The question of morality in bankruptcy

[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?

[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!

[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."

[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......

[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 *****.

[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.

[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......

[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]

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!

[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.

[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.

[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.....

[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"

[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.

[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.