Personal Debt. Should I worry about it?

I am on completely on the fence when it comes to how I feel about being in debt and if i should pay it off or not. Well not completely but i'm more on the side where I don't think I should pay it off.. My brother was in debt, He just stopped paying his debt, and after 5 years of not paying it (i forget the term he used but it was pretty much dead) it went to collectors, he got harassed and called, he was threatened but in the end nothing happened. He wasn't put in jail and were talking a 10,000 debt. not a few grand.. he couldnt pay them anything so he never did. He dosent have credit now but that isn't an issue to him as he isn't buying a place. he still has never payed it and been purchased buy many collectors over the years and they have offered to pay his debt off for a few hundered .. he never had to goto jail, his wages were never garnished. hes happy and debt free . i live in canada but i'm sure its similar to america and oversease... after my brother told me this i was suprised because i always imagined they governemt taking your wages and putting you in jail... someone please explain this to me more and what can and cannot happen because i dont want to pay my debt anymore

When citizens stop paying their debts en masse, the fundamental fabric of society will collapse because the rule of law will collapse.

The rule of law states if you have debt, you must pay it. If you cannot afford to pay it, you should never have taken it on in the first place.

I understand there are exceptions to this rule...hard luck stories of people losing their jobs, having medical problems, and so on. I have tremendous sympathy for these people. But there are also millions of idiots who just whipped out the credit-card with no thought for tomorrow, or bought overpriced houses with marble countertops they "absolutely had to have" without rationally thinking of how they would pay them off. Why should these idoits be given a free ride while people who lived within their means get nothing in return for acting rationally and responsibly?

Without trust that people will pay back debt, no economy of any nature whatsoever can function. Not even barter, the most basic economic system of all.

I'm not a lawyer, and I don't play one on TV...

Anyway, before you totally ignore your debts, do your research about what the laws in your country say NOT only about not paying the debt but also about what debt collectors can and can't get away with in your area.

QueenBob

Although I've been very tempted, I would have to agree with QueenBob. Our social and economic structure would begin to collapse literally over night if everyone shared that attitude.

Originally posted by silent thunderThere are also millions of idiots who just whipped out the credit-card with no thought for tomorrow, or bought overpriced houses with marble countertops they "absolutely had to have" without rationally thinking of how they would pay them off. Why should these idoits be given a free ride while people who lived within their means get nothing in return for acting rationally and responsibly?

is tomorrow worth thinking about? how are we sure it even exists. The other day i saw a bus stop completely demolished from a car accident, u can get in a car accident without even being in a car, i hope no one was waiting for the bus. i'm not wondering why people get in debt, and im not looking for an opinion about what someone who is in debt and how they gained it is, i'm wondering about, how can my brother not payed off his debt and the only thing he loss was his credit raiting..

I can tell you as an ex manager of Avco(now GE)finance your brother was lucky he didn't have a proffessional collector investing too much time and energy on him,its always best to have some semblance of a credit rating if your in hardship ignoring it won't go away,refinance all your bills into one with a lower debt or make an offer say 50 bucks on a $200.00 monthly payment whilst your out of work,whatever,but keep in contact with your creditors,most importantly pay out your credit card chop it in half and throw it in the bin.

Originally posted by hautmess
is tomorrow worth thinking about? how are we sure it even exists. The other day i saw a bus stop completely demolished from a car accident, u can get in a car accident without even being in a car, i hope no one was waiting for the bus.

Death is easy. Life is hard.

It's quite easy to answer the question, "what if I die tomorrow?" It's much harder to answer the question, "what if I live another few decades at least?"

Which scenario is more likely for most people under retirement age?

Originally posted by hautmess
I am on completely on the fence when it comes to how I feel about being in debt and if i should pay it off or not.

Depends how you feel about having people know you are untrustworthy I suppose.

It may influence getting a future job, or how banks and insurance companies see you as a personal risk. They may not want you as a client.
Just remember, defaulting on a debt will be recorded, and that will follow you around for the rest of your life.

Suppose (for example) sometime in the future you may wish to immigrate to another country, they will check, and may decide they don't want to give you citizenship. They may pass you over for one of the hundreds of other hopeful immigrants trying to get citizenship.

No offence to the OP or his brother, but this issue is really bugging me after I read the following collection of anecdotes today:


No Morals Is the New Normal

"My 25 year old niece had $10,000 of outstanding credit card debt. Recently, she told the bank she couldn't pay. She is not unemployed so the 'hardship' is all relative. Nevertheless, the bank offered her a concession which she refused. They offered another concession, she refused again. Finally, they told her if she paid $150/month for 2 years (total of only $3600 with no interest), they would call it paid in full! She accepted in a heartbeat. It is less than a month later, and she celebrated her good fortune by going on a cruise to Hawaii."

