View Poll Results: Is there a moral obligation to repay money you borrow?

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  • If you borrow money, you are morally obligated to repay it.

    110 34.48%
  • I feel no moral obligation to repay loans I've taken out

    209 65.52%
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Thread: Are you morally obligated to repay a loan that you take?[W:461]

  1. #491
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    Re: Are you morally obligated to repay a loan that you take?

    Quote Originally Posted by tuhaybey View Post
    You're not "giving your word" to a bank, you're entering into a contractual relationship. The rules at play in that kind of situation are economic, not moral.

    I mean, I suppose you could do a moral analysis of the question- figure out whether the world is better off if you pay the loan back or if you don't. But, moral reasoning is not a tool well suited to that kind of question. Probably the most "moral" thing you can do with your loan would be to give the money to a charity instead of the bank. But that wouldn't be in your self interest. If your goal is to maximize your self interest, as people's goal usually is in economic situations, then you should be using economic analysis instead of moral analysis.

    A contractual agreement is your word. The fact that it is in writing is because a whole bunch of people don't seem to understand that and/or don't keep their word, so it's in writing.

    This has nothing to do with "money". It could be anything that you borrow. if one doesn't feel obligated to keep one's word or make good on one's promises or otherwise live up to and fulfill their end of bargains they strike, it is an issue of morality that is in play.

    The original question could just as easily have been: "Do you feel you have a moral obligation to follow through on agreements you make when the other party has followed through on their end of the deal"? It's about morality. When you enter into a deal in good faith, it is immoral to renege because you don't want to follow through with your responsibilities that YOU agreed to accept after you got what you wanted out of the deal.
    Last edited by Papa bull; 01-24-15 at 06:59 PM.
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    Re: Are you morally obligated to repay a loan that you take?

    This is an interesting read that may help the ethically-challenged among us.

    By Jeffrey Seglin
    Tribune Media • Sunday January 31, 2010 7:02 AM
    Comments: 0 0 0 6
    One of the byproducts of the recent financial turmoil has been a precipitous drop in home values in the United States.

    As a result, some home owners are finding that the value of their houses is less than the amount they owe on their mortgages.

    A reader from West Virginia writes inquiring about the ethics of homeowners who default on mortgages that they can still afford to pay but choose not to, because the underlying property values have dropped so precipitously that it is financially preferable simply to walk away.

    "Is this kind of 'strategic default' blameworthy be cause it constitutes a failure to keep a promise?" my reader asks.

    "Or, since the borrower is willing to accept the contractually mandated consequences of defaulting, is it simply a reasonable economic response to the invisible hand of the marketplace?"

    The practice the reader describes is legal. The question is, is something ethical simply because it's legal?

    If a homeowner cannot afford to make payments on her mortgage and cannot sell her house at a price that will yield enough cash to pay off the mortgage so that she can move on, she might be left with no choice but to default on the mortgage and turn over the house to the bank. There's obviously nothing wrong with this from an ethical standpoint.

    A key component of my reader's question, however, is that he's talking about homeowners who "can still afford to pay but choose not to."

    It might be a reasonable economic decision to walk away from the property, but is it ethically acceptable?

    I think not. A mortgage agreement is not a promise to do one of two things, either to make the payments or to give up the house. It's a promise to make the payments, period. Giving up the house to the bank is a penalty for not keeping the promise, not one option within the promise.


    In this regard, the situation is comparable to the law: The fact that the law imposes a penalty for, say, stealing someone's car doesn't mean that a person can ethically choose to steal the car if he is prepared to accept the penalty. The requirement of the law is not to steal the car, and the implied promise of citizen ship is to obey the law, not to weigh the costs and benefits of breaking it.

    Every mortgage comes with the risk that the value of the home might go down during the course of the mortgage, and the homeowner knows that going in.

    The homeowner promised to make the payments, in return for which the bank advanced the purchase price of the house. The bank has lived up to its share of the agreement, and the right thing for the homeowner to do, if he can afford to make the payments, is to live up to his end.

    He should honor the commitment as long as he is financially able to do so.

    Send questions about ethics to The Right Thing, New York Times Syndicate, 500 7th Ave., Eighth Floor, New York, NY 10018; or send e-mail.
    rightthing @ nytimes . com
    Link: 'Strategic default' on mortgage unethical | The Columbus Dispatch
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    Re: Are you morally obligated to repay a loan that you take?

    Quote Originally Posted by Papa bull View Post
    This is an interesting read that may help the ethically-challenged among us.

