6 ms·

That sounds more like fraud. What if I take out a loan, am perfectly capable of paying it off, but the asset backing the loan has lost sufficient value so as n

by njovin 9y ago

That sounds more like fraud. What if I take out a loan, am perfectly capable of paying it off, but the asset backing the loan has lost sufficient value so as not to be worth the continued investment? Is there any shame in defaulting and letting the lender suffer some of the consequences? In my personal opinion, no. Especially with secured or collateral-backed loans, the lender knew there was risk going in and there's no reason they shouldn't also suffer some losses in the case the plan doesn't work out. This is the situation many Americans found themselves in after the last housing bubble and it still makes me sad that some people still feel a sense of obligation to corporations that would screw them in a heartbeat if it would make them a legal dollar.

myrandomcomment 9y ago
Sorry but what you are saying is since people are too stupid to understand the contract they signed and to do some math it is the companies fault? My wife and I at one point were in the hole nearly 1m. The crash put my house way under and the job money fun time went away. It sucked. You know what we did. We canceled the cable TV, we stopped eating out. We watched every penny. I work jobs I hated, hated, hated. We got credit councling and got on a plan with them and stuck to it. We paid our debt. I am by no means saying that banckrucy should not be an option in some cases. Our medical systems is a mess and that is a huge cause of banckrucy. However let's be clear people signed those loans without understanding it and it is their fault. I knew the cost of the interest only loan I had. I got burned but it was a bet I entered after doing research and math, etc. When it did not work out I sucked it up and delt with it. I agree that some companies did some shady stuff, but really? You get something to good to be true and you don't question it? The consumer has to take some responsibility for their actions.
- wonderwonder 9y ago
  The companies are more than capable of doing the math as they are signatories on the same contract. They interest rate they charge on the loaned money is based on their own internal algorithm that determines the risk of default on a particular borrower. Risk is priced into the loan. I am glad you and your family were able to work your way out of the debt you found yourself and I commend you for it. Many others are not able too. Provided they did not get themselves into debt just to keep up with the Joneses' while living on credit cards, they should not be ashamed or made to feel stupid for taking advantage of a legal option that has been priced into their loan via their interest rate. You talk of doing the math and taking a bet on your loan. The lenders do the same math and take the same bet. They just don't apply any moral imperative to their actions. Life happens, and at the end of the day their is no shame in looking at the math and your situation and determining that the numbers don't add up and its time to reset.
  - myrandomcomment 9y ago
    I agree but that is not the case for most of this. People spend to much and run up to much debt because they are trying to keep up with the Jones. My wife was property manager for a large company. One of the properties in Orange County, New Port Beach area, had the highest rate of late payments and evictions. This is a A+ complex and has some of the highest rents for the units in the area. Guess what, those people that were late came in to the office with their bags from Nordstrom that they just came from in their BMW or MB asking for extendtions because they did not have the cash (but still had the CC to run up shopping). We as a country over all have made it okay for people not to be responsible for their actions and it will be our downfall. I agree with having the bankruptcy laws but we need to make it harder to get a reset whenthe cause of the situation was your own stupidity. I personally know people (Not friends) that have gone through bankruptcy 2 times, doing the same stupid shit the 2nd time as the first and it does not look like anything has changed with the last.
    - xyzzyz 9y ago
      I personally know people (Not friends) that have gone through bankruptcy 2 times, doing the same stupid shit the 2nd time as the first and it does not look like anything has changed with the last. The companies that lent them money for the second time should have gotten a clue, shouldn't they? Isn't this precisely what credit reports are for? It is definitely stupid to live over one's means and then go bankrupt, but it is just as stupid to lend money to people that have proven themselves irresponsible in the past, and so whoever lends to them should also suffer the consequences.
