shareholders to ensure the borrower understands the contract and has the ability to repay.

I include offering 30 day trading accounts as lending.

Once upon a time you went to the bank and asked for a loan. You couldnt get one if you didn't have a stable job history and were not able to show your income, expenses, and savings pattern for the last 12 months if not more.

Once upon a time you could not get store credit unless the owner knew you personally. Once upon a time if you were struggling for a period store owners cut you some slack.
Small business carried many many creditors during the depression.

I believe that if you are offered credit by someone that has not investigated your ability to meet payments then it is the credit providor that is taking the risk. If you have offered credit to a client and subsequently find they cannot meet the expected payments it should be your responsibility to work out with the creditor the best ioptions for payment.
That may be (legally) selling their property or working out a payment plan. However the basic needs of the client do need to be taken into account

Who forced lenders to provide credit to parties not credit-worthy?

The Government.

Do you really thing that all of the Bank Magnates woke up one morning and decided that lending money to high risk borrowers was a good way to go?

A lender has no obligation to consider, in the execution of its contract, that the borrower doesn't believe that he or she should repay their debt.

It has a contract and should enforce it through whatever legal means are available.

It has no contractual obligation to consider the socio-economic status of the borrower or that the borrower may think that taking money from The Man and not paying it back is effin cool.

Clearly it needs to consider the socio-economic status of its borrowers (although Leftists would argue otherwise) if it is to construct a portfolio of debt that has any chance of providing its company with a satisfactory return on the capital it has employed.

People with lots of money don't lend it out through the goodness of their hearts. If they did, they would soon have no more capital to lend. They lend it to people whom they believe will repay it, with interest. They want to make a profit!

Borrow money and pay it back. If you borrowed it for a worthy cause it was worth it. If you borrowed it for vanity or self-indulgence, chances are you are not going to be able to pay it back, and a universal sense of justice demands that in some way you bear the consequences when you do not.

All of you leftist clowns are going to kill the Golden Goose.

It may take 10, 20 or more years, but if there isn't a sea-change in the way this country is run, America is going down.

Your silly largesse is not sustainable.

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Notwithstanding my points above there are many clients that my wife sees that want too much or realistically cannot afford to have.
My wife works with the cleint to set up a budget.
Often tthe first thing on the list of must have items are beer and ciggarettes another is choof (Marijuana).
Must haves many times include pay TV (cable), mobile phone, hired or
rent/buy plan dvd, computer, plasma screen TV.
Most clients are on social welfare and believe they are entitled to have these things.

One client my wife saw had an income of 10K per month and still could not pay debts. If there was money in her account she (the client) spent it. The minimum amount was paid each month on the credit card because that what it said had to be paid. Which of course meant interest on the outstanding amount ... etc etc.
This client had to reduce lifestyle choices and did so. As i understand things payment plans and budgeting solved the crisis.

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@dadpad,

dadpad wrote:

Finn dAbuzz wrote:
If you lend, you have no obligation to consider that your borrower has no principles.

If you lend you have an obligation to yourself your company or shareholders to ensure the borrower understands the contract and has the ability to repay.

I include offering 30 day trading accounts as lending.

Once upon a time you went to the bank and asked for a loan. You couldnt get one if you didn't have a stable job history and were not able to show your income, expenses, and savings pattern for the last 12 months if not more.

Once upon a time you could not get store credit unless the owner knew you personally. Once upon a time if you were struggling for a period store owners cut you some slack.
Small business carried many many creditors during the depression.

I believe that if you are offered credit by someone that has not investigated your ability to meet payments then it is the credit providor that is taking the risk. If you have offered credit to a client and subsequently find they cannot meet the expected payments it should be your responsibility to work out with the creditor the best ioptions for payment.
That may be (legally) selling their property or working out a payment plan. However the basic needs of the client do need to be taken into account

See other Finn replies.

Of course the Lender needs to take into account, when deciding whether or not to lend, the capability and even the philosophy of the borrowe, but once the money is lent, all bets (except those supported by the contract) are off.

Alas, any number of governments and countless A2K idiots believe that the Lender needs to take into account the circumstances of the borrower when it comes time to collect.

Actually, to some extent, they do. No matter whether the borrower is a dickweed with no sense of personal accountibilty, the lender has to look at the tranaction in terms of economics.

Not-with-standing the argument that the US government forced lenders to loan money to poor risks, the lenders caved too quickly and attempted to find a uber-complicated way to turn sows ears into silk purses.

Ultimately, though, while greed and stupidity in the private sector helped create the financial crisis of 2008, it was the government's mad desire to see everyone own a home that launced the disaster.

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@ebrown p,

ebrown p wrote:

Quote:
In reality, the government pressured the lenders to loan money to risky borrowers, and the lenders said "OK rather than fight the government, let's figure out a clever way to do what they demand and still make money."

This pretty much ends the argument. LOL

/quote]

If you say so Browny.

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@dadpad,

dadpad wrote:

My wife works as financial councellor.

dadpad, I totally agree with everything you are saying.

Sometimes all people need is a bit of a hand up to get back on their feet.