"A friend owns a small manufacturing co. He tells me of one of his female employees who was saddled with a $450,000 home she purchased almost five years ago with no down pmt. One year after her purchase she pulled $75,000 home equity and purchased 'fun stuff' including a boat. She recently walked away from the house (now saddled with $525K mortgage), purchased a new house for $200,000 (in her sister's name) and kept all the goodies purchased from the home equity withdrawal. With the much lower mortgage payment she just bought a new car.

Almost everyone in my "survey" is aware of, or knows someone living rent free in their home for an extended period of time, having stopped paying their mortgage. Many of these free boarders are spending lavishly on non-essentials. My hard-working part-time assistant knows two different 35+ yr olds who have enjoyed over 9 months (one is up to month eleven) of rent-free living in very nice homes they purchased in 2004/2005! Both are employed and both enjoy a non-frugal lifestyle. My assistant wonders if he should do the same or have me pay him more so that he too can enjoy the 'good life'.

My sister is a nurse with 25+ years on the job. She told me of a young couple that she is good friends with that both work at her hospital making a decent joint income. They didn't like the fact that they grossly overpaid for their 3000 sq ft home in 2006. They stopped making hefty monthly payments six months ago and haven't yet been contacted by the bank. They have decided to wait until contacted and then walk away. In the meantime, they just returned from NYC from a week vacation in the Big Apple.

My brother-in-law wanted to know if he should stop making payments on everything. He lives in Virginia and his carpentry skills are not as marketable as they were in the height of the boom. He and his wife's best friend have lived close-by for many years. For the past 13 months since they strategically decided to stop paying their mortgage, they had yet to be contacted by their bank. Not even one letter! My brother-in-law doesn't understand how they get to pocket the mortgage and spend carefree, including a 10-day Caribbean vacation.

Apparently there are lots more anecdotes of this type -- potentially "millions of similar stories across the country."

More at source:
www.marketoracle.co.uk...



[edit on 4/21/10 by silent thunder]

Two good reasons to pay your debt

1) If you stop paying you cant get a loan for the next 5 years for been blacklisted, if in those 5years you need to get a loan for a life threatening situation... well you going to be kicking yourself for been so stupid

2) I love debt, why? Well cause the more debt i get into the harder it pushes me to find a better job or make more money, so far so good... and im very happy with what i have achieved in life... if i was not in debt at times i dont think i would have pushed myself as hard though..

go online and change your ph # and address for every account. Stop paying and when you get ph calls tell them that you just got that number and have no clue about who they ask for. your credit will get hit HARD but it seems that credit is not the issue at hand.

Once in 3rd party collections you have absolutely no obligations to pay, at least in the us.

Sorry to go against the grain of every banker is God but sheesh man, they got their bail out that me and my kids have to pay.

Originally posted by ComadantZero

Sorry to go against the grain of every banker is God but sheesh man, they got their bail out that me and my kids have to pay.

I fully believe banker bailouts were obscene and unjustified and should not have been made. Personally, I'd love to see a bunch of bailed-out bankers in orange jumpsuits and leg-irons, although I doubt its going to happen.

But guess what? Deadbeats like the kinds in the anecdotes I posted a few posts above are ALSO going to cause you and your kids to pay.

Bankers are guilty. So are "Mr.-and-Mrs.-too-much-plastic-crap-bought-on-credit."

Well, there are a lot of businesses you could get involved in where your credit is a non-issue. For example, you could traffic coc aine. Cash business. You could broker human tissue and organs. No credit, no problem. You could sell automatic firearms. Again, cash in your pocket for providing an in-demand service. Some things you could do are what they call "against the law." No matter. If certain authorities detain you over this small matter, they will provide you with free housing, free food, free soap, free everything. They will even give you a job! You don't even need to apply. They will never do a credit check. So, you could do any of these things and more. Then buy all the stuff you could ever need with all your cash. There is no need to pay off these nuisances. Life is good.

reply to post by QueenBob


Yep! Look up what they can do in your country first! Where i live the government and/ or so called IRS can actually take your home away from you and put it out back on the market for a rediculous low price. The same goes for your car, boat, scooter and so on!
If its gone that far so you lose everything, materially speeking, you will be put back on the street with a "minimum wage" just to have food on your table which will be located in the smallest apartment thinkable...
I have seen it happen to my neighbours

Pay or give back i guess.

Yep governments and private firms will literally kill you over debts.

