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The title is misleading. In general, you want to pay off debt. However, sometimes leveraging debt to gain assets which make even more money is good. Convincin
by alexfromapex 5y ago
The title is misleading. In general, you want to pay off debt. However, sometimes leveraging debt to gain assets which make even more money is good. Convincing a lender to reduce liabilities is strange and probably won't work in many scenarios.
- xnyan 5y agoThere's a very common and overused saying along the lines of "If you owe the bank $100,000, you have a problem. If you owe the bank 1,000,000,000, the bank has a problem." The point is that in a debt relationship, the lender has given you something today and while you have a legal obligation to pay that back tomorrow, the fact remains that the borrower has The Thing and the lender does not, which often creates leverage to the advantage of the borrower. The lender knows/accepts that not everyone will pay them back (this risk is controlled by interest), leaving the borrower wiggle room to pay back less than what they owe by threatening to not pay back anything at all. This is why it pays not to pay back your debts - some entities can and have borrowed and used that borrowing as leverage to extract better-than-agreed-upon terms to pay it back.
- villasv 5y agoThe title is fine. It's not a general purpose aphorism, it's the theme of the article (using bankruptcy/defaults to profit from liabilities).