4
   

moral question regarding debt

 
 
Reply Mon 17 Aug, 2015 01:24 pm
Hi all,

My wife and I are deeply in debt. (Student loans and credit cards). Through my ignorance I thought we were doing better than we were.

We tightened the budget significantly but it wasn't enough. When I realized that I would not be able to make the next months payments I looked into my options and decided that going the debt settlement route was the most feasible thing I could afford. I want to avoid bankruptcy because I would like to pay my creditors something.

I know some people feel a moral obligation to their creditors post-bankruptcy, I would likely be among them. My question is this:

If my creditors ultimately settle for less than the original amount owed is there still a moral obligation outstanding?

Thanks

 
jespah
 
  3  
Reply Mon 17 Aug, 2015 01:53 pm
@czarisdad,
I don't think so. Seriously, if they are settling for, say, 25 cents on the dollar, then that is what they are accepting. Don't beat yourself up about the remaining 75.

They aren't.

Let it go; it's okay.
0 Replies
 
maxdancona
 
  1  
Reply Mon 17 Aug, 2015 02:13 pm
Follow the law and there is no moral issue.

Your creditors don't care about morality. They only care about profit. They will use whatever laws exist to get as much money from you as possible. Sometimes they are good decent creditors, sometimes they are greedy and cruel. But morality has nothing to do with it. They make decisions, usually within the law, to make as much money as possible.

When you are doing business with them, you should have the same attitude. It isn't about morality. It is about keeping as much of your money as possible.

The system only works when both sides are equal. If one side is trying to get as much money as possible while the other side is worried about morality, the system will be quite unbalanced.

The laws are set up to give options to both sides. The can legally charge fees and ruin your credit and put liens on things. You can legally negotiate and declare bankruptcy. By giving different abilities to both sides we have as system that is somewhat balanced.

So follow the law, but use every advantage the law gives you to keep your money without worrying about morality. Morality had nothing to do with it and your creditors know this.

Have you calculated whether bankruptcy might be a good idea?
roger
 
  1  
Reply Mon 17 Aug, 2015 04:19 pm
@maxdancona,
There are a couple of things not allowed in bankruptcy cases. I think that includes income taxes, child support, and student loans.
maxdancona
 
  1  
Reply Mon 17 Aug, 2015 04:34 pm
@roger,
That's true. I would advise that anyone considering bankruptcy talk to an expert... either a lawyer or a knowledgeable accountant before deciding if that is the right way forward.

On the other hand would also advise someone with a large amount of debt they are struggling with but not considering bankruptcy yet to talk to an expert before completely ruling bankruptcy out.

Bankruptcy is the law, and part of what is built into the system.
0 Replies
 
engineer
 
  3  
Reply Mon 17 Aug, 2015 06:30 pm
@czarisdad,
Your creditors are business people and you are an account in the computer to them. You are not dealing with George Bailey down at the Building and Loan. They count on a certain level of default and charge you more interest because of the credit worthiness of people in a similar straits. Your debt settlement is just one number in a large equation to them.
0 Replies
 
czarisdad
 
  1  
Reply Tue 18 Aug, 2015 08:26 am
Thank you all for your responses. I probably did not consider bankruptcy as much as I should have, but I am able to afford my settlement payments. Also, my govt. student loans are not included in the settlement. One particular creditor I have no qualms about screwing is Sallie Mae. They charge a sky high rate for law student loans, while the schools they are cozy with lie about their employment and salary statistics.
Thanks again
tsarstepan
 
  1  
Reply Tue 18 Aug, 2015 08:52 am
@czarisdad,
You CAN'T place student loans into bankruptcy. They're protected by law. At least the federal student loans are. I tried when I declared bankruptcy over 10 years ago. It hasn't changed since.
czarisdad
 
  1  
Reply Tue 18 Aug, 2015 10:55 am
@tsarstepan,
Federal and private student loans are both exempt from bankruptcy protection, but the private loans require a court ordered judgment to garnish, so there is incentive to settle.
roger
 
  1  
Reply Tue 18 Aug, 2015 03:03 pm
@czarisdad,
And how difficult or expensive do you suppose such an order would be to obtain?
FOUND SOUL
 
  1  
Reply Tue 18 Aug, 2015 03:35 pm
@czarisdad,
Be careful of entertaining the idea of Bankruptcy. Whilst you would be free of debt, it will be years before it's held back on record for others to see but more so, if you have Morals then more than likely you also have pride and having that over your head can also create emotional stress for some time.

As for Creditors, for the most part they are credit cards / banks, large corporations that have made a fortune in interest over the years from everyone, they don't loose at all by accepted a reduced payout, they already have the full funds from all the interest they charged.
maxdancona
 
  1  
Reply Tue 18 Aug, 2015 03:51 pm
@FOUND SOUL,

When you consider bankruptcy, it is a fairly straightforward calculation. On one side are the costs (which include the damage to your credit which isn't as bad as some people think). On the other side are the savings (i.e. the debts that are forgiven).

It is pretty simple. If the savings from declaring bankruptcy are greater than the costs of declaring bankruptcy, then you should declare bankruptcy. Of course you should consult an accountant and/or an attorney before settling on this strategy.

As far as morality, or pride? This is a business decision. Bringing fake emotional concepts like morality or pride into a business decision is just stupid. Banks and creditors declare bankruptcy when it is in their favor to do so. Why wouldn't you?

Of course if your creditors are offering you a deal, then that significantly lowers the savings side of the equation which may very well make it unprofitable for you to declare bankruptcy (which is why they do it). I think I would still talk to an accountant, but these deals are often beneficial for both sides. Take the deal if it benefits you and let the creditors worry about their side of the business transaction.
czarisdad
 
  1  
Reply Tue 18 Aug, 2015 04:57 pm
@roger,
I Myself am a lawyer and there is also legal insurance provided in the agreement If I get sued I will be certain there is a proper answer filed. Theyrely on default to win it wont happen
0 Replies
 
czarisdad
 
  1  
Reply Tue 18 Aug, 2015 05:05 pm
@maxdancona,
You are right and I sincerely wish I Could alter my feelings so that they are more in line with my own self interest. When I try there is this unreasonable inner voice challenging me.
czarisdad
 
  1  
Reply Tue 18 Aug, 2015 05:06 pm
@FOUND SOUL,
Yea you pretty much hit it all
0 Replies
 
maxdancona
 
  1  
Reply Tue 18 Aug, 2015 05:32 pm
@czarisdad,
I care about "morality" when it concerns people I care about; family, friends and co-workers. When it comes to business (or poker), I just follow the rules in the way that benefits me the most.

I don't know if this distinction helps at all.
czarisdad
 
  1  
Reply Tue 18 Aug, 2015 05:52 pm
@maxdancona,
I completely agree with you. That is the ideal. Separate the personal you from the business you. I try to think of my wife and daughter as my shareholders when making businesses decisions. I am trying to get to the point where I can be as dispassionate as actual businesses are when dealing with them.
0 Replies
 
 

Related Topics

debt settlement - Question by czarisdad
 
  1. Forums
  2. » moral question regarding debt
Copyright © 2019 MadLab, LLC :: Terms of Service :: Privacy Policy :: Page generated in 0.03 seconds on 04/24/2019 at 06:48:04