The question of morality in bankruptcy

[JRScott]

I am struggling with the question of the morality of filing for bankruptcy. I know it is the only solution to my unstainable debt problem but how do I deal with the with the moral issue, after all so many of the public has the idea that people who file are basically getting away with murder and off scot-free, most think walking away from debt is immoral, I know in my heart I did allI could to avoid it, but I still feel in some weird way that I am being immoral, any advice?

While we should make every effort to pay off our debts, we oftentimes find we get ourselves in over our heads. It is a dilemma that many Americans face as we make the decision. I struggled with it for a few years before I decided. In the end I had gotten on my knees explained all the bills and what revenue could be expected. Pointed out I saw no other way out than Bankruptcy. I then asked the Lord if he thought it would be proper. I felt a peace come upon me and I felt it was the right decision for me at the time.

It can be a deeply personal decision. But yes if there is no clear way other than bankruptcy I do feel it is the moral thing to do. Without it you can never improve your life or that of your families without it when used properly. Even the law of Moses provided for the forgiveness of debt every seven years.

[onwards]

It seems like the only people that keep bringing up the question of bankruptcy being moral or not, are the banks and financial institutions.

Surely. That's ALSO part of business, if you think about it; you use all the tools at your disposal (at least when business is viewed through the sole lens of the profit motive, which is a different discussion).

I think that more and more consumers are becoming very intelligent when dealing with financial institutions and are treating things like a business transaction instead of a personal issue. As more consumers do that they are empowering themselves and making the right choices based on facts and not on some "moral" obligation.

Of course it has nothing to do with morals. What it DOES have to do with is the sinking feeling a lot of the folks on the "other side" suddenly have when they are realizing that main street is not, in point of fact, full of sheep. When WE have the upper hand, we will be just as ruthless as they were in pursuing out own goals.

I keep telling folks that at least for indebted home owners, the massive crash in prices has been a boon. Think of what would have happened if prices simply went down 5-10% and then stagnated. Help from the government? loan settlements? writeoffs? fiuggedabaoutit. But when your house is severely underwater and all the laws are there to protect you, suddenly you hold all the cards, the tables are flipped, and it can be fun to play hardball with THEM for once.

As for morality - I look at things this way. The way banks have treated all along has been without a shred of morality; none whatsoever. I have been abused for many years in every financial transaction I have taken with the major banks. I had to grin and bear it, because the game was rigged that way. Well, guess what? now *I* have the hand full of aces. So screw the lot of em. Karma, as they say, can be a *****.

[mikeinsurpri]

It seems like the only people that keep bringing up the question of bankruptcy being moral or not, are the banks and financial institutions. They are the ones that adjusted interest rates all the time, increased minimum payments and extended too much credit. How many of you bought a house a few years ago and all of the sudden you got a letter from your credit card company that they increased your available credit to $15k or more.
I think that more and more consumers are becoming very intelligent when dealing with financial institutions and are treating things like a business transaction instead of a personal issue. As more consumers do that they are empowering themselves and making the right choices based on facts and not on some "moral" obligation.
Are credit card companies moral? Remember when Congress passed the credit card act and waited almost 2 years to implement it, what did that do to the credit card companies? Gave them plenty of time to figure out other ways to make money.
These are just my opinions......

[gman]

Try to think of this in a simple way.

Assuming you believe in God, then the following according to the Bible are true:

1. We all have sinned and fall short of God.
2. God looks at all sins equally. This one is tough for most of us as we view murder worse than lying, but God has a different "viewpoint."
3. Debts are merely promises.
4. Promises are broken every day...sometimes for reasons outside of one's control, sometimes for reasons that are purposeful and evil.

In either case, I believe what God wants from all of us is to learn and grow from our mistakes. When you file BK, you are admitting you have broken promises. What is most important in God's eyes is likely to be what have you learned and what are you going to do differently in the future?

Just like any Father, he is disappointed, but supportive. Most good dads want their children simply to learn and try and avoid past mistakes. They do not want their children to wallow in self-pity nor do they want their kids to feel guilty. Personally, I think God likely views bankruptcy the same way.

