BF2S Forums Bankruptcy: Creditors have a face too

ATG wrote:

There is a debtor prison, and its , called the USA.

Too broke to move, slave to debt and without means; that's 80% of the population.

Of course a " small " person with a rental home is legally a creditor, but they are more of a person.

These large banks sucking on the Great Veiny Penis of Satan who received Tarp funds?

'fuck'em!!!!

I have no sympathy for people who choose to live beyond their means.

By special request:

Creditors do have a face, however those mortgages have already been packaged into bonds and sold to investors. If the mortgagee defaults, the investor doesn't get screwed, the government does because they now back every single mortgage via Fannie Mae and Freddie Mac. Ultimately the taxpayer gets screwed but we're screwed anyway by the multi-trillion dollar debt our government has racked up.

In fact the govt has bought the worst of the mortgage backed securities and guaranteed the rest.
Whatever happens the taxpayer takes the hit.

I'm not really sure who deserves to get screwed here.

The person who bought an average house at an average point in the market but still lost half his investment?
The person who bought at the peak of the market and has now lost most of their investment?
The person whose business folded and can't pay their mortgage now and can only default or beg for a stay?
The banks which sold mortgages to numbnuts who never had a hope of repaying them once the teaser rate was gone?
The traders (Goldman Sachs etc) who packaged up the shitty mortgages as AAA bonds and sold them on?
The ratings agencies which rated the shitty bonds as AAA when they should have been ZZZ?
The morons who bought the bonds without having a clue what they were buying?

I dunno who deserves to, I do know its the US taxpayer who will actually be paying.

Last edited by Dilbert_X (2010-06-29 06:26:19)

I have a couple of issues with what people in here are posting. It sounds like many of you are either too young to understand what is going on out there or haven't been hit financially like people have. Yes, there is a segment of people who did the "house flipping" or bought a house they could not afford  but there are many more who are simply struggling even though they did the right thing.  Here is what happened and is happening to me and if you think I would deserve debtor prison...then you are insane to bunch everyone up into a single category simply because they are in debt.

I went through a divorce and child custody battle for 3 years, during that time I sold a house that once had equity of over 100,000. The house I sold (required by divorce) lost most of its equity and I received 700.00 dollars at closing.  I built a new house cheaply and at that time had plenty of income and reserves to pay for almost anything. I have been self employed in the state of Michigan for 15 years. My income 3 years ago was more than enough to pay for the house I had built. The house was built for 165,000. At that time I had very little expenses, large checking and savings and yes a mortgage payment.

Living in the state of Michigan, being an architect and all you have to do is add those 2 things up and you can see what happened to me. The housing market in Michigan tanked. My work went from producing 200 plans a year went to almost nothing overnight and then my ex-wife decided she wanted to move my child to another state so she could be with her new man she met on the net. So i went through a 2 year custody battle (which I won) that cost me 2 years of salary. In my county alone, building permits went from an average of 600+ year down to 20 and I basically lived off what i had in the bank because there was virtually no income. It is the same today. I have been using credit cards to pay my lawyer, to pay my house payment and to just get by. Even though I have always paid on time and had a great credit score, the credit card companies decided to reduce my credit lines down to what I owe, I did not max my cards out, they maxed them out for me and my credit score tanked. Now I am at a situation where I am trying to get the home loan modified to stay in the home.

I feel that I did nothing wrong, I built up credit lines for 22 years, using the cards sparingly and only using them when I needed to when everything tanked. When I did, I was targeted and the domino effect took hold. Did I ever believe that my income would almost disappear, that my ex-wife would take me to court over anything and everything over the last 2 years (I won every case). Did I ever think that I would lose all credit lines I had earned over 22 years. What I find infuriating is that when the banks needed help, our taxpayer money saved their butts, when I needed to finally use the credit lines I had, they were almost instantly removed by these same banks. I want to make this clear. I never abused any credit card. I did not go out and buy things I did not need. I worked and paid my bills, I fought to keep my rights for my daughter and now I almost have no where to turn and some of you think that I would deserve debtor prison????? Not everyone out there is abusing the system....I did everything I was supposed to do but it turned into a disaster in Michigan, my work related to housing and now debts to lawyers and a couple of credit cards. There are real problems happening to real people who used to be able to live a good life, pay their bills and have a nice home without going overboard, but it still caught up to me. Things happen, it will pass but don't lump me into one giant category or blame. It is not that simple.

Turquoise wrote:

I think it would be reasonable to give someone forgiveness for the first filing of bankruptcy, because that can happen to a lot of people in situations where it really is mostly bad luck.  I understand that.