Again, I agree 100%. Sometimes people DO need a bit of a hand....to GET on their feet. Once they are ON their feet, I believe people need to readdress what they owe, and as they are BACK on their feet, pay their debt.

Businesses screw the life out of people.

I would amend that to "SOME, and actually Very Few In the Big Picture" screw the life out of people.

Sign them up over the phone but need a cancellation in writing sent to a particular department or person who's address is very difficult to find.
Lots of times it's people who arnt intelligent enough to be able to recognise scamming.

Very true. It's a shame this happens. I don't mean that sarcastically. Not trying to brush it off, but I'm more addressing people who get into debt because They spent their way into it. Again, I know there can be dire events, illness, a divorce that throws your finances into disarray, etc. etc.
Is it fair though that a legit business or individual never gets paid back their full amount?
Life isn't fair, I know that. But people do have, I feel, an obligation to pay what they owe, eventually.

One client she worked with offered the debtor a payment plan of 10.00/month until the full amount was paid. My wife and the client had worked out a budget and this amount was affordable. This was rejected by the debtor on the basis that "their system would not handle such small amounts" You'll have to make it $50.00/month.

I have to ask, was there another $40 somewhere that could be squeezed out of this budget that was devised? Could someone in the family have taken a 2nd job for extra income? Could the family have said "we will stop eating meat and eat beans and rice for our protein until something else in our finances change? Could the family have decided they would forgo all forms of entertainment that cost any sort of money, instead choosing to cultivate new ways of relaxation that doesn't cost anything? Libraries, board games, card games, free concerts, walks in the park, watching a sunset are all free.

Assuming by family you mean at least 2 people, I just figured, and $40 a month comes down to each of those people not spending an extra .65 cents a day.
Tap water instead of soda, or even a tea, brew a little less coffee in the morning, using vinegar and water to clean instead of commercial products, slowing down and using less gas if you drive. Wearing a shirt one more time if it doesn't stink, etc.
I think we all have the mindset to one extent or another that money is needed to have fun. Sure, some things you have to spend money on might be more fun than the immediate alternative, but, so what? Deal with it.

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Declaring personal bankruptcy is getting more and more difficult these days and it's never 100% - you may not be accepted when you file a claim, and you still have to pay a portion of your debt. They also require you attend budgeting/financial workshops the entire time you're paying off your portion of your debt.

We had a temp in our office who was in the process - turns out that school loans are exempt from a bankruptcy claim, where they didn't used to be. I've known a couple other people who've declared bankruptcy and it really bugs me. Why should they get off paying their debts when the rest of us honour them? If you can't afford something, you don't deserve to have it. And Chai's right - knuckle down and economize.

I think credit card interest is usury so when I use my card, I make sure it's paid off in full before the due date every month. I hate giving them, banks, and the government my money so I do everything legal within my power to minimize what I give them.

People who reduce their debt (Chai's reference) are the same kind of people as those who get paid for 8 hrs but actually only work part of the day. Both types of people are thieves and have no honour or integrity. I have no use for them.

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@Mame,

The point is there should be a level playing field-- between creditors and debtors. The way you do this is to set up a system of rules and understanding that protect the interest of both sides as well as society at large. Then give both creditors and debtors the ability to use the rules as they were intended.

I don't understand why people so quickly side with the creditors-- even when it is clear that the shady, if not immoral, creditors are often a big part of the problem.

Let's talk about bankruptcy. Bankruptcy protection, as a set of rules to govern what happens when a debtor is unable to pay their debts, has been an important part of our system for a long time. The modern form has existed since the mid 1800's... and the idea comes from hundreds of years earlier. Before this we had debtors prisons (putting people who don't have money in jail is a ridiculous idea in any economic system).

Protections for debtors exist in Western society for thousands of years... you even find it in the Bible.

But let's talk about now.

The system of Bankruptcy is a legal way to resolve a bad situation in. The rules are set up to protect the rights and interests of the debtor as well as the creditor. I will argue that our society is much better off, socially and economically, because of bankruptcy protections.

Creditors know what the rules are (which include bankruptcy) when they choose to enter into a contract. You shouldn't feel that sorry for them (they don't feel sorry for you when they are raising rates or socking you with fees).

Come on now-- these are protections that are guaranteed by law under a fair economic system. The system is open-- everyone knows the rights and rules before going in, and it is fairly applied.

Using your rights under the law is not "thievery". Declaring bankruptcy is playing by the rules. Playing by the rules is not a crime.

The whole idea is simply ridiculous.

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My attitude to debt & paying it back, is really simple: if I can't afford it (whatever "it" might be) then I can't have it. And if I should decide to borrow money (which I'd really rather not do, unless it's for something important I can't pay for) then it's my responsibility to pay back what I've borrowed. I couldn't sleep at night if I was constantly worried about debts I might not be able to repay.

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@chai2,

The posting "Your feelings on paying back debt" is skewed as I would advise a separation of emotions and finances...at least to try to.

The simple direct response however is: do not borrow money for a deprecating asset (notwithstanding net tax benefits if any).

As far as defaulting on a loan, that can be assessed on a risk-reward basis as a business might well do, exempting emotionalism as discussed.

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