Finally - our US bankruptcy laws have their roots in the Bible. This is why [until recently] one could file every 7 years.

Nehemiah 10:31b: "Every seven years we will let our fields rest, and we will cancel all debts."

Deuteronomy 15:1-2: "Every seven years you must announce, "The LORD says loans do not need to be paid back." Then if you have loaned money to another Israelite, you can no longer ask for payment."

[tobee43]

I'm amazed at how many stories I hear that are essentially the same... I, too, ended up having to file because of an obstinate lender, who acted against their own best interest, cutting off their nose to spite their face. In our case it was USAA, who absolutely refused to accept a short-sale on our old house which would have netted them about $60K on a $250K loan. When I explained that it was either that or I file and they get nothing, they sent me a letter saying "we realize you may file for bankruptcy and we may get nothing" and wording to the effect of "go ahead, we dare you". So I did. They lost not only the $60K but another $50K on credit card debt I had with them, all of which I COULD have paid off over time if they just accepted the short sale.

Whatever. In the end, they did me a great favor by forcing my hand; I got rid of a whole bunch of debt and have recovered nicely since then, actually building towards some sort of future rather than paying for a past I had little control over (being the financial meltdown).

DITTO...same story....just different name!

[empowered]

Wow onwards, what happened to you is pretty instructive.

I don't think it should be legal for lenders to make blanket refusals to debtors' requests for payment plans. I mean, when credit lenders like American Express call themselves banks, aren't they collecting some sort of compensation for defaulted sums? Aren't they indemnified somehow? If so, it seems like if the debtor does want to pay they should be willing to deal.

On the other hand, I'm sure that it is a business liability at some point for them to continue to hold the debt, but aren't they the ones that allow the credit limits to get so high that they're that exposed to begin with?

[onwards]

I actually have a private moral code that is of fairly high standard. But I have to say that morality was not an issue that I addressed when I moved towards bankruptcy. In fact, considering that a lender I had worked with for 20 years refused to establish a payment plan to catch me up and that was what left me no choice but bankruptcy, I would have said and still maintain that the lack of morality (if one could theorize a relationship between business and morals) is on the part of lenders who have not been regulated sufficiently and have pursued increasingly predatory practices.

I'm amazed at how many stories I hear that are essentially the same... I, too, ended up having to file because of an obstinate lender, who acted against their own best interest, cutting off their nose to spite their face. In our case it was USAA, who absolutely refused to accept a short-sale on our old house which would have netted them about $60K on a $250K loan. When I explained that it was either that or I file and they get nothing, they sent me a letter saying "we realize you may file for bankruptcy and we may get nothing" and wording to the effect of "go ahead, we dare you". So I did. They lost not only the $60K but another $50K on credit card debt I had with them, all of which I COULD have paid off over time if they just accepted the short sale.

Whatever. In the end, they did me a great favor by forcing my hand; I got rid of a whole bunch of debt and have recovered nicely since then, actually building towards some sort of future rather than paying for a past I had little control over (being the financial meltdown).

[empowered]

I actually have a private moral code that is of fairly high standard. But I have to say that morality was not an issue that I addressed when I moved towards bankruptcy. In fact, considering that a lender I had worked with for 20 years refused to establish a payment plan to catch me up and that was what left me no choice but bankruptcy, I would have said and still maintain that the lack of morality (if one could theorize a relationship between business and morals) is on the part of lenders who have not been regulated sufficiently and have pursued increasingly predatory practices.

Maybe when you're further in the process or after a certain number of nasty creditor calls you'll look at the situation differently. Perhaps not. I don't know where you are in your process and don't want to make a lot of assumptions. But try to forgive yourself, if you feel you've done something wrong, and move on.

[ryan]

I'm not sure most people realize how inter-connected our whole economic system is here in the US...

If the bankruptcy code ceased to exist, you would see, over time, the greatest reduction in new business enterprise start-ups you can imagine. ...and as a result, the pushing of unemployment rates even higher than they are already.