However, a repeat offender should be jailed, because after the first time, you should know better.

As you can see, my stance is not absolute.

I can see not applying debtor's prison for the first offense, but how can you defend multiple offenses?

One time might be bad luck.  I understand that.  Beyond the first time, how can it be anything more than negligence?

Last edited by Turquoise (2010-06-29 16:53:38)

Turquoise wrote:

Turquoise wrote:

I think it would be reasonable to give someone forgiveness for the first filing of bankruptcy, because that can happen to a lot of people in situations where it really is mostly bad luck.  I understand that.

However, a repeat offender should be jailed, because after the first time, you should know better.

As you can see, my stance is not absolute.

I can see not applying debtor's prison for the first offense, but how can you defend multiple offenses?

One time might be bad luck.  I understand that.  Beyond the first time, how can it be anything more than negligence?

As unbelievable as it may seem, there were actually responsible creditors and lenders who may have suffered mildly, compared to the rest of their contemporaries.

It's simple. Lend responsibly and not to those clearly not fit to pay back their debt, or those your confidence in is questionable. I do not believe in incarcerating those who fail to pay back their debts. Why should tax payer money be wasted to "punish" someone for failing to meet their debt obligations? Banks lend out their own customers money, and we suddenly should feel sorry for them for lending out too much money, to the wrong people?

Phrozenbot wrote:

Turquoise wrote:

Turquoise wrote:

I think it would be reasonable to give someone forgiveness for the first filing of bankruptcy, because that can happen to a lot of people in situations where it really is mostly bad luck.  I understand that.

However, a repeat offender should be jailed, because after the first time, you should know better.

As you can see, my stance is not absolute.

I can see not applying debtor's prison for the first offense, but how can you defend multiple offenses?

One time might be bad luck.  I understand that.  Beyond the first time, how can it be anything more than negligence?

As unbelievable as it may seem, there were actually responsible creditors and lenders who may have suffered mildly, compared to the rest of their contemporaries.

It's simple. Lend responsibly and not to those clearly not fit to pay back their debt, or those your confidence in is questionable. I do not believe in incarcerating those who fail to pay back their debts. Why should tax payer money be wasted to "punish" someone for failing to meet their debt obligations? Banks lend out their own customers money, and we suddenly should feel sorry for them for lending out too much money, to the wrong people?

I would take that angle myself if it weren't for bailouts.  Sympathy doesn't enter the equation -- what I'm trying to figure out is how to keep this disaster from repeating.

Phrozenbot wrote:

Aren't you, an advocate of social safety nets?

My suggestion would be to let the market regulate the credit market, so it may be accurately priced and corrected in a timely matter, rather than deviate as so far to create significant bubbles when credit is artificially held down in price. But we all know that's how I've felt since... ever, and it's ever so trite.

While some regulations helped create the financial bubble, so did the greed of these lenders.

You can't solely blame the government for this.

Granted, if we did completely open up the market as far as rates go, that would be interesting.  Doing that in combination with getting rid of the CRA might work.

SenorToenails wrote:

Turquoise wrote:

While some regulations helped create the financial bubble, so did the greed of these lenders.

So...the lenders were greedy, made stupid decisions, got bailed out...and only the borrower would go to jail?  Sounds perfectly fair.

America - Land of the Free (Pass)

Turquoise wrote:

My support for debtor's prison is contingent on 2 things....

1) Forgiveness for the first filing

2) A prohibition on all future bailouts

Granted, because the second one will never happen, this is primarily a philosophical discussion rather than a practical one.

Why should bailouts have anything to do with how a debtor's prison could be justified?  Unless you make all lending practices FAIR (eg, fair interest rates for debt that cannot be discharged), then I would never support a debtor's prison.  And the likelihood of that is...zero.

Dilbert_X wrote:

If you reorganise the system

- Don't lend people more than they can realistically repay or against unstable investments.
- Keep rates fair, don't start jacking them up just as people get in trouble
- Garnish the wages or seize the assets of the real twats who won't play ball
- Allow bankruptcy in case of force majeure - disability etc

Then the system should stay pretty stable.

Too much of that makes sense...we'll have none of that here!

In your system, if a corporation were to go bankrupt, who would go to jail?

Turquoise wrote:

SenorToenails wrote:

In your system, if a corporation were to go bankrupt, who would go to jail?

Good question.  I would think all of the upper management.  Basically, all the VPs, the CEO, CFO, Chairman, etc.

You mean they'd have to earn their salary?
Thats un-American.