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Are you morally obligated to repay a loan that you take?[W:461]

Is there a moral obligation to repay money you borrow?


  • Total voters
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If you rape your neighbor's wife, they come after you, too. The fact that you pay the penalty for breaking our legal contract (thou shalt not rape) doesn't make it an acceptable choice for you to make. The fact that the bank can recover some of it's losses doesn't make it right for you to stick them with your losses. When you buy a house, the house is YOURS. It's your purchase, not the bank's purchase. If your purchase doesn't work out to be as profitable as you thought it would be, walking away and sticking the bank with that loss is just unscrupulous. Sure, it's good for you and bad for the bank, but it demonstrates that given the choice, you will do what's good for you instead of what is RIGHT. That's the morality of it. Granted, you can decide not to give a damn about doing the right thing and not care who thinks you're moral or not.... hey, after all, it's good for you and what's good for you is all that really counts, right?

I expect better from my friends, associates and business partners. Anyone that will screw someone else if it profits them is someone I don't want to have anything to do with. I have friends who filed bankruptcy. I don't hold it against them. They tried their best and the debt became so great there was no way they could pay it. The reason I still consider them friends is because they didn't blame the banks or credit card companies or car dealership and never tried so shrug their shoulders and figure it's no sweat. They knew they made mistakes and they knew that now others were going to have to pay for them and there was a sense of remorse. At least they KNEW that it was a failure on their part. At least they know and can acknowledge the difference between right and wrong.

I probably still see more higher ethical behavior coming out of non-stock, non-profit owned type business like hospitals and such than I do out of Wall Street. It take generations to build institutional culture and generations to change them, so I do not expect to see a lot of payoff from this new orientation until later in life.

In the meantime, I almost created a new job opening a few minutes ago. Thought I was gonna take out a camera man filming B-roll of the sun and dark shadow on a wall down in the warehouse district when he meandered out into the street. Not sure what they are filming for though. We gets lots of random things filmed in this area, especially exteriors, so could be anything. The rest of the crew was standing there shivering as the wind was rolling down the street. Man, shoot. Missed my chance to be on the news now that I think about it.
 
You can bring up Snow White and the seven dwarves if you want but it wouldn't be on topic, either.

So, in a thread about moral responsibility to repay a loan, I can't talk about other moral responsibilities in finance? Am I to start a "Are you morally obligated to carry health insurance" thread? I guess my question, Papa bull, is how can you pretend that you believe there should be morality in financial decisions, and then vote conservative? How can one worship the infallible, force of nature known as the free market, and then chastise individuals for making free market decisions?

That's the thing, I agree with you on this topic. But what I don't get is why we agree, because by all standards of reason you shouldn't agree.
 
It's actually nothing like that.
The argument is that contracts include both and outline and a penalty for a breach of contract. In either case, both parties will act in their best interest.

If you think there is any correlation between a contract on your home and a cell phone contract, you aren't being serious in this discussion.
 
I wouldn't know. The lender doesn't have to tell me.

Where are you coming up with this nonsense? Are you talking about a loan shark or borrowing from your friends? Because if you're talking about a bank or a credit union, you are 100% incorrect.
 
You aren't paying attention. They are loaning based on ASSETS they already have. Money isn't the only asset of value. Mortgages are also assets of value. How much currency a bank has on hand doesn't in any way tell you what their assets are or how much debt they can cover. When they write you a mortgage check, you are cashing a check that is valid and good and has money to back it. They loaned you money they DO have. The fact that you don't understand how the banking system works doesn't change that fact. So your reasoning for feeling it's OK to stick the bank with YOUR bad purchasing decision because "they loaned you money they didn't have" is nonsense.

I am reading a lot of people in this thread who have no idea what they are talking about and who appear to be pushing propaganda they don't understand.

For anyone who is interested in what you just said here, they should spend some time researching how lending works, including learning how to read Call Reports.

Bank lending is one of the most heavily regulated businesses in this country today. Banks can't do anything amiss.
 
If you rape your neighbor's wife, they come after you, too. The fact that you pay the penalty for breaking our legal contract (thou shalt not rape) doesn't make it an acceptable choice for you to make.