If EVERYBODY took the op`s brother`s attitude, it would be great, because people would all be saying "no, the credit had no value, the corporations are false, none of this debt is part of real life, it`s part of a hyperreal demonic construct of the mind of oppressors."

No one should pay anything back to a company. There very presence is malign, and thats a fact, not an opinion.

Personal debt to fellow human should be payed, but never to a company.

We really would lose out being part of a capitalist society for eternity.
The capiltalist pyramid is a good example of the kind of tyranny those who pay back their debts uphold. It stinks, it`s abhorent, and it needs taken down.


When the fabric fell apart, a new real fabric would be woven but the banks wouldn`t be near the top imo, it would be up to the humans.

You can look at this legally or morally.

Personally, I pay my debts because I made an agreement to do so when I signed the paperwork. But I've known people who have got out of small debts the same way your brother did.

Well our government does not give a rip about debt, so why should the average citizen?

If you wont go to jail for not paying (just like BigBrother)then dontpay(just like our Government teaches us by example).

Originally posted by discl0sur3
Although I've been very tempted, I would have to agree with QueenBob. Our social and economic structure would begin to collapse literally over night if everyone shared that attitude.

GOOD! The sooner the better!

As long as we continue to live under the illusion that the current system is a safe and fair system, the longer we remain slaves to debt - and not just our own. The money you spend is not money at all - nope, it represents a debt that the country has to pay back - WITH INTEREST! Your labor... better than 50% of it goes to service debt, through taxes, interest, penalties and your own private debt. I seriously doubt that God intended for us to live in servitude to the banks and be treated live serfs or plebes.

I wish people would all stop paying their debts and their taxes. The sooner we shed this ystem, the sooner we can get back to the principles of liberty, freedom and equal justice! We just need to stop feeding the monster!

I'm based in the UK so it may be different to the States but I like to consider two factors when looking into this debate, the moral issue and the legal issue (please remember I'm in the UK)

Morally we are told we need to pay back debts, when I lend money from Friends and family I take away - physically - their money. This can deprive them of things they might need and morally of course I should pay the money back. However, banks and credit card companies magic up money, it is not theirs to lend nor in most cases do they even have the money that they lend to you in the first place, so do you morally have an obligation to pay that money back? The banks take deposits, loan out multiples of those deposits and pay themselves all the profit that comes from the interest, you pay them back for loaning you money that is not theirs to begin with. The difference is made up by the central bank and is inflation. The banks showed recently that they have no understanding of moral hazard and quite happily took your money to pay for their mistakes whilst they continue to pay out £3.5Billion in bonuses and face no penalty. Who is morally corrupt here ?

In the legal perspective it all depends on "Contract law". I advise everyone everywhere to read ever law possible and never sign any agreement with any financial company unless you have read the Terms and Conditions and UNDERSTAND them. In the UK there is a process called "Statue barred", this exists under the 1980 Statue of Limitation act, the concept is that if a Creditor has not undertaken the obligation of recovering a debt within 6years that debt can no longer be enforceable under the condition that the debtor has had no contact with the creditor or accepted responsibility for the debt. This protects the rights of the consumer; I will give an example. Mobile Phone company X does not collect the payment on the final two months of a person Y's contract. Person Y forgets to pay the 2mths moves to another phone company and hears nothing from company X. 2years later Person Y rejoins company X with a phone contract, 6years later the same company sells the outstanding debt to a debt collection agency, the agency places 50% surcharge onto the contract as well as x% of interest per year for non payment. The customer made a simple mistake is it moral and is it fair that the customer is now liable for the companies neglect of the obligation to recover the debt. In this circumstance the debt collection agency was informed the debt was "statue barred" and the debt was cleared.

My final example is of a credit card company. Customer x informs the credit card company that the credit card is lost. Credit card company opens a brand new account for the customer, sends a new card and cancels the previous account. 1mth into the new account the Credit Card company informs the customer that it is changing the interest charged on the account i.e. its changing the terms and conditions relating to the contract that was signed. However as the Credit Card company changed the customers account without notification or requesting a new contract customer x requests from the credit card company a copy of the contract that was signed as customer is not happy about the increased charges to his credit card. Credit Card company can not produce the said contract so customer x says we have no agreement therefore I am not responsible for the debt. Cuts up the credit card, cancels the account and never pays the debt back. Now you have to have big cohunas take that chance you know your stuff and don't destroy your credit rating.

Before anyone preaches about morality of not paying debt back understand the only reason the banks want debt is to make you a slave to the system and turn you into a cash cow, debt = interest = free money, the con is its your money in the 1st place, or rather figures on a computer screen - abracadabra.

Of course I am only taking about personal debt in this reply.