The question of morality in bankruptcy

[andy158]

I posted once to this thread and after reading today about BofA proceeding with their record foreclosures and Citigroup posting a substancial profit for the last quarter, I have to question their morality to the people whose lives they turned upside down and to the use of the bial out money they got. They have no concern for anyone's well being, just the almighty dollar! Granted they are a buisness and a buisness is about making money, but do they have to support those outrageous CEO salaries at all costs?

Money = Greed = Coruption = Immorality

[jjim120]

Poorhouse, I think we are getting to the same point. We are about to lose our house, the one that we built with our own hands 35 years ago. the bank refuses to talk to us about it.

[Poorhouse64]

Well when it comes to "moral hazards" I learned one thing. Never invest in real estate. There are no morals on the business end of real estate.
All the advice from wise men: try to get a loan modification, ask your bank to do a short sale, offer a deed in lieu = all this is utter nonsense. Banks don't care.


Now when I think of the morality of filing BK...all I can say is: I wish I had done it SOONER. (and I really wish the banks would have worked with us..... we didn't want to lose that house, we would have done anything to keep it...... but like I said. Banks don't care)

[mommi2many]

I had those very issues too, it's also why I struggled and built up more debt for 1-2 years before filing. Looking back, the moral thing to do would have been to file 2 years ago and avoid the buildup of more debt even though it was not due to spending but fees/interest. I had a very hard time with this. I had to step back and look at my life. I knew I had no other options except win the lotto. I have a family and kids, would the moral thing be to keep paying until we loose everything and end up on the street supported by the government? I felt morally I needed to look out for my families best interests.

Also consider the morallity of companies letting you borrow so much that you can end up in this situation or to take advantage of people who don't understand finances well. In truth many of us paid back our original debts, just not the compounded penalties and interest.

Amen!

[cocoasmom]

Original post by Onwards: 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 here too--just different bank.

[jjim120]

Good points, HHM. The moral component has not only been stripped from our legal system, but the ethical responsibility as well. Today's lawyers do not even address ethical conduct, explaining it away in favor of winning for their client at all costs (or back pocket non-client when the game is screw the client, too, if you don't get caught). Whether it is derived from a moral sense or not, lawyers today spin, twist and circumvent the intent of the law with no consideration of ethical duty or concern for truth, for evidence, or for innocence until proven guilty. Today, money, power and influence trump truth, justice and morality throughout our legal system, our giant corporations, and even our educational institutions.

[rck3]

I had those very issues too, it's also why I struggled and built up more debt for 1-2 years before filing. Looking back, the moral thing to do would have been to file 2 years ago and avoid the buildup of more debt even though it was not due to spending but fees/interest. I had a very hard time with this. I had to step back and look at my life. I knew I had no other options except win the lotto. I have a family and kids, would the moral thing be to keep paying until we loose everything and end up on the street supported by the government? I felt morally I needed to look out for my families best interests.

Also consider the morallity of companies letting you borrow so much that you can end up in this situation or to take advantage of people who don't understand finances well. In truth many of us paid back our original debts, just not the compounded penalties and interest.

[HHM]

The idea of debt forgiveness goes back to Biblical times, when God instructed the Israelites to fogive debts on the Sabbatical Year (every seventh year).

“At the end of every seven years thou shalt make a release. And this is the manner of the release: Every creditor that lendeth ought unto his neighbor shall release it; he shall not exact it of his neighbor, or of his brother; because it is called the Lord’s release." (Deuteronomy 15:1-2).

So creditors could lend money and collect debts until that seventh year, during which all debts were forgiven and no money could be lended. It could be argued that our modern bk laws are rooted in this ancient Biblical instruction. It's just that God didn't seem to have nearly as many hoops that had to be jumped through to dismiss debt as our modern courts have.

