• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

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
    98
Re: Are you morally obligated to repay a loan that you take?

Nonsense.

While ethics are conceptual and pure, morality is always determined by circumstances. Behavior that is moral is some circumstances is immoral in other circumstances.

Declaring that morals are absolute and circumstances have no effect on them is to demonstrate an ignorance about what morality is.

So what conditions make it moral to refuse to pay back money you borrowed in good faith even though you have the resources to do so?
 
Re: Are you morally obligated to repay a loan that you take?

The desire to keep crime and other social ills low can be justified on self-interest alone without resorting to any sort of moral argument.
philosophically, you are probably correct.. it's probably possible to justify ..well, pretty much anything on self interest alone.

the question is over what you do though, not what is possible.



Not sure what you mean
never mind , it doesn't matter.
 
Re: Are you morally obligated to repay a loan that you take?

I'm going to get a government loan and then when they demand payment I will just declare government is immoral and that I have no moral obligation to pay my debt. That should work. Lol

And when morality fails, you still have a legal obligation to repay the loan.
 
Re: Are you morally obligated to repay a loan that you take?

So what conditions make it moral to refuse to pay back money you borrowed in good faith even though you have the resources to do so?

The loan is illegal and/or was made in bad faith by the lender.
 
Re: Are you morally obligated to repay a loan that you take?

So what conditions make it moral to refuse to pay back money you borrowed in good faith even though you have the resources to do so?

When the loan agreement contains provisions that allow other methods of settling the loan.
 
Re: Are you morally obligated to repay a loan that you take?

philosophically, you are probably correct.. it's probably possible to justify ..well, pretty much anything on self interest alone.

the question is over what you do though, not what is possible.

Yes, one can use either or both of interests or morality to justify just about anything.

When it comes to politics, govt policy, the law, and similar things, I prefer to use interests (as in "national interest" or "legitimate governmental interests") to justify those things
 
Re: Are you morally obligated to repay a loan that you take?

so , in your own way, you've assigned a moral obligation to pay those bills?... it might not be a moral obligation to the bank itself, but instead to society?
I think that is accurate. While our economic system isn't perfect it does seem to do a decent job of providing folks with food, shelter, etc and seems to increase the general standard of living over time. It would be a harm to subvert that system and take from society.

I mean really reflecting on my intuitive motivations here, you could say I see a business as an arm of the greater society which I care about, even if that individual business is not worth moral consideration.
 
Re: Are you morally obligated to repay a loan that you take?

When the loan agreement contains provisions that allow other methods of settling the loan.

Agreed. I've never seen one that didn't require repayment as the only means of settling the loan. Walking away from it and letting them foreclose on your property is not settling the loan. It is defaulting on the loan. It triggers the foreclosure, but the foreclosure is not a "means of settling the loan". It's what they have to do when you don't do what you agreed to do. Seeing foreclosure as permission to default is convenient if you're looking for an excuse to screw the lender and duck your obligations but it's not an honorable way to deal with your obligations.
 
Re: Are you morally obligated to repay a loan that you take?

Agreed. I've never seen one that didn't require repayment as the only means of settling the loan. Walking away from it and letting them foreclose on your property is not settling the loan. It is defaulting on the loan. It triggers the foreclosure, but the foreclosure is not a "means of settling the loan". It's what they have to do when you don't do what you agreed to do. Seeing foreclosure as permission to default is convenient if you're looking for an excuse to screw the lender and duck your obligations but it's not an honorable way to deal with your obligations.
Don't forget that when the collateral fails to meet the balance due, the borrower is STILL on the hook for the remainder, only now they've surrendered the collateral as well. Do these people think they should be able to walk away from the remaining balance due guilt-free? Do they think that they have now satisfied all aspects of the agreement?


The loan is illegal and/or was made in bad faith by the lender.
If the lender is solely at fault for fraud/bad faith, yes. If it is a collaborative effort, i.e. the recent housing and mortgage boom/bust where lenders knew they were setting people up for failure and knew they were going to package and sell these bad loans before they failed, AND where borrowers were gambling that they could re-fi into a new teaser ARM forever, then no.
 
Re: Are you morally obligated to repay a loan that you take?

Nonsense. Banks pay you to use their money and they expect you to pay them to use theirs. When you deposit your money in a bank - be it a savings account, chequing account, GIC, retirement account, etc. - you loan your money to the bank to use in their business for the fee they offer. If you don't like the fee, you take your business elsewhere. Likewise, the bank then uses those deposits to generate income by loaning the funds to those who wish to borrow. Just as it's your money when you borrow from a bank, it is the bank's money when you loan it to them, regardless of whether you take it out the next day or leave it in there for years.

You should read fractional reserve banking in the document Modern Money Mechanics, or as economists tend to term it, MMM. It was a document written by the Chicago Fed on how banks operate in the 60's, because the senate required it. Since the document is so old, there is more theory as to what banks do, but it is known that they practiced fractional reserve banking.

