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No. You are borrowing within the context of a system in which there are offsets to bad debts. All the rules are made by the lender, and are not negotiable. All the rules favor the lender. The lender has structured everything so he wins, even if some people default, because those who don't default are subsidizing those who do. Everyone knows from the start that this is the way it will work, and if you default, you are just fitting in like a piece in a puzzle. Somebody else has voluntarily agreed to terms in which they undertake to cover for you if you default, and they know it. In fact, those who honor the agreement have already paid for your default, and the lender is holding the money in anticipation of your default.
I think so. If you spent it, you have a responsibility to pay it back. What do you define as a severe hardship?
My question was: 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?
I said a Real Hardship, not Severe hardship. We can define a hardship as a loss of income, a spouse passing away, a medical condition, an act of nature such as Katrina. These and more are Real hardships that prevent you from paying your debt, not going on vacation some place or going on a shopping spree and charging your cards to the limits and very soon finding out you cannot keep up with your payments. That is what I meant by a Real hardship.
Yes, but based on your definition, there would never be a need for people to have emergency savings or plan for hardships by outlining their spending plans accordingly.
That's the whole point - you should spend and save like you may have a hardship at any time. That's your responsibility.
No. You are borrowing within the context of a system in which there are offsets to bad debts. All the rules are made by the lender, and are not negotiable. All the rules favor the lender. The lender has structured everything so he wins, even if some people default, because those who don't default are subsidizing those who do. Everyone knows from the start that this is the way it will work, and if you default, you are just fitting in like a piece in a puzzle. Somebody else has voluntarily agreed to terms in which they undertake to cover for you if you default, and they know it. In fact, those who honor the agreement have already paid for your default, and the lender is holding the money in anticipation of your default.
If this were the case the American economy would be in far worse shape, no one would pay their debt and the government would have to bail the banks out for ever. The question here is: 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?
I'm not talking about going out and applying for a million credit cards and maxing them out and then turning around and saying to the creditors I'm not paying you back because you knew you were covered for the losses from the beginning, remember I used the word "morally" having nothing to do with the law or if the creditors are covered for their losses or not. I'm talking on a personal level, I was taught to pay my debt and to honor any agreement I entered into and so far I have, what I'm wondering is if I ever have a "real hardship" is if I would hesitate not to pay my debt, regardless if the creditor is covered or not for the loss or if they are making a profit on it.
That's the whole point - you should spend and save like you may have a hardship at any time. That's your responsibility.
Totally agree. "Loss of income"?? This is exactly why you're supposed to have rainy day funds. Have we really gotten so screwed up that we don't believe you should be responsible for your own well-being anymore?
Yes, but based on your definition, there would never be a need for people to have emergency savings or plan for hardships by outlining their spending plans accordingly.
That's the whole point - you should spend and save like you may have a hardship at any time. That's your responsibility.
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?
Totally agree. "Loss of income"?? This is exactly why you're supposed to have rainy day funds. Have we really gotten so screwed up that we don't believe you should be responsible for your own well-being anymore?
Very few people world wide let alone America live by this code anymore, it is truly amazing to see professionals earning upwards of 75k filling for bankruptcy, now that is real.
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