I don't know if there is a "direct" connection, but conceptually, bankruptcy is related to that concept, debt forgiveness. That bible passage puts the moral obligation on the lender. It was the lenders moral duty to forgive debt. Today, we seemed to have forgot that lenders (corporations etc), should be held to an ethical standard. Our laws, like bankruptcy attempt to do so, but laws and regulations strip away the moral component;hence, the moral dis-equivalence between debtor and lender. Thus, the shift from bankruptcy being about forgiving debt and the embodiment of the value of "forgiveness" and is now seen as a way for the debtor to "skip out" of obligations, a legal way to break promises.

[onwards]

The idea of debt forgiveness goes back to Biblical times, when God instructed the Israelites to fogive debts on the Sabbatical Year (every seventh year).

“At the end of every seven years thou shalt make a release. And this is the manner of the release: Every creditor that lendeth ought unto his neighbor shall release it; he shall not exact it of his neighbor, or of his brother; because it is called the Lord’s release." (Deuteronomy 15:1-2).

So creditors could lend money and collect debts until that seventh year, during which all debts were forgiven and no money could be lended. It could be argued that our modern bk laws are rooted in this ancient Biblical instruction. It's just that God didn't seem to have nearly as many hoops that had to be jumped through to dismiss debt as our modern courts have.

Who would have thought that the day would come when I, an agnostic atheist, should say: "good on god"

[tobee43]

Ryan, the bankruptcy code does not encourage risk-taking, but is simply a necessary evil to prevent debtors' prisons, etc. Far more devastating to the workings of our economy is the current free-wheeling of our financial institutions, covered by their own control of financial regulations and lack of concern for the whole. In fact, the ability of the larger banks to make loans that they know they can call on a whim for no reason, without proving cause and in bad faith, is a major deterrent to risk-taking, and has set the stage for massive numbers of fraud in commercial loans.

The courts have upheld the right of banks to act without cause and in bad faith in the few cases that have actually made it into court; most such cases lead to the bankruptcy of the borrower and his inability to obtain legal representation (due to lack of money) long before ever reaching court. A thorough investigation by FBI and/or federal regulators might discover the fraudulent legal games played out by verbal means by lawyers, bank officials, and others to line their pockets in the last few years, with the blessing of federal money to cover their criminal acts. In our case, where a big regional bank failed to meet its loan guarantees and ultimately foreclosed on a property 85-90% complete, the verbal fraud of one lawyer and his felon "non-client" (currently in prison serving a sentence on a different mortgage fraud conviction), coupled with an apparent corrupt attorney representing a big bank and cohort in crime with the power of the bank behind her, led to the theft of a valuable property, the loss of millions to the regional bank (and its shareholders), multiple corporate and personal bankruptcies, hundreds of job losses, etc. How many of these commercial properties have been stolen by this and similar apparent conspiracies over the last few years?

Two changes in the financial world could have prevented these millions in losses and stopped these types of massive fraudulent games being perpetrated: 1) require banks to prove cause and to fund its agreed-upon loans in good faith, 2) require that banks receiving federal funds such as TARP use those funds to complete its existing loans before using it for new loans.

Today, small and middle class businesses are running scared because of these types of scenarios. Bankruptcy is not a way out for any small business and its associates who must put up personal guarantees to fund their businesses and are forced into poverty to prevent them from being able to fight. They pay massive legal fees to try to hold on while such a conspiracy uses the money of its client, its power and influence, its protection of attorney-client privilege, and its unprovable by documentation fraudulent verbal tactics to deliberately break everyone involved to prevent their access to the legal system. Risk-taking by those broken by these insider bank conspiracies and those who have been affected in many tiers down the chain will not come back for this generation.

it just appears like it's the beginning of the end. and, in fact, in many it is.

i doubt, however, any of those truly at the core of these fraudulent tactics will ever be held responsible.


by the way excellent post jjim.....

[Dee]

The idea of debt forgiveness goes back to Biblical times, when God instructed the Israelites to fogive debts on the Sabbatical Year (every seventh year).

“At the end of every seven years thou shalt make a release. And this is the manner of the release: Every creditor that lendeth ought unto his neighbor shall release it; he shall not exact it of his neighbor, or of his brother; because it is called the Lord’s release." (Deuteronomy 15:1-2).