That's not a contract. The rapist didn't enter into a negotiation with the neighbor with each party giving consideration to a deal that is presumably in the best interests of both parties. You're really reaching with this example - apples and killer whales.

The fact that the bank can recover some of it's losses doesn't make it right for you to stick them with your losses. When you buy a house, the house is YOURS. It's your purchase, not the bank's purchase. If your purchase doesn't work out to be as profitable as you thought it would be, walking away and sticking the bank with that loss is just unscrupulous. Sure, it's good for you and bad for the bank, but it demonstrates that given the choice, you will do what's good for you instead of what is RIGHT. That's the morality of it. Granted, you can decide not to give a damn about doing the right thing and not care who thinks you're moral or not.... hey, after all, it's good for you and what's good for you is all that really counts, right?

OK, most of this behavior comes out of the financial crisis. When the bank made the loan, did it have an moral obligation to place you in the cheapest loan? If it did have that obligation, it was ignored - by some estimates as many as 60% of those who ended up in subprime loans qualified for prime loans. Point is we KNOW without any doubt the bank doesn't act as a moral agent - their obligation to shareholders is to maximize returns, full stop. Why do individuals have a moral obligation when the other side rationally behaves amorally - our 'free market' system in fact takes as a given, effectively demands, that profits motivate behavior, not morality.

I expect better from my friends, associates and business partners. Anyone that will screw someone else if it profits them is someone I don't want to have anything to do with. I have friends who filed bankruptcy. I don't hold it against them. They tried their best and the debt became so great there was no way they could pay it. The reason I still consider them friends is because they didn't blame the banks or credit card companies or car dealership and never tried so shrug their shoulders and figure it's no sweat. They knew they made mistakes and they knew that now others were going to have to pay for them and there was a sense of remorse. At least they KNEW that it was a failure on their part. At least they know and can acknowledge the difference between right and wrong.

Part of the problem is you have an issue that some now believe the rhetoric of the "free market," and apply the logic drummed into us over decades to our personal lives that has the unfortunate side effect of potentially harming BUSINESS. Just in the last week I've read a dozen times about how an employer has no obligation to hire anyone, pay him or her a decent wage, provide benefits. There is no moral obligation for a firm to keep a plant in the U.S. when it can close the plant, lay off 5,000 workers, move it to China and improve EPS.

So what's unclear to me is where each side's moral obligations begin and end. All I see is a demand that individuals have a moral obligation to make bad business decisions but I can't think of even ONE instance where conservatives apply a similar standard to a for profit company.
 
So, in a thread about moral responsibility to repay a loan, I can't talk about other moral responsibilities in finance? Am I to start a "Are you morally obligated to carry health insurance" thread? I guess my question, Papa bull, is how can you pretend that you believe there should be morality in financial decisions, and then vote conservative? How can one worship the infallible, force of nature known as the free market, and then chastise individuals for making free market decisions?

That's the thing, I agree with you on this topic. But what I don't get is why we agree, because by all standards of reason you shouldn't agree.

You can bring up other responsibilities, but we're actually just talking about whether it is moral to repay a loan. If you want to argue it is immoral to not have health insurance, that's another topic and you can certainly have fun with that.

But don't argue that republicans must be financially irresponsible because Texas is a red state and has a high rate of uninsured. Don't do that for a few reasons. 1. Florida is blue and has a higher rate of uninsured by your own map. 2. There's no clear pattern between "red states" and "uninsured". 3. Even if there was, all you know about a "red state" was that there were enough votes for the republican nominee that the electoral college went for the republican nominee. What percentage of the welfare or uninsured or abortions are from republicans cannot be determined by that. Now don't get me wrong. You can argue the "red state" vs. "blue state" thing but you'll get your ass handed to you if you try to make an argument that most of the uninsured in Texas must be republicans since most of the people who voted in 2012 pulled the lever for Romney. And you SHOULD get your ass handed to you in a debate for making such a foolish argument.
 
That's not a contract. The rapist didn't enter into a negotiation with the neighbor with each party giving consideration to a deal that is presumably in the best interests of both parties. You're really reaching with this example - apples and killer whales.