No one, or hardly anyone, would take the risk of starting a business that involved borrowing money.

No prudent person would take the risk, knowing that if it failed, they would be indebted, probably 'buried' is a better word, in massive debt til the day they died. By taking that business risk and failing, they would have even consigned themselves and their families to a life of poverty in many cases. ...all because there was no way out.

Bankruptcy, when circumstances clearly warrant, is the best thing for the debtor and their family, but also for society as a whole. An economy that discourages risk-taking will never be a prosperous economy.

[drowning123]

Awww. . . .

[tobee43]

Awwww, tobee, the hug rule is so cute. LOL. But you're right, home is where the heart is.

yeah...we were never into the huggy thingy...but i must admit...it feels good...except for when he comes in from working outside and KNOWS i'd rather not...LOL!!..so he always playing with me about the rule...but i stick to my guns...or hugs!

i never thought i could make another "nest" after 33 years in the same house. but i must tell you...we are happier than ever before in this place!!

[drowning123]

Awwww, tobee, the hug rule is so cute. LOL. But you're right, home is where the heart is.

[tobee43]

Every time New York State or New York City wants to close a budget gap, who do you think pays for it? We, the working class people have to pay for everything. Everytime the Metropolitan Transit Authority wants to close a budget gap, which is once a year, they raise the fare. The cost of everything goes up 25%, but the one thing that doesn't go up is our salary. How are we supposed to survive. We can never catch up to the cost of living if we don't get a decent raise in salary. When you don't make much, a 1% to 3% raise is nothing! Banks and those who represent them have made a lot of money. Big bonuses are still being doled out, it's just that the big wigs are trying to keep it hush hush. So whatever way we little people can get a bite out of the pie, we'll take it! Bankruptcy is a business decision, not personal. Afterall, money is not your life. Your family is your life. If I were homeless today and living in a shelter, my son would still be happy because he know's he has his mother by his side.

got that right!!! i remember when we moved into our house our electric bill was 30 dollars....when we left the house and had all but 3 rooms closed up...NOT including HEAT it was running us between 500-600 dollars a months....where the HECK were we supposed to get that type of money...

these companies raised fees and expensives so far out of site for the average joe and their family who can make ends met anymore.

your right drowning...if our salaries matched the companies increases we would not be here today.

and HOME IS WHERE the heart IS for sure!! (we have a "new" rule in the house...it's the 5 minute hug rule). you can do it all at once...or through out the day....but you need the full 5 minutes in and to be completed by ends day...just to help each other know it's going to be ok....

[tobee43]

Absolutely! Our banks, legal system and much of our country is completely immoral. It is all about money and power, about twisting and spinning the law to prevent justice for the little guy. In fact, a lot of today's bankruptcies are attributable to unethical and immoral acts by banks. They took taxpayer money to cover their mistakes, but did not use it to honor their commitments. Instead, they went out and screwed over their borrowers and the employees and small creditors of their borrowers to double the take, using devious legal trickery. These corrupt acts caused many workers in this country to lose their jobs, thereby putting them into bankruptcy.

WELL stated jjim!!

[drowning123]

Every time New York State or New York City wants to close a budget gap, who do you think pays for it? We, the working class people have to pay for everything. Everytime the Metropolitan Transit Authority wants to close a budget gap, which is once a year, they raise the fare. The cost of everything goes up 25%, but the one thing that doesn't go up is our salary. How are we supposed to survive. We can never catch up to the cost of living if we don't get a decent raise in salary. When you don't make much, a 1% to 3% raise is nothing! Banks and those who represent them have made a lot of money. Big bonuses are still being doled out, it's just that the big wigs are trying to keep it hush hush. So whatever way we little people can get a bite out of the pie, we'll take it! Bankruptcy is a business decision, not personal. Afterall, money is not your life. Your family is your life. If I were homeless today and living in a shelter, my son would still be happy because he know's he has his mother by his side.