So creditors could lend money and collect debts until that seventh year, during which all debts were forgiven and no money could be lended. It could be argued that our modern bk laws are rooted in this ancient Biblical instruction. It's just that God didn't seem to have nearly as many hoops that had to be jumped through to dismiss debt as our modern courts have.

[jjim120]

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.

Ryan, the bankruptcy code does not encourage risk-taking, but is simply a necessary evil to prevent debtors' prisons, etc. Far more devastating to the workings of our economy is the current free-wheeling of our financial institutions, covered by their own control of financial regulations and lack of concern for the whole. In fact, the ability of the larger banks to make loans that they know they can call on a whim for no reason, without proving cause and in bad faith, is a major deterrent to risk-taking, and has set the stage for massive numbers of fraud in commercial loans.

The courts have upheld the right of banks to act without cause and in bad faith in the few cases that have actually made it into court; most such cases lead to the bankruptcy of the borrower and his inability to obtain legal representation (due to lack of money) long before ever reaching court. A thorough investigation by FBI and/or federal regulators might discover the fraudulent legal games played out by verbal means by lawyers, bank officials, and others to line their pockets in the last few years, with the blessing of federal money to cover their criminal acts. In our case, where a big regional bank failed to meet its loan guarantees and ultimately foreclosed on a property 85-90% complete, the verbal fraud of one lawyer and his felon "non-client" (currently in prison serving a sentence on a different mortgage fraud conviction), coupled with an apparent corrupt attorney representing a big bank and cohort in crime with the power of the bank behind her, led to the theft of a valuable property, the loss of millions to the regional bank (and its shareholders), multiple corporate and personal bankruptcies, hundreds of job losses, etc. How many of these commercial properties have been stolen by this and similar apparent conspiracies over the last few years?

Two changes in the financial world could have prevented these millions in losses and stopped these types of massive fraudulent games being perpetrated: 1) require banks to prove cause and to fund its agreed-upon loans in good faith, 2) require that banks receiving federal funds such as TARP use those funds to complete its existing loans before using it for new loans.

Today, small and middle class businesses are running scared because of these types of scenarios. Bankruptcy is not a way out for any small business and its associates who must put up personal guarantees to fund their businesses and are forced into poverty to prevent them from being able to fight. They pay massive legal fees to try to hold on while such a conspiracy uses the money of its client, its power and influence, its protection of attorney-client privilege, and its unprovable by documentation fraudulent verbal tactics to deliberately break everyone involved to prevent their access to the legal system. Risk-taking by those broken by these insider bank conspiracies and those who have been affected in many tiers down the chain will not come back for this generation.

[tobee43]

You forgot my favorite: GOLDMAN SACHS

Quote of the Financial Meltdown Award...

""I'm doing 'God's Work." - Goldman Sachs CEO Lloyd Blankfein - quoted on Nov 7, 2009.

Link: http://www.timesonline.co.uk/tol/new...cle6907681.ece

Wonder how the Almighty feels about Lloyd?

g...your right i forgot GOLDMAN SACHS....as well as many more. perfect quote you cite!

[gman]

g....can you send a copy of that to the following please:


chase bank
BOA
GMAC
CitiBank

etc etc. ETC!

and let me add just one note...i didn't sin...except for on prom night with that guy that now i can't remember his name...that's the one and ONLY real sin i can recall......

You forgot my favorite: GOLDMAN SACHS

Quote of the Financial Meltdown Award...

""I'm doing 'God's Work." - Goldman Sachs CEO Lloyd Blankfein - quoted on Nov 7, 2009.

Link: http://www.timesonline.co.uk/tol/new...cle6907681.ece

Wonder how the Almighty feels about Lloyd?

[tobee43]

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."

g....can you send a copy of that to the following please:


chase bank
BOA
GMAC
CitiBank

etc etc. ETC!

and let me add just one note...i didn't sin...except for on prom night with that guy that now i can't remember his name...that's the one and ONLY real sin i can recall......