OK, most of this behavior comes out of the financial crisis. When the bank made the loan, did it have an moral obligation to place you in the cheapest loan? If it did have that obligation, it was ignored - by some estimates as many as 60% of those who ended up in subprime loans qualified for prime loans. Point is we KNOW without any doubt the bank doesn't act as a moral agent - their obligation to shareholders is to maximize returns, full stop. Why do individuals have a moral obligation when the other side rationally behaves amorally - our 'free market' system in fact takes as a given, effectively demands, that profits motivate behavior, not morality.



Part of the problem is you have an issue that some now believe the rhetoric of the "free market," and apply the logic drummed into us over decades to our personal lives that has the unfortunate side effect of potentially harming BUSINESS. Just in the last week I've read a dozen times about how an employer has no obligation to hire anyone, pay him or her a decent wage, provide benefits. There is no moral obligation for a firm to keep a plant in the U.S. when it can close the plant, lay off 5,000 workers, move it to China and improve EPS.

So what's unclear to me is where each side's moral obligations begin and end. All I see is a demand that individuals have a moral obligation to make bad business decisions but I can't think of even ONE instance where conservatives apply a similar standard to a for profit company.

Jasper, some people understand that an honorable person does what they agree to do. Some people don't understand that. I guess we can chalk you up in the latter column.
 
If you think there is any correlation between a contract on your home and a cell phone contract, you aren't being serious in this discussion.

If that's true, then you have to explain how the two situations differ, other than in the amounts involved.
 
If that's true, then you have to explain how the two situations differ, other than in the amounts involved.

I have to explain to you why there's a difference - long term, short term, and life impacting- between defaulting on your unsecured cell phone contract and defaulting on a loan secured by your home?

I'm not here to teach you the basics of life. If you're not responsible enough to know the difference, find someone else to help you learn it. Even my 14 year old knows it.
 
You can argue the "red state" vs. "blue state" thing but you'll get your ass handed to you if you try to make an argument that most of the uninsured in Texas must be republicans since most of the people who voted in 2012 pulled the lever for Romney. And you SHOULD get your ass handed to you in a debate for making such a foolish argument.

Well that's just horse****. I don't need to argue that, and I don't know how it would be possible to get that data on such a micro level. Your sad implication that the highest rates of uninsured or abortions would be from democrats, even though I've clearly shown that the highest rates of uninsured are in red states (and Florida is a swing state not a blue state), is lazy argument.

The only one making foolish arguments is you, by implying such unfounded ideas. I've only pointed that red states harbor the most uninsured, as I certainly do not have the data about the political leanings of each person. And who gives a **** really? You, probably.

Who takes the most federal government aid while paying the least in federal taxes? Red states. Who has the highest uninsured rates? Red states. But you're right, it must be the packets of blue in those states, because **** it.
 
Jasper, some people understand that an honorable person does what they agree to do. Some people don't understand that. I guess we can chalk you up in the latter column.

But you're not addressing the core point which is we take as a given that businesses in the market behave amorally - they're in business to maximize profits, period. So is it "moral" to lay off 1,000 workers? The CEO doesn't consider the question - the question is whether it's profitable to do so. That's what shareholders demand. You're now demanding that individuals engage in positive acts contrary to their own financial interests, and to apply a 'morality' standard that we simply do not demand in any context in the business world.
 
Well that's just horse****. I don't need to argue that, and I don't know how it would be possible to get that data on such a micro level. Your sad implication that the highest rates of uninsured or abortions would be from democrats, even though I've clearly shown that the highest rates of uninsured are in red states (and Florida is a swing state not a blue state), is lazy argument.

The only one making foolish arguments is you, by implying such unfounded ideas. I've only pointed that red states harbor the most uninsured, as I certainly do not have the data about the political leanings of each person. And who gives a **** really? You, probably.

Who takes the most federal government aid while paying the least in federal taxes? Red states. Who has the highest uninsured rates? Red states. But you're right, it must be the packets of blue in those states, because **** it.

Well, I suppose there isn't any rule that you can't use stupid and irrational arguments so go ahead and have fun with that.
 
