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Old 07-14-2010, 12:03 PM
 
Location: Georgia, USA
36,994 posts, read 41,017,756 times
Reputation: 44925

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Quote:
Originally Posted by 4satnleycups View Post
Stan4,

There are very few consumers that do this, the percentages are very low. Americans became used to being bailed out by plastic. That is my point exactly how many of us are still old school? I remember my grandparents cutting down on expenses and living within their means to pay their debt off, they never had any trouble honoring their contracts. How many people still think that way today?
My husband and I have never failed to repay a debt. We have only a house loan and one car loan. We use credit cards for the convenience but pay the total balance every month.

If something horrific happened and we could not pay, we would do so when we could, even if some bankruptcy proceeding intervened.

We know the difference between needs and wants.
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Old 07-14-2010, 08:02 PM
 
Location: SoCal desert
8,091 posts, read 15,383,634 times
Reputation: 15036
Quote:
Originally Posted by 4satnleycups View Post
Is it "morally" wrong to default on unsecured debt? If a real "hardship" occurred and there was no other way out of this debt, what should be done?
It depends on your morals.
It depends on your sense of responsibility.

There is always a way out of debt.
Some people just don't like the way out.
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Old 07-14-2010, 08:53 PM
 
566 posts, read 1,550,798 times
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Generally speaking, in most circumstances, I believe that it is morally wrong to default on one's debts. Offhand, I can't think of any circumstances when it would be morally right, but I'm sure somewhere in the world there is some set of extreme, extenuating circumstances where I would agree with the defaulted debtor. Perhaps an extreme case of medical debt might quality. However, almost exclusively, I think the default is totally wrong, because in essence, it's stealing.

We as a society hold that stealing is wrong. When you borrow a car for the day, you are expected to return it. If you keep it, the car become stolen goods. If our society does not approve of automobile theft, then why do we condone Chapter 7 bankruptcy? If you borrow money, you are expected to pay it back in compliance with the terms and conditions of the agreement. If you don't repay, you have stolen, and committed theft. If stealing goods is wrong, how can stealing money ever be right?

So in short, I'd say that it is wrong to default on debt. I totally understand that a variety of circumstances, from bad judgment to bad luck, can get us upside down and really knock us down. What is, in my opinion, morally right and extremely admirable, is living frugally and repaying your debts, even if it takes you 50 years. And then, at the end of the day, you will not be kept up at night wondering if you made a decision that was morally right or wrong, for you will have undoubtedly done what is morally right. I wish you the best of luck during this difficult decision-making process.

Last edited by Curbed Enthusiasm; 07-14-2010 at 09:30 PM..
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Old 07-14-2010, 11:53 PM
 
Location: San Francisco, CA
15,088 posts, read 13,408,480 times
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Quote:
Originally Posted by jtur88 View Post
People do not pay their debts out of moral virtue. They pay them because the real-world penalty for nonpayment is draconian. It is never a moral issue. It is not morality that compels people to obey the fine print of arcane contracts, it is fear of the consequences.
In a perfect world, people would pay their debts out of moral virtue, so long as they are able to do so, and we wouldn't need the draconian consequences. In a perfect world, lenders would also not extort borrowers or push them below critical survival levels in cases of extreme unforeseen hardship. Clearly, this would require a lot of honesty from all parties involved. Since we obviously don't live in a perfect world, consequences are necessary in order to allow credit to ever be extended to anyone.
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Old 07-15-2010, 03:24 AM
 
2,036 posts, read 4,233,982 times
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Quote:
Originally Posted by jtur88 View Post
Well, then, is it morally wrong for all lenders to structure their non-negotiable contracts in such a way that the lender can never be a loser, and the borrower can never be a winner? Does the lender have an obligation to behave morally, or only the borrower?

The relationship between the lender and the borrower carries with it the power of the lender to punish the borrower for misdeeds. If "noone paid their debts", it would be because everyone disregarded the power of the lender to punish. But the structure is weighted, so that the practical trumps the moral.

People do not pay their debts out of moral virtue. They pay them because the real-world penalty for nonpayment is draconian. It is never a moral issue. It is not morality that compels people to obey the fine print of arcane contracts, it is fear of the consequences.

Let's put it the other way around. Say you are the CEO of a huge lending corporation, and Joe comes in hat in hand, and says my babies are starving and my wife is bedridden, may I be forgiven this meager debt? What would be the moral thing for the CEO to do? And what are the chances that he would do it? Is turnabout fair play, morally?
You make an excellent emotional appeal, however, we don't leave the womb beholden to debt. You write this in such a fashion that one might believe that people have no choice but to sign contracts where the borrower is never a winner.

If the terms stink, don't sign the contract. The negotiation stops when someone signs on the dotted line. There are no victims.

If you don't sign, you're not obligated. If you sign, you agreed to the terms. If you didn't read or understand the terms, then the person made a foolish mistake and needs to be held accountable.

