The question of morality in bankruptcy

[chrisdfw]

Retiring completely though may become a past practice for the middle class.

Consider it a blip in the timeline of human history. There aren't enough resources to support people who could
be productive for half their life. It may have been a past practice, but only the recent past.

[andy158]

I'm thankful for BK but now have to figure out if I will ever be able to retire as I have to start over in my 50's. I know two things for sure, I never take my good health for granted and will never fall into the debt trap again.

I thank God my 401k stayed intact (well somewhat intact) before going into our bk13. I knew if we didn't file there would never be a chance to retire. I just turned 50 and may still work til death if the bumps in the road become potholes. I look in envy to some of my co workers that are triple dipping (i.e. pension form past jobs, working full time and collecting ss) all while being in good health. I'm not that greedy. Retiring completely though may become a past practice for the middle class.

[onthefence]

I know two things for sure, I never take my good health for granted and will never fall into the debt trap again.

Amen to that!

[mijd]

To me it's not a question of morality, it is a matter of personal responsibility. This is the way I was raised. I can see many other posters here who have the same views. This is for me why there was so much guilt at having to stop making payments on my debt. And until recently bk has always been looked down on. Some other prople I know who are financially struggling to pay their bills and don't personally use bk see me as taking the easy way out. I've had this said to me many times. In my town filing bk rates your name and total debt being published in the local newspaper. I can't imagine the purpose of that!

Just as the adage says, if you can't afford it buy it with credit. Many of us can't and rightly so predict unemployment or disability but how many of us actually think about the future and what may happen at the point we buy something on credit. I remember applying for a home improvement credit card and being upset my initial CL was only 2K. That wasn't enough to buy the kitchen cabinets I wanted, so I settled for a less expensive brand. I made my payments on time, watched my CL go up and started thinking about buying things with the "no payments no interest" for xx months option being offered. My mother looked at my statement and asked me questions I never asked myself. Can I budget enough each month to pay the balance off in a year or will I be stuck paying accured interest at 22% apr. She knew the answer before asking me the question.
Many of us can complain about rising interest rates on existing balances and lowered CL's and rightly so. Maybe we should think first about what we are buying on credit and if it is really necessary.
I'm thankful for BK but now have to figure out if I will ever be able to retire as I have to start over in my 50's. I know two things for sure, I never take my good health for granted and will never fall into the debt trap again.

[kartoons19]

I agree with what everyone has said. I struggled with the issue myself, but realized it would take decades to pay them back and that doesn't even count student loans! This mess started when I was laid off of a full-time job because the company went under and I couldn't collect unemployment since I was a contractor. Unfortunately, I only had about three months of savings, which was not nearly enough. So while I was upset, to say the least, about the situation, I never questioned the morality of the company because they filed bk, I just looked at it as a business decision. So why should I judge myself differently? It's not wrong to get a fresh start. It is what you do with that fresh start that matters. Good luck to you.

[Logan]

It's a business decision.

[BKDebby]

What ccsjoe said. I didn't have to hash it out with a spouse though. When I saw it would take me 40 years to pay off my DiscoverCard, only paying the minimum (and right now that's all I could come up with is the minimum), I knew it was time to quit thinking about trying to save my 780 credit score. My attorney said it's strictly a business decision.

I'm filing next week!

[blockhead]

As Thomas Jefferson said:-

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

Thomas Jefferson, (Attributed) 3rd president of US (1743 - 1826)

And of course that's exactly what we have, a privately owned Federal Reserve bank.

[cocoasmom]

I wrestled with the morality issue for months--including many, many sleepless nights. In the end I resolved we had done our part, tried to work with the mortgage and cc companies. To no avail. We had great credit, 720 score and no late payments. The reality was I was unemployed and now couldn't pay. They didn't care. Until I stopped paying. Too late, game over. I am excited about life without debt. I will never deal with the big banks again.

[ironpirate]

The government and corporations get bail outs all the time, why shouldn't you? And you know who pays for these bailouts? We do!

[blockhead]

Morality of bankruptcy? Ha ha! Do the taxpayer bailed out banks who are collecting from us and charging usurious rates of interest have any qualms. It's a business decision both ways. The only moral issue to me would be if was discharging a personal debt .

[andy158]

My opinion is the people that forced our bk are the ones who are immoral. Cc's (and the banks who held them) increasingly raising interest and minimum payments to embarass a loan shark are the immoral ones. Perfect credit and a score of 720 gave them reason to jack the rates because we had too many outstanding debts and considered a high risk. A high risk of what? Never any missed or late payments. They refused to negotiate on anything and modified their initial contracts at will with no remorse based on current economic conditions (aka losing their a**es in the housing market). They forced our hand and are now getting ony 63% of what we owed. Never again will I deal with the likes of BofA, HSBC, Cap One, etc. We exhausted every avenue for two years trying to satisfy the greed of the big banks. Lots of mental anguish and stress. A great burden has been lifted and we are at least paying a portion of our debt through bk13. I feel not one bit of immorality.

[HHM]

I think in a common sense perspective, chrisdfw is correct, if the person actually has the ability to pay debt they promised to pay, and didn't; that would violate just about any moral code that exists. Granted, the gray area in that statement is what constitutes "ability to pay." Personally, I see NOTHING immoral about bankruptcy. Bankruptcy exists because it balances different and competing values. On the one hand, a person should pay debts if they can, but we also don't want people to become burdens on the state or tax payers. Bankruptcy effectively shifts costs; it is difficult to imagine what the U.S. would be like if we did not have bankruptcy (I know I wouldn't want to live there).

[onwards]

If you can pay and you don't, that would be immoral.

Why?

There are plenty of situations when this simply isn't true. There's the whole notion of loan covenants, after all.

I think the ONLY place where I would agree with you in a general sense is when you take money from friends/relatives, without interest or even a loan agreement, and then tell them to stuff it even if you can pay it back. THAT's immoral. Taking a commercial loan (which includes your typical consumer loans, such as credit cards) and defaulting, even if by choice, thereby triggering the loan's provisions against default, is perfectly alright in any situation. It is up to the lender to evaluate you as a borrower, and to have proper provisions against your possible default. They aim to make money via interest, after all. Is that immoral too? (if you are a follower of Islam, your answer would be yes, by the way)

[chrisdfw]

If you can pay and you don't, that would be immoral.

If you can't pay, its just reality. Lenders make a business decision to lend money and they price such losses accordingly. You make the same decision when you buy bonds and they can't pay, or you invest in stocks that lose money. You aren't stealing from the lenders unless you committed fraud.

You aren't doing anything wrong by seeking a fresh start, you can't pay anyway, you are just admitting it. It would not be moral to allow your family, children, or even society to be deprived of your contributions by suffering under an unsustainable debt load. The fresh start exists for the benefit of society, we all benefit from allowing people a fresh start, allowing people to take a risk and fail, because allowing people to move on lets them become more productive members of society. Without bankruptcy, nobody would ever risk starting businesses if they knew they could end up in debtors prison or a life of poverty when they failed. Nobody would buy a car on credit if knew a job loss would confine them to slavery for life. Even mortgages would be impacted, as few would risk the devestation of an upside down house if there was never a way out.

Bankruptcy is the moral thing to do when you can longer meaningfully pay your bills and contribute to society. Nobody benefits when you suffer un-necessarily. If you can't pay, that is a question of fact, not morality.

We all feel like we have failed to some degree when we need to start over. The real question is whether we learn anything and become better citizens, ready to be productive and free from the harrassment and pressure of the debt.