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Who wouldn't want to rack up a bunch of debt and just not pay when the bill came due?
by jazz9k 7mo ago
Who wouldn't want to rack up a bunch of debt and just not pay when the bill came due?
- hdgvhicv 7mo agoCompanies do this all the time, then declare bankruptcy and move on.
- dyauspitr 7mo agoThat’s intentional to foster the growth of entrepreneurship. It’s the ability to do something without being personally liable. It’s a good thing.
- samesamediffer 7mo agoHow does your argument fail to also apply to student loans?
- dyauspitr 7mo agoWhen companies declare bankruptcy they have to liquidate their assets and pay back as much as they can. How is it different from student loans?
- kadoban 7mo agoThe difference is you _can't_ do that for student loans. There is no option to get rid of them via bankruptcy. So, this happens instead.
- dyauspitr 7mo agoYeah because then most students would graduate and declaring bankruptcy would be the first thing they do out of school. People have almost no assets at that point that they can lose, no real income. They would ride out the 7 years of bad credit while building out their early career and essentially would get a free education. The financial system wouldn’t be able to manage that at the pure scale of the number of people that use student loans.
- kadoban 6mo agoI did not suggest that you could just turn on bankruptcy with no rules. > [...] essentially would get a free education. How horrible, imagine the world.
- Analemma_ 7mo agoPeople can decide on what terms they want to loan money to, or invest in, a business, based on how likely they think it is to succeed. And if they guess wrong, tough luck, they should've been smarter. The incentive structure here is to make it easier to raise money with good ideas and harder to raise money with stupid ones. This incentive structure doesn't exist with student loans: student loans are unconditional, and with terms that don't take into account likelihood of payback.
- nickpinkston 7mo agoTotally agree - there's a lot of double standards here: Bankruptcy is good for entrepreneurial risk, but not for human thriving apparently...
- tpmoney 7mo agoBankruptcy is great for human thriving, and the extensive US bankruptcy system is one of the best tools our legal system has for people who wind up in bad situations. It's a complete shame that we decided that student loan debt was ineligible for most forms of bankruptcy once it became clear that federal guaranteeing of loans would generate a lot of high risk loans. But fleeing to another country and/or simply refusing to pay your debts, regardless of whether or not you are able to are is not bankruptcy. It's simply refusing to pay your debts.
- nickpinkston 7mo agoI see them as morally equivalent in our current system - ie an illegitimate democracy without recourse for common people. If companies can do strategic bankruptcies, transfer pricing, etc., then regular people can do the consumer equivalents. I don't think any of us should shill for corporate interests.
- declan_roberts 7mo agoStudent loans should also get discharged in bankruptcy and the schools who are benefiting from predatory lending should take the bath.
- deleted 7mo ago[deleted]
- gunapologist99 7mo agoPeople investing in companies do so knowing that it might be a poor investment. But if a company borrowed the money and never had the intention to make enough to pay it back or return on investment, we have a different word for that. That word is fraud. Just ask Elizabeth Holmes.
- tartoran 7mo agoIts not bad intention from the start. Im sure the succesful ones who land well pating jobs after school do pay off their loans.
- kkotak 7mo agoPeople are corporations too.
- tracerbulletx 7mo agoMany people seem to have been successfully brainwashed into moralizing debt but only for 19 year old serfs who have been lied to about the value of the asset they're taking out debt for. If its a corporation transferring 20 billion of debt into a leveraged buy out so they can shut down the company after squeezing all the assets out of it, that's just doing business.
- nickpinkston 7mo agoExactly! I like the analogy of: When the bank is giving you a sub-prime loan, who is more sophisticated in that transaction? If the bank (with their fancy risk models, etc.), why shouldn't they be the party to take the bulk of that risk?
- gunapologist99 7mo agoIn the United States at least, a bank who is offering a subprime loan is taking the bulk of that risk. Student loans are guaranteed by the federal government. That is not the same thing at all.
- nickpinkston 7mo agoDuring the 2008 Crisis, it was mortgage holders who got fucked and banks made whole, so risk asymmetries go far beyond just student loans.
- s5300 7mo ago[dead]
- llm_nerd 7mo agoA similar situation occurs if you bring up usurious bank charges, such as overdraft fees. I lucked into an aptitude for a lucrative paycheque/career, but somehow I still manage to feel enormous sympathy for people being utterly robbed by these fees, banks literally structuring transactions to charge enormous penalties to the very people least able to afford it, for something which actually costs them fractions of a cent. People become absolutely psychopathic about these sorts of discussions, and become heartless, soulless goblins. Even people at the bottom of the socioeconomic ladder will desperately line up to show how good of little corporate bootlicking subjugates they are.
- s5300 7mo ago[dead]
- rvz 7mo agoAsk Oracle.