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]

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

    Quote Originally Posted by tres borrachos View Post
    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.
    for purposes of discussing the topic of this thread, the morality of financial repayment, the link should be obvious
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    Re: Are you morally obligated to repay a loan that you take?[W:461]

    Quote Originally Posted by Lursa View Post
    I had to leave the thread. The way people tried to rationalize and justify their reasons for not (necessarily) paying showed they used excuses in life to prop up their behavior. Ignoring the fact that cheating, fraud, and non-payments are not included in business models and spread out so that everyone else had to pay for their defaults. Rationalizing that 'big business didnt feel it' or 'it was too small for people to notice.'
    Oops, should be ARE included in business models.
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    I have felt pain when I was in the womb. So when you say they are incapable of feeling pain, that is based on junk science.
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    Re: Are you morally obligated to repay a loan that you take?[W:461]

    Quote Originally Posted by AlbqOwl View Post
    And neither of us have a moral basis on which to decide we don't have an obligation or moral duty to repay money we borrow on anybody's good faith just because we want to use the money for something else or think the money will do more good elsewhere.
    I agree, if we borrow money based on anyone's "good faith" then we have a moral obligation to repay the loan. But a loan in a commercial setting, such as a mortgage, isn't being made on good faith. It's a business contract, and that contract has collateral, mortgage insurance in some cases, remedies in the event of default, etc. I've just not heard any explanation why this contract is fundamentally different than any other.

    I'm watching basketball - our coach is under a five year contract. He promises recruits he'll be their coach next year, and the next. etc. But if he gets a better offer, he'll leave, the next school will pay a large penalty for breaking that contract, and not one person will assert he has a moral obligation to harm his family's financial future and stay at the local university. Where is the principled difference between that and defaulting on a mortgage? Would any Fortune 500 company citing morality or ethical principle remain in a contract, repay a loan, if it's in the interests of shareholders to terminate the contract or default on a loan? Of course not.

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

    Quote Originally Posted by JasperL View Post
    I agree, if we borrow money based on anyone's "good faith" then we have a moral obligation to repay the loan. But a loan in a commercial setting, such as a mortgage, isn't being made on good faith. It's a business contract, and that contract has collateral, mortgage insurance in some cases, remedies in the event of default, etc. I've just not heard any explanation why this contract is fundamentally different than any other.
    Quote Originally Posted by Lursa View Post
    I had to leave the thread. The way people tried to rationalize and justify their reasons for not (necessarily) paying showed they used excuses in life to prop up their behavior. Ignoring the fact that cheating, fraud, and non-payments are included in business models and spread out so that everyone else had to pay for their defaults. Rationalizing that 'big business didnt feel it' or 'it was too small for other people to notice.'
    No one said businesses are moral. That's not what the OP asked. Businesses are based on law and contracts. Not morality.
    Quote Originally Posted by Bucky View Post
    I have felt pain when I was in the womb. So when you say they are incapable of feeling pain, that is based on junk science.
    Quote Originally Posted by applejuicefool View Post
    A murderer putting a bullet through someone's brain is a medical procedure too.

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

    Quote Originally Posted by JasperL View Post
    I agree, if we borrow money based on anyone's "good faith" then we have a moral obligation to repay the loan. But a loan in a commercial setting, such as a mortgage, isn't being made on good faith. It's a business contract, and that contract has collateral, mortgage insurance in some cases, remedies in the event of default, etc. I've just not heard any explanation why this contract is fundamentally different than any other.

    I'm watching basketball - our coach is under a five year contract. He promises recruits he'll be their coach next year, and the next. etc. But if he gets a better offer, he'll leave, the next school will pay a large penalty for breaking that contract, and not one person will assert he has a moral obligation to harm his family's financial future and stay at the local university. Where is the principled difference between that and defaulting on a mortgage? Would any Fortune 500 company citing morality or ethical principle remain in a contract, repay a loan, if it's in the interests of shareholders to terminate the contract or default on a loan? Of course not.
    I criticize coaches and players all the time for wanting to either break a contract and/or renegotiate. If anything, this is a scenario where the team/business has more moral integrity than the coach or player that everybody loves. (That's the rub, isn't it? We like the player/coach, just like we like ourselves, so we're willing to rationalize for them.) If the player or coach bombs, the team is still expected to pay, and they do. Why don't we expect the same level of integrity from the player or coach?

    They want the security of the long-term contract when they sign it. Maybe if they want flexibility they shouldn't sign a long-term deal and go just 1 to 2 years at a time. I would approve if teams/businesses started denying these requests. Both sides should be held to their negotiated deal. If they don't want to be 'stuck', they should sign shorter deals.
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    Re: Are you morally obligated to repay a loan that you take?[W:461]

    Quote Originally Posted by Lursa View Post
    non-payments are not included in business models and spread out so that everyone else had to pay for their defaults. Rationalizing that 'big business didnt feel it' or 'it was too small for people to notice.'
    It is a bit more complicated than that because of credit ratings. How much extra a person needs to pay to cover the cost of defaults depends on their credit rating which in turn depends on their record of making payments on time. If you default, you don't actually change what anybody else pays, you just change which payment tier you are in going forward. Regardless of if there are 10 million low credit borrowers and 1 million high credit borrowers, or vice versa, low and high credit borrowers still pay the same. If one person- or 10 million people- move from the high credit pool to the low credit pool due to a default, that doesn't change how much people in either pool pay. In fact, the person who defaulted will nearly always pay far more to the lenders in the end than they gained off the default.
    Last edited by tuhaybey; 01-28-15 at 12:22 AM.

