Your feelings on paying back debt

@ebrown p,

ebrown p wrote:

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

Perhaps not, but that doesn't mean it's not wrong, in many cases.

Right and legal, wrong and a crime do not always equate.

I have more respect for someone who would do something illegal, knowing it's the right thing.

1 Reply

@Chumly,

Chumly wrote:

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.

I think your emotions should be involved, to an extent, in your finances.

Otherwise, if you had no emotions about it, you could run a profitable child pornography ring.

Since learning to invest in the stock market, I've done very well, by keeping emotions such as greed under check.

You're right in that the emotion of greed should not get involved in paying back your debts, since it will cause you to try to not pay the full amount.

Other emotions, such as that feeling in the pit of your stomach that says "you played the game, now pay the piper", is necessary to be an ethical person.

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@Chumly,

Anyway, why is it ok to have emotions when spending money, whether you have the ability to pay or not, but it's not ok to have emotions when the bill is due?

Why is it great to be able to feel good when you buy something that is wonderful, but bad to have the feeling of commitment to settling your debts when it's going to be tough to pay back?

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@chai2,

Right and wrong are not always black and white. Many families are faced with the choice of going bankrupt, or losing the ability to send kids to college. Give me the choice between my kids future, and credit card bills-- you see the issue.

The real issue here is that you are still only looking at one side.

Companies never look at "right or wrong"-- they only look at what is best for them financially. If evicting a young family who has unexpectedly fallen on hard times is best for their profit margin, they will do it in a second.

Do you think it is OK for companies to play by the rules in the way that best helps them financially with no regard to "right or wrong"? If this is true for companies, why shouldn't it be true for families?

1 Reply

@ebrown p,

ebrown p wrote:

Do you think it is OK for companies to play by the rules in the way that best helps them financially with no regard to "right or wrong"? If this is true for companies, why shouldn't it be true for families?

That reminds me of something my mother used to say...

"If Johnny Miller jumped off the Brooklyn Bridge, would you jump too?"

It really is this simple; you buy something, you pay for it.

Perhaps life throws something at you causing you to not be able to pay it right now until "you get back on your feet", but when you do, you pay.

In the meantime, you show your commitment by paying what you can.

1 Reply

@chai2,

No 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, under a well understood system of rules, rights and protections that are part of American law. This is about fairness-- you seem to be arguing that one side should be able to use the rules in any way benefits them financially, while the other should be kept from exercising their rights under the rules.

In a fair system, you set up a well-defined system of rules that everyone understands. Then you let each side exercise their rights or protections as they feel benefits them.

Our system includes bankruptcy protection. The rules of bankruptcy are open, and well-understood. Creditors do business, setting up rates and policies and freely enter contracts with a full understanding that our legal system gives rights and protections to debtors.

It is really that simple: If you extend credit, first make sure that you understand the rules.

Fairness means letting each side play by the rules.

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@ebrown p,

ebrown p wrote:

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.

What would be the rules that protect each side? Right now there are rules. If you use a credit card, it's on the understanding that outstanding amounts are subject to 19% or whatever interest. So, you can choose to use their credit or not. That seems eminently reasonable to me. If you spend more than you can afford and get yourself into serious arrears, how is that the credit card company's fault?

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.

How are they shady and immoral?? They're offering a service that is optional for everyone. It's BUSINESS.

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.

Right, and so if credit card companies are allowed to charge 19% interest and then they do so, they're playing by the rules, too. You call them shady and immoral when they're simply providing a service, yet you dispute that people who overspend and can't/won't pay are not thieves. THAT'S ridiculous.

1 Reply

@Mame,

Quote:

What would be the rules that protect each side? Right now there are rules. If you use a credit card, it's on the understanding that outstanding amounts are subject to 19% or whatever interest. So, you can choose to use their credit or not. That seems eminently reasonable to me. If you spend more than you can afford and get yourself into serious arrears, how is that the credit card company's fault?

Sure.

Well, in my opinion 19% interest is obscene. And, seeing the bad social effects of some of these practices makes it more frustrating. So when I call some of these practices "immoral", I admit that I am making a subjective judgement But my opinion isn't the point.

So yes, you are absolutely correct that the credit card companies are following the law. They aren't doing anything illegal... so it would be wrong for me to use words that imply crime;

Calling them "thieves" for example, when they are doing something that is allowed under the law, would be inappropriate.

The problem with your argument is that you are willfully ignoring other important rules that businesses and consumers operate under.

The law says that consumers have the right to bankruptcy protection. With this right, a consumer who has no ability to pay back significant debts, can appear before a judge who can discharge this debt.

Now we can argue about whether this right is a good thing or not, but it is without question a right granted under the law.