    A mortgage agreement is not a promise to do one of two things, either to make the payments or to give up the house. It's a promise to make the payments, period. Giving up the house to the bank is a penalty for not keeping the promise, not one option within the promise.
    Link: 'Strategic default' on mortgage unethical | The Columbus Dispatch
    Wow. Almost word-for-word what I said to whatshisface. Imagine that.
    If you claim sexual harassment to be wrong, yet you defend anyone on your side for any reason,
    then you are a hypocrite and everything you say on the matter is just babble.

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    Re: Are you morally obligated to repay a loan that you take?

    I guess I am really old fashioned because I was raised to believe a person's word is their bond. A hand shake is as binding a contract as a signed document.

    To borrow money by assuring the lender that you will repay it when you know you probably won't be able to repay it is no different than stealing the money out of the lender's billfold.

    To borrow money in good faith but then choosing to use your money for non essential purposes rather than repay your loan is just as dishonest.

    To borrow money in good faith but borrow beyond your means to pay is irresponsibly dumb.

    To borrow money responsibly in good faith and then, because of circumstances beyond your control, you cannot repay your loan as agreed, it is your responsibility to try to renegotiate the terms of the repayment or otherwise make good faith effort to do the best you can. If that is not acceptable to the lender or simply is not feasible, and there are consequences for default, bankruptcy may be the only way out. But IMO, anybody with an honorable moral center will feel absolutely terrible if they default on a $10 loan from a friend or a million dollar loan from the bank.
    "I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it." --Benjamin Franklin 1776

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    Re: Are you morally obligated to repay a loan that you take?

    Quote Originally Posted by AlbqOwl View Post
    I guess I am really old fashioned because I was raised to believe a person's word is their bond. A hand shake is as binding a contract as a signed document.

    To borrow money by assuring the lender that you will repay it when you know you probably won't be able to repay it is no different than stealing the money out of the lender's billfold.

    To borrow money in good faith but then choosing to use your money for non essential purposes rather than repay your loan is just as dishonest.

    To borrow money in good faith but borrow beyond your means to pay is irresponsibly dumb.

    To borrow money responsibly in good faith and then, because of circumstances beyond your control, you cannot repay your loan as agreed, it is your responsibility to try to renegotiate the terms of the repayment or otherwise make good faith effort to do the best you can. If that is not acceptable to the lender or simply is not feasible, and there are consequences for default, bankruptcy may be the only way out. But IMO, anybody with an honorable moral center will feel absolutely terrible if they default on a $10 loan from a friend or a million dollar loan from the bank.
    Greetings, AlbqOwl.

    Other than banks, but on a more personal basis, money borrowed from friends or family doesn't necessarily have to be repaid in money if you are broke. It can always be paid in doing jobs done such as lawn or garden work, babysitting or something the lender wants or needs. That is the basis for the huge barter system in this country, and it works. A doctor could agree to have an out-of-work carpenter build storage units for an office or his home, as an example. The loan could be repaid that way, and both parties would be satisfied. Just a thought....

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    Re: Are you morally obligated to repay a loan that you take?

    Quote Originally Posted by Papa bull View Post
    A contractual agreement is your word. The fact that it is in writing is because a whole bunch of people don't seem to understand that and/or don't keep their word, so it's in writing.

    This has nothing to do with "money". It could be anything that you borrow. if one doesn't feel obligated to keep one's word or make good on one's promises or otherwise live up to and fulfill their end of bargains they strike, it is an issue of morality that is in play.

    The original question could just as easily have been: "Do you feel you have a moral obligation to follow through on agreements you make when the other party has followed through on their end of the deal"? It's about morality. When you enter into a deal in good faith, it is immoral to renege because you don't want to follow through with your responsibilities that YOU agreed to accept after you got what you wanted out of the deal.
    A bank isn't a person, it's a tool. You can't owe a moral duty to a tool. But, even if it were a person, the contract with the bank spells out exactly what will happen if you breach. It sets it up so that it is indifferent as to whether you breach or not. In fact, often times, the bank actually prefers that you breach because it loads the contract up with so many fines and whatnot that the best outcome for it is that you run off and refuse to pay your loan back, interest and fines accumulate for years, then when you finally need your credit rating again, you end up paying the bank way more than it could have made off that money any other way. Or, maybe the bank then gets to take something you used to secure the loan, like your home, and makes a huge profit off it. You can't really hurt the bank. Again- the bank is way better at this game than you or I are.