In this process, the banks bet that not everyone is going to withdrawal their money at the same time. So a fraction of their reserves is allocated to withdrawals of their consumer's money. The rest of the money, which is the consumer's money, is used for loans. It isn't the bank's money. I'm not going to spell everything out to you, but the banks actually create money out of thin air for every dollar they loan out. Ontop of that, they receive interest. This money they then use in financial instruments, to increase their wealth.

I have no problem not paying back a bank. It is our money that is putting us in servitude.
 
Re: Are you morally obligated to repay a loan that you take?

If you got a loan from somebody that was doing you a favor, then yes, you have a moral obligation to pay it back.

But if we're talking about loans you get in the market that the other party gives you in order to turn a profit for themselves, then I don't really think "morality" is the right framework to think about it in. When a corporation lends you money, they aren't doing it as a kindness. They don't wish you well, they are your adversary in that transaction. They're going to try to trick you and scam you and take the shirts right off your back and your kids' backs. You have no moral obligation to treat them any better. If you can figure out a way to take the shirts off the backs of the bankers instead and come out ahead in the long term, my god, that's the American dream. That's playing a game of one-on-one with LeBron James and beating him.

The thing is, you can't actually do it. In the basketball game between you and the bank, the bank is a pro basketball player and you're just some average couch potato. They're not just taller, stronger, faster, more experienced and more skilled than you, but they start the game out with a 200 point lead already on the board. Just flatly skipping out on a loan entirely always hurts you a lot more than paying it would. And that's no coincidence. They don't give you a loan until they're damn sure that is the case.

So, you generally should pay back your loans, but not for moral reasons, for self interest reasons.
 
Re: Are you morally obligated to repay a loan that you take?

If you got a loan from somebody that was doing you a favor, then yes, you have a moral obligation to pay it back.

But if we're talking about loans you get in the market that the other party gives you in order to turn a profit for themselves, then I don't really think "morality" is the right framework to think about it in. When a corporation lends you money, they aren't doing it as a kindness. They don't wish you well, they are your adversary in that transaction. They're going to try to trick you and scam you and take the shirts right off your back and your kids' backs. You have no moral obligation to treat them any better. If you can figure out a way to take the shirts off the backs of the bankers instead and come out ahead in the long term, my god, that's the American dream. That's playing a game of one-on-one with LeBron James and beating him.

The thing is, you can't actually do it. In the basketball game between you and the bank, the bank is a pro basketball player and you're just some average couch potato. They're not just taller, stronger, faster, more experienced and more skilled than you, but they start the game out with a 200 point lead already on the board. Just flatly skipping out on a loan entirely always hurts you a lot more than paying it would. And that's no coincidence. They don't give you a loan until they're damn sure that is the case.

So, you generally should pay back your loans, but not for moral reasons, for self interest reasons.

So you figure that you really are only morally obligated to keep your word with people that are doing something for you out of the goodness of their heart? That's a rather queer perspective on things. I guess you figure that a bank is just screwing you by loaning you money, so why not screw them back, huh?

I think I'm going to start asking people if they're liberals before doing business with them from now on because I don't want to have anything to do with people that think they only have to keep the promises they make if it's a promise they made to someone they like. A promise is a promise and when you enter into a loan, the bank promises to write you a check for a certain amount of money under the condition that you pay it back with interest at the schedule you agree to pay on. They make good on their promise, so they're not the immoral party here.
 
Re: Are you morally obligated to repay a loan that you take?

You should read fractional reserve banking in the document Modern Money Mechanics, or as economists tend to term it, MMM. It was a document written by the Chicago Fed on how banks operate in the 60's, because the senate required it. Since the document is so old, there is more theory as to what banks do, but it is known that they practiced fractional reserve banking.

In this process, the banks bet that not everyone is going to withdrawal their money at the same time. So a fraction of their reserves is allocated to withdrawals of their consumer's money. The rest of the money, which is the consumer's money, is used for loans. It isn't the bank's money. I'm not going to spell everything out to you, but the banks actually create money out of thin air for every dollar they loan out. Ontop of that, they receive interest. This money they then use in financial instruments, to increase their wealth.

I have no problem not paying back a bank. It is our money that is putting us in servitude.

Wow. I see why this country is in the sad state of affairs it's in and going downhill quickly. I think I'm going to have to give up reading political discussion forums because hearing what makes people tick these days is making me lose all faith in humanity.
 
Re: Are you morally obligated to repay a loan that you take?

So you figure that you really are only morally obligated to keep your word with people that are doing something for you out of the goodness of their heart? That's a rather queer perspective on things. I guess you figure that a bank is just screwing you by loaning you money, so why not screw them back, huh?

I think I'm going to start asking people if they're liberals before doing business with them from now on because I don't want to have anything to do with people that think they only have to keep the promises they make if it's a promise they made to someone they like. A promise is a promise and when you enter into a loan, the bank promises to write you a check for a certain amount of money under the condition that you pay it back with interest at the schedule you agree to pay on. They make good on their promise, so they're not the immoral party here.

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

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:
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
 
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.

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.
 
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.
 
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.

Greetings, AlbqOwl. :2wave:

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

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

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

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.
 
Back
Top Bottom