I have to explain to you why there's a difference - long term, short term, and life impacting- between defaulting on your unsecured cell phone contract and defaulting on a loan secured by your home?

OK, so it's the amounts involved. At what point does it become "immoral" to break a contract? $10,000?

Or maybe the term - so, it's OK to break a two year contract, but not a 15 year contract. What's THAT dividing line - the midpoint - 9 years?

I'm not here to teach you the basics of life. If you're not responsible enough to know the difference, find someone else to help you learn it. Even my 14 year old knows it.

I'm responsible enough to pay my bills, all of them, on time, including our mortgage about 10 years early. But what I'm missing is any kind of objective standard that will inform me in advance which contracts are or are NOT "immoral" to break.
 
OK, so it's the amounts involved. At what point does it become "immoral" to break a contract? $10,000?

Or maybe the term - so, it's OK to break a two year contract, but not a 15 year contract. What's THAT dividing line - the midpoint - 9 years?



I'm responsible enough to pay my bills, all of them, on time, including our mortgage about 10 years early. But what I'm missing is any kind of objective standard that will inform me in advance which contracts are or are NOT "immoral" to break.

:lamo :lamo

Please bother someone else. I don't get paid to educate people on here about basic fundamental best practices of money and life management. And I'm way too tired to explain my posts to someone who can't understand them.
 
:lamo :lamo

Please bother someone else. I don't get paid to educate people on here about basic fundamental best practices of money and life management. And I'm way too tired to explain my posts to someone who can't understand them.

I don't want or need your advice on money or life management. What I asked for was an objective standard that governs the morality of breaking contracts, and you obviously don't have one.
 
I don't want or need your advice on money or life management. What I asked for was an objective standard that governs the morality of breaking contracts, and you obviously don't have one.

I can't have a cerebral discussion with someone who thinks the difference between defaulting on a loan secured by your home and defaulting on your unsecured cell phone contract is "the amounts involved". When I'm interested in educating 2nd graders on civics, I'll come back to find you. Morality has nothing to do with it.
 
I can't have a cerebral discussion with someone who thinks the difference between defaulting on a loan secured by your home and defaulting on your unsecured cell phone contract is "the amounts involved". When I'm interested in educating 2nd graders on civics, I'll come back to find you.

"What I asked for was an objective standard that governs the morality of breaking contracts, and you obviously don't have one."

Morality has nothing to do with it.

You're having a different conversation than the rest of us, then. If your point is the FINANCIAL implications of defaulting on a mortgage are fundamentally different than for a cell phone, that's obviously true, and not the point of this thread.
 
"What I asked for was an objective standard that governs the morality of breaking contracts, and you obviously don't have one."



You're having a different conversation than the rest of us, then. If your point is the FINANCIAL implications of defaulting on a mortgage are fundamentally different than for a cell phone, that's obviously true, and not the point of this thread.

I have said repeatedly in this thread, from my very first post, that morality has nothing to do with borrowing and lending.

If you think the difference between defaulting on a cell phone contract and your home loan is "financial", then you're having a conversation with yourself. I don't engage in ridiculous discussions with people who make such clueless posts. And if you need an explanation as to why discussing the default of a cell phone agreement and default of a loan secured by a mortgage on your home in the same breath is absurd at best, then ask someone to help you understand it.
 
I think it's time for a recap. Let's see if I've got this right.

Those that say it is not immoral to stick other people with your bad debt say that it's not immoral because:

(a) banks would screw you if they could so you should screw them first.

(b) since the banks are loaning you money that isn't really theirs, you should feel no moral obligation to repay loans.

(c) You should do whatever profits you financially whether or not it is honest or moral because morality doesn't matter in business and that doesn't make you immoral or bad..... but business is immoral and corrupt because you think they'd act like you and do something unethical if it was profitable for them.

This has been a very informative discussion.
 
If i am following correctly, the question is whether or not you are "morally" obligated to repay debts

Here is my take

Sometimes.......it really depends on what we are talking about, and why you cant pay

I have been in the finance/loan/auto business for 30+ years now

I have seen the gamut of the bad credit people over the years.....with every excuse under the sun

What i have taken from it all......"bad **** sometimes happens to good people"

For instance, i helped a family reestablish their credit that had been trashed by a medical bankruptcy. One of their daughters had gotten cancer, and it had crucified their finances. It finally buried them, and they had no choice but to declare BK. They bought a fairly cheap reliable car...a civic i think, and we got the loan done for them.

