The problem here, I think, is that the problem as stated only works out if having $0 dollars is no better than having -$200. I don't think this is the common c

The problem here, I think, is that the problem as stated only works out if having $0 dollars is no better than having -$200. I don't think this is the common case, but there are cases where that makes sense, for instance if keeping a license enables you to keep a job that will allow you to easily pay off the debt, or, if you multiplied the numbers by 1000, and assumed the poor person was willing to declare bankruptcy. In that case, you might have a point; Really, I think this is why buying a house at a time of obvious volatility is such a good deal, assuming you have no other assets. If prices go up, you have put 5% down on an asset that is appreciating quickly. In the up market, housing was appreciating at north of 10% a year; that's 10% of the total home value, of which you maybe put down 5%. If prices go down? you walk. The question, in that case, is how much does declaring bankruptcy cost? I mean, you have the up front lawyer costs... then you have the problems associated with having bad credit. but I can see many cases where taking the gamble would make sense.