Credit is risk.
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Old 07-15-2010, 04:23 AM
 
Location: North Texas
24,561 posts, read 40,151,082 times
Reputation: 28547
Quote:
Originally Posted by 4satnleycups View Post
Stan4,

There are very few consumers that do this, the percentages are very low. Americans became used to being bailed out by plastic. That is my point exactly how many of us are still old school? I remember my grandparents cutting down on expenses and living within their means to pay their debt off, they never had any trouble honoring their contracts. How many people still think that way today?
I think that way. My unsecured debt does not exceed my checking account balance, in fact nowhere near. That is a rule I make for myself.
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Old 07-15-2010, 07:28 AM
 
Location: Texas
44,256 posts, read 64,159,565 times
Reputation: 73916
Quote:
Originally Posted by 4satnleycups View Post
Stan4,

There are very few consumers that do this, the percentages are very low. Americans became used to being bailed out by plastic. That is my point exactly how many of us are still old school? I remember my grandparents cutting down on expenses and living within their means to pay their debt off, they never had any trouble honoring their contracts. How many people still think that way today?
That's because we've made it socially acceptable to be a deadbeat and we've put social pressure to live up to an unaffordable standard.

How many people do I know who live by this code? Several. I know a lot more that live on the edge of income. I know a few in the middle who max out their retirement and spend everything else.

I siphon off a third of my salary every month to automatically go to retirement and savings. Then I live off the rest and put away additional savings if and when I have more. My only debt is my mortgage. And I plan to prepay that off as fast as possible.
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Old 07-15-2010, 09:21 AM
 
Location: Victoria TX
42,579 posts, read 86,702,293 times
Reputation: 36642
Quote:
Originally Posted by Spraynard Kruger View Post
You make an excellent emotional appeal, however, we don't leave the womb beholden to debt. You write this in such a fashion that one might believe that people have no choice but to sign contracts where the borrower is never a winner.

.
We leave the womb entrapped in an economic system in which an individual is certain to be the loser, unless the individual uses cunning and guile, if not outright theft and thuggery, to place himself among the winners. Stepping on all the other losers in order to work his way up the ladder to the winners' circle. When viewed in those terms, it is easy to understand the role of morals in the big picture.

Whether they sign contracts or not, those leaving the womb have no moral way of becoming the winners. There is no new wealth, there is only pre-existing wealth, to be redistributed according to one's willingness to take some from somebody else.

The jungle is still a jungle. You eat, or get eaten. Economics and Morals have no characteristics in common, and in the end, cannot coexist. They are like anvils and oranges.

The validity of Michels' Iron Law of Oligarchy becomes more apparent every day. Power and wealth will always centralize in the hands of the few who are most aggressive in pursuing it, which is never done through morally virtuous methods. http://en.wikipedia.org/wiki/Iron_law_of_oligarchy

Last edited by jtur88; 07-15-2010 at 09:44 AM..
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Old 07-15-2010, 10:14 AM
 
Location: Texas
44,256 posts, read 64,159,565 times
Reputation: 73916
Quote:
Originally Posted by jtur88 View Post

1. We leave the womb entrapped in an economic system in which an individual is certain to be the loser, unless the individual uses cunning and guile,

2.Whether they sign contracts or not, those leaving the womb have no moral way of becoming the winners.

3. There is no new wealth, there is only pre-existing wealth, to be redistributed according to one's willingness to take some from somebody else.
1. Crap.
2. More crap.
3. The stupidest crap of all.

Do you really believe this? Because I can think of over a dozen examples right now that totally refute what you've said...and that's just my personal experience. There have to be thousands more.
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Old 07-15-2010, 10:54 AM
 
Location: NJ
17,574 posts, read 46,030,185 times
Reputation: 16271
Quote:
Originally Posted by jtur88 View Post
We leave the womb entrapped in an economic system in which an individual is certain to be the loser, unless the individual uses cunning and guile, if not outright theft and thuggery, to place himself among the winners. Stepping on all the other losers in order to work his way up the ladder to the winners' circle. When viewed in those terms, it is easy to understand the role of morals in the big picture.

Whether they sign contracts or not, those leaving the womb have no moral way of becoming the winners. There is no new wealth, there is only pre-existing wealth, to be redistributed according to one's willingness to take some from somebody else.

The jungle is still a jungle. You eat, or get eaten. Economics and Morals have no characteristics in common, and in the end, cannot coexist. They are like anvils and oranges.

The validity of Michels' Iron Law of Oligarchy becomes more apparent every day. Power and wealth will always centralize in the hands of the few who are most aggressive in pursuing it, which is never done through morally virtuous methods. Iron law of oligarchy - Wikipedia, the free encyclopedia
Sounds like what a lazy person would say who wants to justify why they aren't successful.
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