And then there are the others....the ones with 3 or 4 repo's on their report, open chapter 13's, and excuse after excuse as to why they just cant pay their bills

For the people with true misfortune, i have no issue with them using the BK system to basically press the restart button. Everyone is entitled to a second chance.

For the perpetual ones that dont pay attention, much less their bills, well.....how many chances are we to allow them?
 
I have said repeatedly in this thread, from my very first post, that morality has nothing to do with borrowing and lending.

If you think the difference between defaulting on a cell phone contract and your home loan is "financial", then you're having a conversation with yourself. I don't engage in ridiculous discussions with people who make such clueless posts. And if you need an explanation as to why discussing the default of a cell phone agreement and default of a loan secured by a mortgage on your home in the same breath is absurd at best, then ask someone to help you understand it.

You've spent several posts telling me why you WILL NOT articulate an objective standard for breaking contracts and why I'm stupid for asking.

Why not just explain your standard? It's a simple question.

My standard is fairly simple - the golden rule. I expect the lender to maximize profits according to the amoral terms of the loan contract, and my obligation is the identical standard - to maximize my own financial situation. With a personal, unsecured loan, my 'security' is my integrity, and so I will go to great lengths to repay that loan even when it's contrary to my financial interests.

See, not so hard to do....
 
I think it's time for a recap. Let's see if I've got this right.

Those that say it is not immoral to stick other people with your bad debt say that it's not immoral because:

(a) banks would screw you if they could so you should screw them first.

That's not really it at all. Banks maximize profits, period. Morality plays no role in their decision making at all. My obligation under that contract is simply the same as theirs.

I've asked tres borrachos this - what is the objective standard you're applying to contracts? Is it immoral to break ANY contract or just loans, or just big loans? Or maybe it's immoral if the lender loses money, but OK if the collateral is sufficient to pay off the remaining balance, so the immorality is to create losses for the bank? Do I have a moral obligation to keep paying, but only until I'm no longer underwater? Etc...

For example, let's say I lease a car for 60 months, and 22 months in, I'm drowning - can barely make ends meet. If the lease has a cancellation penalty - I turn in the car, pay a fee - is it immoral to do that? Is it only immoral if the bank LOSES money on that lease, but OK if it the amount owed on the lease is less than FMV of the car when I drop off the keys? How do I define "loss" in that deal? Etc.
 
That's not really it at all. Banks maximize profits, period. Morality plays no role in their decision making at all. My obligation under that contract is simply the same as theirs.

I've asked tres borrachos this - what is the objective standard you're applying to contracts? Is it immoral to break ANY contract or just loans, or just big loans? Or maybe it's immoral if the lender loses money, but OK if the collateral is sufficient to pay off the remaining balance, so the immorality is to create losses for the bank? Do I have a moral obligation to keep paying, but only until I'm no longer underwater? Etc...

For example, let's say I lease a car for 60 months, and 22 months in, I'm drowning - can barely make ends meet. If the lease has a cancellation penalty - I turn in the car, pay a fee - is it immoral to do that? Is it only immoral if the bank LOSES money on that lease, but OK if it the amount owed on the lease is less than FMV of the car when I drop off the keys? How do I define "loss" in that deal? Etc.

Am I to assume that you don't know the difference between a lease and a loan? Not being financially sophisticated enough to understand that loans and leases are completely different things in all regards would explain all your confusion on this matter.

I'll help you out, though. With a "lease", you are not borrowing money. You are paying for the use something. These contracts are written so that you can terminate your use whenever you please. If you terminate early, you pay the penalty for the early termination and it's all good. With a LOAN, you are BORROWING MONEY. There is no "option" to stop paying until the loan is complete. There are actions that the bank can take to try to limit their losses from your default but there is no "I don't want to pay back the money I owe because I owe more than my house is worth" clause in a mortgage.
 
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