    Contract law isn't a moral area of law like criminal law is. Fine upstanding companies and individuals breach contracts all the time. In fact, lots of times, breaching a contract is the best thing for all involved. Say, for example, that I have a widget worth $9 to me, but $11 to you. So, we enter into a contract where I'm going to sell it to you tomorrow for $10. We'd each gain $1 by fulfilling the contract. Now, say that before I deliver it to you, somebody else offers me $15 for it. Do I still just sell it to you because I gave you my word? Of course not. That would be totally irrational. I sell it to the guy for $15 and then instead of having $2 of gain between us, we have $6 of gain between us. By breaching the contract, I would triple the benefit for us. I then give you a portion and I keep a portion and we both win.

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    Re: Are you morally obligated to repay a loan that you take?

    Whether you promised to pay back a friend or a business doesn't change the fact that YOU promised to pay it back.
    If you claim sexual harassment to be wrong, yet you defend anyone on your side for any reason,
    then you are a hypocrite and everything you say on the matter is just babble.

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

    Businesses don't lend money for altruistic reasons. Of course they don't. They're still doing you a favor, though, by making money available that you want or need, and you are choosing to get it from them instead of some other source.
    If you claim sexual harassment to be wrong, yet you defend anyone on your side for any reason,
    then you are a hypocrite and everything you say on the matter is just babble.

  9. #499
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    Re: Are you morally obligated to repay a loan that you take?

    Quote Originally Posted by tuhaybey View Post
    A bank isn't a person, it's a tool. You can't owe a moral duty to a tool. But, even if it were a person, the contract with the bank spells out exactly what will happen if you breach. It sets it up so that it is indifferent as to whether you breach or not. In fact, often times, the bank actually prefers that you breach because it loads the contract up with so many fines and whatnot that the best outcome for it is that you run off and refuse to pay your loan back, interest and fines accumulate for years, then when you finally need your credit rating again, you end up paying the bank way more than it could have made off that money any other way. Or, maybe the bank then gets to take something you used to secure the loan, like your home, and makes a huge profit off it. You can't really hurt the bank. Again- the bank is way better at this game than you or I are.

    Contract law isn't a moral area of law like criminal law is. Fine upstanding companies and individuals breach contracts all the time. In fact, lots of times, breaching a contract is the best thing for all involved. Say, for example, that I have a widget worth $9 to me, but $11 to you. So, we enter into a contract where I'm going to sell it to you tomorrow for $10. We'd each gain $1 by fulfilling the contract. Now, say that before I deliver it to you, somebody else offers me $15 for it. Do I still just sell it to you because I gave you my word? Of course not. That would be totally irrational. I sell it to the guy for $15 and then instead of having $2 of gain between us, we have $6 of gain between us. By breaching the contract, I would triple the benefit for us. I then give you a portion and I keep a portion and we both win.

    I suspect you would consider contract law to be a lot more of a moral issue if the corporation that employed you decided to renege on your contract and refuse to pay you for work you've done. Hey. They're a corporation and it's a contract so it's not immoral to refuse to pay you what they owe you.

    I think you'd consider that plenty immoral even if you don't admit it.
    You can't reason anyone out of a position they didn't reason themselves into in the first place.

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    Re: Are you morally obligated to repay a loan that you take?

    Quote Originally Posted by tuhaybey View Post
    A bank isn't a person, it's a tool. You can't owe a moral duty to a tool. But, even if it were a person, the contract with the bank spells out exactly what will happen if you breach. It sets it up so that it is indifferent as to whether you breach or not. In fact, often times, the bank actually prefers that you breach because it loads the contract up with so many fines and whatnot that the best outcome for it is that you run off and refuse to pay your loan back, interest and fines accumulate for years, then when you finally need your credit rating again, you end up paying the bank way more than it could have made off that money any other way. Or, maybe the bank then gets to take something you used to secure the loan, like your home, and makes a huge profit off it. You can't really hurt the bank. Again- the bank is way better at this game than you or I are.

    Contract law isn't a moral area of law like criminal law is. Fine upstanding companies and individuals breach contracts all the time. In fact, lots of times, breaching a contract is the best thing for all involved. Say, for example, that I have a widget worth $9 to me, but $11 to you. So, we enter into a contract where I'm going to sell it to you tomorrow for $10. We'd each gain $1 by fulfilling the contract. Now, say that before I deliver it to you, somebody else offers me $15 for it. Do I still just sell it to you because I gave you my word? Of course not. That would be totally irrational. I sell it to the guy for $15 and then instead of having $2 of gain between us, we have $6 of gain between us. By breaching the contract, I would triple the benefit for us. I then give you a portion and I keep a portion and we both win.
    If you think it is irrational to do what you promised if it profits you more not to, then you should look up the "sociopathy" and see if any of the characteristics of it sound familiar.
    You can't reason anyone out of a position they didn't reason themselves into in the first place.

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