      - massysett 9y ago
        Oh they had a clue all right. They were charging the appropriate risk premium. People with bankruptcies are getting credit--expensive credit.
      - cmdrfred 9y ago
        After seven years that data is removed from your credit report due to consumer protection laws. Its possible they had no idea, and even if they did its illegal for them to deny credit because of it if it was 7 years or more ago.
- teekert 9y ago
  Whole countries are in huge debt that affect people that were not even born when the debt was established because of US economic hitmen [0]. I feel that all these countries should default and the corporatocracy fof the US should be ashamed of itself. [0] http://www.goodreads.com/book/show/26593431-the-new-confessions-of-an-economic-hit-man http://www.goodreads.com/book/show/26593431-the-new-confessi...
- unprepare 9y ago
  >were in the hole nearly 1m >We canceled the cable TV, we stopped eating out cable is what 200/month max? 2400 /year? How the hell much were you eating out that changing your habits allowed you to pay off a million dollars worth of debt? You sound more financially irresponsible than people whose mortgages were underwater by orders of magnitude
  - sctb 9y ago
    Please don't be so personally rude to other users. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
    - unprepare 9y ago
      The parent was disparaging millions of americans by calling them too stupid to read a contract and financially irresponsible, and i pointed out that his situation sounded more financially irresponsible than someone underwater on their mortgage. If they take offense to being called financially irresponsible im not sure how they justify calling millions of americans the very same thing. that said, fair enough, i was more discourteous than i needed to be in getting my message across, i apologize for that.
saimiam 9y ago
While I agree with everything you said, I feel your argument should stand on its own merit. Just because a corporations screw people isn't a good enough reason for people to screw them back. Your point that the risk premium you pay while taking a loan implies that the lender is willing to take some pain from your failure is sufficient in itself.
- cmdrfred 9y ago
  I think there a "tragedy of the commons" sort of moral responsibility here to only take out loans you have a good chance of paying off as you theoretically raise interest rates for everyone else.
  - state_less 9y ago
    But everyone is definitely not lumped together into a commons. If their is information to delineate people, it will be used. That is what credit scores are used for. Also, of some interest, it was when banks sullied the information, that the housing market really went off the rails. BTW: We've got to watch out for these financial guys, they'll try it again if they have the chance.
    - ericd 9y ago
      It's not the "financial guys" forcing everyone to sign up for the huge amounts of per-capita debt we're now up to. People are doing that themselves out of their utter lack of self-discipline to save money instead of buying a stupidly overpriced SUV or pickup truck. And the housing market really went off the rails because people were making stupid bets. Does the casino enable stupid bets? Damn right. But we don't blame them when a gambler loses all their money on a stupid bet. I'm as pissed as anyone that bankers didn't go to prison en masse, but what they did was package mortgage debt up as more safe than it was. It was home buyers eating up easy money with no restraint that caused the pricing to hit bubble territory.
      - thanksgiving 9y ago
enraged_camel 9y ago
>>That sounds more like fraud. What do you mean "more like fraud"? Immoral behavior and fraudulent behavior are not mutually exclusive. It is possible for something to be both immoral and fraudulent, such as the example I gave in my post. >>What if I take out a loan, am perfectly capable of paying it off, but the asset backing the loan has lost sufficient value so as not to be worth the continued investment? Is there any shame in defaulting and letting the lender suffer some of the consequences? No, I don't think there is any shame in that. Like you said, the risk for that is known upfront and is therefore built into the interest rate.
hvidgaard 9y ago
You can declare bankruptcy all you want, but if you are able to pay your debt, it will not be accepted.

