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So the creditors should just take the loss? That would make credit more expensive, perhaps prohibitively so, causing less people to get into the problem in the

by walkon 17y ago

So the creditors should just take the loss? That would make credit more expensive, perhaps prohibitively so, causing less people to get into the problem in the first place. That's bad for the industry though, not to mention people's insatiable desire for things they don't need and can't afford.

cdr 17y ago
What loss? With interest, fees, etc the debtor ends up paying many times the value of the debt.
- walkon 17y ago
  So I could take my credit card with no balance, run up the debt to its limit (11K-ish), make no payments or anything and my bank wouldn't have a loss? There's plenty of ways they can lose.
  - cdr 17y ago
    The post you replied to (and the parent article) are talking about garnishment, interest, fees, etc when debt is collected upon. If you ran your credit card up to the limit and did nothing (including doing nothing when you were sued for the debt), you would end up with your wages garnished and proceed to pay far more than $11k, just as I said.
    - deleted 17y ago
      [deleted]
pg 17y ago
In a lot of cases I would be happy to have the creditors take the loss. The credit card companies are not simply innocent victims. They deliberately try to lend money to people who will have trouble paying it back, because the longer people take to pay back the principal, the more interest they'll pay. The cases where people incur too much debt even to pay the interest are just instances of the credit card companies' algorithm missing slightly-- like a torturer accidentally killing his victim.
- philwelch 17y ago
  In a sense, this makes credit cards even worse than the Mafia. If you borrow money from the Mafia and don't pay back, they will maim or kill you, but they probably want to avoid that as it is expensive. If you borrow money from the credit card and don't pay back, the credit card gets to garnish your wages for life, which is a pretty nice deal for them. So the Mafia actually has its incentives better aligned with their creditors.

by walkon 17y ago

cdr 17y ago

What loss? With interest, fees, etc the debtor ends up paying many times the value of the debt.

walkon 17y ago
So I could take my credit card with no balance, run up the debt to its limit (11K-ish), make no payments or anything and my bank wouldn't have a loss? There's plenty of ways they can lose.
- cdr 17y ago
  The post you replied to (and the parent article) are talking about garnishment, interest, fees, etc when debt is collected upon. If you ran your credit card up to the limit and did nothing (including doing nothing when you were sued for the debt), you would end up with your wages garnished and proceed to pay far more than $11k, just as I said.
  - deleted 17y ago
    [deleted]

pg 17y ago

In a lot of cases I would be happy to have the creditors take the loss. The credit card companies are not simply innocent victims. They deliberately try to lend money to people who will have trouble paying it back, because the longer people take to pay back the principal, the more interest they'll pay. The cases where people incur too much debt even to pay the interest are just instances of the credit card companies' algorithm missing slightly-- like a torturer accidentally killing his victim.

philwelch 17y ago
In a sense, this makes credit cards even worse than the Mafia. If you borrow money from the Mafia and don't pay back, they will maim or kill you, but they probably want to avoid that as it is expensive. If you borrow money from the credit card and don't pay back, the credit card gets to garnish your wages for life, which is a pretty nice deal for them. So the Mafia actually has its incentives better aligned with their creditors.