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@ebrown p,

granted bankruptcy laws are a good thing, but wanton consumerism is just as immoral as usury, bankruptcy due to catastrophic illness, or a business that despite your best intentions and hard work goes under is one thing, the thought that you needed a 100 inch flatscreen and home theater system in every room is quite another

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I work for a bank in their credit card department. I recently moved to a new department have seen some newinformation that I still find shocking.

We have reports that show where revolving debt was charged; it doesn't show what was bought, but it shows categories like 'departmet stores' 'supermarkets' 'gas' 'electronics' 'home improvement'.

I've only seen the report once, it's a pretty closely guarded piece of data. I was surprised at how much revolving debt is spent at resturants, super markets, warehouse clubs, home improvement, and electronics stores. The majority of all revolving debt at my company are made up of these 5 categories. Subsequently, of delinquint and charge-off customers, they also havethe vast majority of their balances in these categories also.

We see very very few charge off accouts where the balance is made up of charges from medical companies.

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@chai2,

Quote:

Where the hell is personal accountability?

Where the hell is political accountability?, where the hell is corporate accountability?, where the hell is religious accountability??

Where the hell is accountability for those who ran our economy into the ground? I see no reason why only the little guy should be held accountable When EVERYONE ELSE is plundering the national treasure.

What we do is wrong, way wrong, but we need to keep fairness in mind.

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@maporsche,

That's silly Ma (especially considering).

Imagine your wife has breast cancer and you are socked with medical bills (which you will pay by check). You still need to buy clothes for your kids, gas to get to work, and food for your family.

This little anecdotal story of the report you saw is silly when it is well known that half of bankruptcies are caused by unforeseen medical emergencies.

I don't understand the human urge to demonize people who have fallen on bad times, other then maybe it gives us some smug feeling of superiority.

1 Reply

@djjd62,

Dj,

I absolutely agree with you.

However Bankruptcy laws have accountability. A person seeking bankruptcy protection has to list every asset (down to household furniture) for a judge, and for the creditors, to see.

The judge then decides what, if anything, can be sold to settle the debts.

The protection is to keep people from losing their home, the clothes from their backs or (most importantly) their means of earning a living. Taking away someone's ability to earn a living because they were unable to pay their debts is undeniably stupid.

The idea that bankruptcy isn't a form of accountability is simply incorrect.

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@Finn dAbuzz,

Oh, good grief.

Do you really believe that nonsense?

Credit card companies thought for a while that it made business sense to give credit cards to people with bad credit. People with bad credit miss payments, and they could charge late payment fees.

All of these charges and late fees made the books look really good, for a while. By the time people started to default, the folks running the companies had already cashed in their bonuses.

I used to receive credit card applications for my cat. It's not like my cat had a credit history.

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@ebrown p,

I would agree that he medical emergency is the final straw on someones already over-extended back, but the debt they are doing a BK on was charged up at the types of places I mentioned. THEN they get hit with a medical emergency and can't pay their minimum payments anymore.

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@DrewDad,

Yes. I was involved in many meetings about this too. Our company knowingly did some things I question the morality of.

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Increasingly, individuals who pay their debts are suckers.

Quote:

Credit card lenders expect to write off an unprecedented $395 billion of soured loans over the next five years, according to projections from The Nilson Report, an industry newsletter. That compares with a total of about $275 billion in the last five years.

http://www.nytimes.com/2009/01/03/business/03collect.html

This has long been true of businesses, who routinely resort to renegotiating the contracts that they dont want to pay and bankruptcy court.

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@maporsche,

Quote:

Yes. I was involved in many meetings about this too. Our company knowingly did some things I question the morality of

Credit card companies are taking a lesson from the insurance industry, which for decades has considered fraud none of their business because they just send the bill to their customers.

Credit card companies are borrowing from the US FED Reserve at a few percentages cost per year, and lending it to citizens at 20-30% a year. They can write off a lot of accounts payable and still make a good profit by milking the spread. Why should they care? Morality and business have long had nothing to do with each other.

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So, if everyone else is doing it, it's all right, huh?

Calling people who've had to sacrifice a lot to pay their debts suckers is the ploy of a school yard bully telling the people who study and get good grades, hell, get average grades, are losers because they don't cheat to get their grades. Or they are losers becasue they care about grades in the first place.

Politics schmolitics.

You buy something, you pay for it.

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@chai2,

Your moral absolutism rears its ugly head in the face of finances; however the dollar has no conscience, nor does the dollar have morality! The dollar only has relative value (albeit some will argue it has intrinsic value too).

'Ol Wiki sayeth:

Quote:

In finance, intrinsic value refers to the value of a security which is intrinsic to or contained in the security itself. It is also frequently called fundamental value. It is ordinarily calculated by summing the future income generated by the asset, and discounting it to the present value.

Quote:

Relative value is the attractiveness measured in terms of risk, liquidity, and return of one instrument relative to another, or for a given instrument, of one maturity relative to another.

1 Reply

Your feelings on paying back debt

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