by njovin 9y ago

myrandomcomment 9y ago

Sorry but what you are saying is since people are too stupid to understand the contract they signed and to do some math it is the companies fault? My wife and I at one point were in the hole nearly 1m. The crash put my house way under and the job money fun time went away. It sucked. You know what we did. We canceled the cable TV, we stopped eating out. We watched every penny. I work jobs I hated, hated, hated. We got credit councling and got on a plan with them and stuck to it. We paid our debt. I am by no means saying that banckrucy should not be an option in some cases. Our medical systems is a mess and that is a huge cause of banckrucy. However let's be clear people signed those loans without understanding it and it is their fault. I knew the cost of the interest only loan I had. I got burned but it was a bet I entered after doing research and math, etc. When it did not work out I sucked it up and delt with it. I agree that some companies did some shady stuff, but really? You get something to good to be true and you don't question it? The consumer has to take some responsibility for their actions.

wonderwonder 9y ago
The companies are more than capable of doing the math as they are signatories on the same contract. They interest rate they charge on the loaned money is based on their own internal algorithm that determines the risk of default on a particular borrower. Risk is priced into the loan. I am glad you and your family were able to work your way out of the debt you found yourself and I commend you for it. Many others are not able too. Provided they did not get themselves into debt just to keep up with the Joneses' while living on credit cards, they should not be ashamed or made to feel stupid for taking advantage of a legal option that has been priced into their loan via their interest rate. You talk of doing the math and taking a bet on your loan. The lenders do the same math and take the same bet. They just don't apply any moral imperative to their actions. Life happens, and at the end of the day their is no shame in looking at the math and your situation and determining that the numbers don't add up and its time to reset.
- myrandomcomment 9y ago
  I agree but that is not the case for most of this. People spend to much and run up to much debt because they are trying to keep up with the Jones. My wife was property manager for a large company. One of the properties in Orange County, New Port Beach area, had the highest rate of late payments and evictions. This is a A+ complex and has some of the highest rents for the units in the area. Guess what, those people that were late came in to the office with their bags from Nordstrom that they just came from in their BMW or MB asking for extendtions because they did not have the cash (but still had the CC to run up shopping). We as a country over all have made it okay for people not to be responsible for their actions and it will be our downfall. I agree with having the bankruptcy laws but we need to make it harder to get a reset whenthe cause of the situation was your own stupidity. I personally know people (Not friends) that have gone through bankruptcy 2 times, doing the same stupid shit the 2nd time as the first and it does not look like anything has changed with the last.
  - xyzzyz 9y ago
    I personally know people (Not friends) that have gone through bankruptcy 2 times, doing the same stupid shit the 2nd time as the first and it does not look like anything has changed with the last. The companies that lent them money for the second time should have gotten a clue, shouldn't they? Isn't this precisely what credit reports are for? It is definitely stupid to live over one's means and then go bankrupt, but it is just as stupid to lend money to people that have proven themselves irresponsible in the past, and so whoever lends to them should also suffer the consequences.
    - massysett 9y ago
      Oh they had a clue all right. They were charging the appropriate risk premium. People with bankruptcies are getting credit--expensive credit.
    - cmdrfred 9y ago
      After seven years that data is removed from your credit report due to consumer protection laws. Its possible they had no idea, and even if they did its illegal for them to deny credit because of it if it was 7 years or more ago.
teekert 9y ago
Whole countries are in huge debt that affect people that were not even born when the debt was established because of US economic hitmen [0]. I feel that all these countries should default and the corporatocracy fof the US should be ashamed of itself. [0] http://www.goodreads.com/book/show/26593431-the-new-confessions-of-an-economic-hit-man http://www.goodreads.com/book/show/26593431-the-new-confessi...
unprepare 9y ago
>were in the hole nearly 1m >We canceled the cable TV, we stopped eating out cable is what 200/month max? 2400 /year? How the hell much were you eating out that changing your habits allowed you to pay off a million dollars worth of debt? You sound more financially irresponsible than people whose mortgages were underwater by orders of magnitude
- sctb 9y ago
  Please don't be so personally rude to other users. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - unprepare 9y ago
    The parent was disparaging millions of americans by calling them too stupid to read a contract and financially irresponsible, and i pointed out that his situation sounded more financially irresponsible than someone underwater on their mortgage. If they take offense to being called financially irresponsible im not sure how they justify calling millions of americans the very same thing. that said, fair enough, i was more discourteous than i needed to be in getting my message across, i apologize for that.

saimiam 9y ago

While I agree with everything you said, I feel your argument should stand on its own merit. Just because a corporations screw people isn't a good enough reason for people to screw them back. Your point that the risk premium you pay while taking a loan implies that the lender is willing to take some pain from your failure is sufficient in itself.

cmdrfred 9y ago
I think there a "tragedy of the commons" sort of moral responsibility here to only take out loans you have a good chance of paying off as you theoretically raise interest rates for everyone else.
- state_less 9y ago
  But everyone is definitely not lumped together into a commons. If their is information to delineate people, it will be used. That is what credit scores are used for. Also, of some interest, it was when banks sullied the information, that the housing market really went off the rails. BTW: We've got to watch out for these financial guys, they'll try it again if they have the chance.
  - ericd 9y ago
    It's not the "financial guys" forcing everyone to sign up for the huge amounts of per-capita debt we're now up to. People are doing that themselves out of their utter lack of self-discipline to save money instead of buying a stupidly overpriced SUV or pickup truck. And the housing market really went off the rails because people were making stupid bets. Does the casino enable stupid bets? Damn right. But we don't blame them when a gambler loses all their money on a stupid bet. I'm as pissed as anyone that bankers didn't go to prison en masse, but what they did was package mortgage debt up as more safe than it was. It was home buyers eating up easy money with no restraint that caused the pricing to hit bubble territory.
    - thanksgiving 9y ago

enraged_camel 9y ago

>>That sounds more like fraud. What do you mean "more like fraud"? Immoral behavior and fraudulent behavior are not mutually exclusive. It is possible for something to be both immoral and fraudulent, such as the example I gave in my post. >>What if I take out a loan, am perfectly capable of paying it off, but the asset backing the loan has lost sufficient value so as not to be worth the continued investment? Is there any shame in defaulting and letting the lender suffer some of the consequences? No, I don't think there is any shame in that. Like you said, the risk for that is known upfront and is therefore built into the interest rate.

hvidgaard 9y ago

You can declare bankruptcy all you want, but if you are able to pay your debt, it will not be accepted.