The question of morality in bankruptcy

[rjmwx81]

The moral issue lies not with the debtor, but with the creditor, in my humble opinion. Yes, the honest and moral thing to do is to pay back what you were loaned. However, most of us aren't looking at BK because we couldn't pay the original balance. We file because we cannot pay the interest rates, late fees, and various outrageous charges. We file because the hourly calls from collection agencies demanding payment or a pound of flesh are just too much. We file because the creditor can snatch every last dime out of our bank accounts if we're not careful, leaving us with nothing to survive on.

In every system of ethics and morals that I've studied, a person has the right to use any means necessary to ensure their survival. BK is no different. We don't file in order to live a luxurious life at someone else's expense. (Some do, I suppose, but look at the stories here...everyone has had a hardship of some kind or other...the cheaters are few and far between.) We file because it is our only option for survival.

Not to get all religious about it, but even the Bible talks about the immorality of aggressive creditors. There's a chapter in the Book of Amos where moneylenders say "We will buy the lowly man for silver, and the poor man for a pair of sandals." (Amos 8:6) Sound familiar? We used credit for life's necessities, and now the banks own us, like slaves. BK restores our freedom. And there is nothing immoral about restoring one's freedom.

[SweetGeorgia]

The guilt you feel is just years and years of conditioning - like Pavlov's dogs and the dinner bell. We have been trained to feel guilty because it is profitable to others. They don't have to beat us up if we beat ourselves up!

In lawsuits, there are punitive damages available sometimes - rarely used, but intended to punish a wrongdoer and dissuade others. There are no punitive damages available in contract lawsuits (at least not in Georgia, and the law here is very harsh). Because breaching a contract is business, just doing the math. You pay one price or the other - and each is morally neutral.

Did you ever negotiate a term in those credit card contracts? Did you ever get to remove or add language from those long agreements they send? No, I bet you didn't. There's a battalion of lawyers on one side, and little ol' you on the other side. They are by far the most powerful party in this relationship; logically they bear the most responsibility for the outcome. And yet we've been trained to see the weaker party as equally (or even more) responsible. That's profit motive, not morality.

[artgood]

I've had to come to the same conclusions. As a pastor I feel especially "guilty" that I am filing bankruptcy. However, if it weren't for all of the fees, charges, and interest hikes, and if creditors would actually be willing to treat you like a human being and work with you, I might not be in the mess that I am in.

Basically it came down to putting food on the table - had a wake-up call last January when I really couldn't - or paying creditors. It really became a no-brainer. It has been a gut-wrenching decision that has meant lots of sleepless nights reading this forum and anything else about bankruptcy that I could find, but in the end it has brought us some relief from the constant feelings of hopelessness. We'll see what happens after we finally file.

[discouraged]

I agree. I was an idiot and even though I was unemployed, it wasn't until I had 3 catastrophies, dog got sick and took him to the vet (198), car needed shocks and struts desperately (900) and the dishwasher exploded (plumber 300), that I finally realized I did not have the money anymore. I'd used up all my savings and 401 trying to keep up the payments and they were gone.

After I stopped paying and the harrassing phone calls began (ringer is off now and they just hang-up), I could have kicked myself. 20 years of always paying and they were awful! Wish I'd kept that money and started bk a long time ago.

It would be hard, as a Pastor, but I believe that nothing happens without a reason and you have to trust that He knows and understands the predictament we are all in.

[tobee43]

i believe that pastor artgood is just the type of example that we see here on this site...

on this site i have spoken with doctors, janitor, lawyers, construction workers, police, firemen, teachers...computer tech.... business people....we have every walk of economic status now getting hit hard and harder everyday.

this crisis has to social boundaries.

[jjim120]

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.

[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.

[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!!

[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....

[drowning123]

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

[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]

Awww. . . .

[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.

[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.

[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).