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

    Quote Originally Posted by tuhaybey View Post
    It is a bit more complicated than that because of credit ratings. How much extra a person needs to pay to cover the cost of defaults depends on their credit rating which in turn depends on their record of making payments on time. If you default, you don't actually change what anybody else pays, you just change which payment tier you are in going forward. Regardless of if there are 10 million low credit borrowers and 1 million high credit borrowers, or vice versa, low and high credit borrowers still pay the same. If one person- or 10 million people- move from the high credit pool to the low credit pool due to a default, that doesn't change how much people in either pool pay. In fact, the person who defaulted will nearly always pay far more to the lenders in the end than they gained off the default.
    Bull****. I agree that alot of business is handled like politics but the fact is...fraud, default, etc is spread out among others.

    And if the person defaults or is successful in their fraud...how are they paying?

    Now granted, of course businesses have penalties written into those loan contracts. However legal costs, are also passed on. And if the person defaulting declares bankruptcy for example...there is not more to squeeze from the stone.

    But the businesses have...as you even pointed out...created business models so that they do not pay or lose profit share.
    Quote Originally Posted by Bucky View Post
    I have felt pain when I was in the womb. So when you say they are incapable of feeling pain, that is based on junk science.
    Quote Originally Posted by applejuicefool View Post
    A murderer putting a bullet through someone's brain is a medical procedure too.

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

    Quote Originally Posted by Lursa View Post
    Bull****. I agree that alot of business is handled like politics but the fact is...fraud, default, etc is spread out among others.

    And if the person defaults or is successful in their fraud...how are they paying?

    Now granted, of course businesses have penalties written into those loan contracts. However legal costs, are also passed on. And if the person defaulting declares bankruptcy for example...there is not more to squeeze from the stone.

    But the businesses have...as you even pointed out...created business models so that they do not pay or lose profit share.
    None of this has anything to do with fraud, we're talking about default. If you default on a loan, you end up paying many times over. From that point on, for years, you're going to pay a much, much, higher interest rate on everything. You can only default on an unsecured loan, and you can't default on student loans, so we're really only talking about credit card debt. For example, lets say somebody defaults on $5k they owe a credit card company, then they get a mortgage 5 years later. Their interest rate will be something like 5% higher because of that default. On a $200k home, that is an additional $10k per year (diminishing as the balance drops).

    Even more commonly, when you go to buy a house 5 years later, they tell you they won't give you a loan because you have an outstanding default. You then go back to the first bank, they say that now you owe them $25k instead of $5k with the fines and interest and so on. You pay them that and then you still pay 5% more on your mortgage interest rate on top.

    You always pay more than you got by defaulting. Banks don't rely on people being nice. They wouldn't give out loans if they hadn't got it figured out.

    If somebody wants to scuttle their credit rating for a few quick bucks now, that's dumb. They're screwing themselves over. But I wouldn't call it "immoral" or anything so melodramatic. I'd put it in the same tier of things as, for example, failing to repair a leak in your roof despite the fact that a leak can pretty quickly do serious damage to your home value.
    Last edited by tuhaybey; 01-28-15 at 12:53 AM.

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

    Quote Originally Posted by Papa Bull
    And where is it that "living wages can only be secured through loans"?
    Many, perhaps most, families in the U.S. are in such a situation. The most common reason to run up debt is for car repairs, medical bills, home repairs, and so on. In at least some of those instances, such a case exists.

    More generally, our money is generated by the creation of debt for which we, the people, are ultimately responsible.

    Quote Originally Posted by Papa Bull
    And what is the rest of that about "if money tracks resources and is distributed equitable" supposed to mean? What you said, as stated, isn't making sense.
    Currency was originally made of stuff that was itself considered a resource which took effort to extract. The theory was that such currency would naturally track along with the production of other goods such that there would be just about exactly enough. The economy, and not a banker, generated money.

    The means and rules by which money is distributed in a society are determined by people, and those means are not always equitable.

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

    Quote Originally Posted by tuhaybey View Post
    None of this has anything to do with fraud, we're talking about default. If you default on a loan, you end up paying many times over. From that point on, for years, you're going to pay a much, much, higher interest rate on everything. .
    Fine. Loans. Byt we're not talking about how your crappy credit rating affects you for yrs to come.

    We are talking about the business having a business model that spreads that default and loss of interest, etc across all other people that do business with that institution.
    Quote Originally Posted by Bucky View Post
    I have felt pain when I was in the womb. So when you say they are incapable of feeling pain, that is based on junk science.
    Quote Originally Posted by applejuicefool View Post
    A murderer putting a bullet through someone's brain is a medical procedure too.

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