The Case for Walking Away

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  • Posted By: retirednow2 @ 01/04/2009 11:23:05 PM

    I'm really inpressed with this artical. We filed bankruptcy at chapter 13 several years ago. I ended up losing my job 2 yrs into the pay back time and thus our attorney filed a complete chapter 7. We have been at the same bank for 30 plus years so we were able to get a newer van with only 11% interest. I am now retired with my husband still working for the government an we are rebuilding our credit one payment at a time. It was not easy for us to file but with kids colleges and then a daughter that had more medical bills with difficulites in a pregency an not working for the last 3 months we took over our credit cards to help and just got over whelmed. I am not sad we did this we did what was best for my husband an me saved our house and retirement money. I advise my kids in the way of saving and not over extending ones self.

  • Posted By: no-win-situation @ 01/04/2009 6:12:29 PM

    In my opinion some of the toughen up and take it advice here is very naive. The first time I told a much older relative about the convenience checks I had received from a bank he asked "Son is it a legit bank or a loan shark?" Like a MAFIA loan the banks promised low interest , they said they could not loan to a business as small as ours without a personal guarantee, but they kept sending letters announcing higher credit lines and wanting me to transfer money to them off of other credit cards.. Banks continued to issue ???business??? credit cards to the internet arm of our business that had not even applied for a business license yet. They never even asked for a tax ID just my company name!

    Big tobacco is not sued because cigarettes cause cancer. They are sued because they KNEW cigarettes caused cancer and waited until the government strong armed them to put out warning labels.

    Why should the banking industry that LOBBIED George Bushs congress to tighten bankruptcy laws, allow them to double minimums and charge higher interest rate and then SMOTHERED the nation with convenience checks and promises of low interest loans get bailed out why I am expected to pay 30% on loans originally offered at 8% for the rest of my life?

    Sounds a lot like the Sopranos to me.

    I say banks should be sued, go under or at the very least the rest of us should follow their lead and get whatever we can out of this so called one-sided bail out situation.

    • Posted By: goldenrule007 @ 01/04/2009 8:18:34 PM

      Look, it's your money in the bank if you have worked and saved that is used to give these loans. The banks do not simply keep your savings in a vault. They use this money to lend to others. The system relies upon everyone to repay their debt. If everyone was honest and lived within a fixed budget then there would be no need to check your credit or verify your company's ability to pay. It is your responsibility to know how much money you can borrow and safely repay. Its very simple. Also, the credit card companies are not charging you 30% on credit under their original terms like you suggest. Unless you were a complete idiot and signed an agreement to such this simply is untrue. Most credit agreements include a provision that they can modify your interest if you default which is likely the case. Read your credit agreement.
      This cycle of speculation and easy credit followed by a collapse in the financial markets was seen in the great depression. After reading the postings in this thread, I can see how this situation will develop. The nation has been overspending for at least a decade and now the check is at the table. Someone needs to pay. Are you going to pay for your meal of walk away? If I'm sitting at the table with you, it not fair for me to pay your bill. Its that simple. No loopholes for rich people or special considerations for your circumstances. If you walk away from the table, you are leaving someone else with the bill. I understand that with 300 million people in the US that some are in unique situations and cannot afford to pay. I dont mind helping to some degree but if everyone stops paying their bill then we are in for more than a depression.
      Just remember that if you need to file then you are in debt to society and should look for ways to pay it forward when you are able. We are all in this together and need to maintain our decency or we will not have the opportunities of the past. Dont look for excuses to feel better. Do the right thing. Its very clear.

      • Posted By: mithots @ 01/04/2009 11:15:47 PM

        Very well said! There is no such thing as "forgiven" debt--it is just redistributed to others who are also struggling with their own.

  • Posted By: re-industrialize the united states @ 01/04/2009 10:35:19 PM

    Once we get political control back we would be able to do like rosevelt #1 and bust up the monopolies. starting with the media mogals. we are so desprite for an idependent and divisive media. we should also bust up the big banks and insurance companies. which brings up another point... lets talk about the stangle hold insurance companies have on us. we could put a major dent in their ability to throtle us by changing the liability laws to be more sensable to where insurance could become optional again instead of manditory. Risk managment has trumpted business management. ltest look alive and unite as a rebelous americans... get out and vote your government back... we have alot of us out of work that would be grand politicians representing the people... of the people..

    • Posted By: allseeingeyeball @ 01/04/2009 11:15:18 PM

      Here in Michigan we are totally gripped by insurance companies that have laws passed that we buy their products. As a result we are double and triple insured in many areas. I say fine, let's eliminate tort liability COMPLETELY - but no they don't want that because then we don't need them. Instead they limit recoveries and exposure and never reduce premiums. Then they invest the loot out of state. It is ridiculous. Now BCBS of Michigan wants to privatize. Gues what, this "non-profit" has accumulated $9 Billion in retained earnings. Now they want to run off with the loot. Only our AG has come out against them.

  • Posted By: Teacher1971 @ 01/04/2009 11:11:41 PM

    Well I am off I have a class to teach in the morning. Have a good night

  • Posted By: Teacher1971 @ 01/04/2009 11:05:43 PM

    Are you kidding, I knew 15 years ago that I would never retire. As for Social Security it won't be there when I reach 65. I knew it when I sat in on a financial planning meeting with Fidelity when they said 1/4 of our retirement should be SSI. However I knew for a fact that the government repeatedly tapped into the funds. I also sat back and watched my Great Grandmother's care costs rise to over 1 mil. 375,000 of which came out of old IBM stock, that left the final 250 was SSI. I started doing the math and realized I would never see SSI income I would use because they already used any and all SSI I would earn in my life time. SO do not depend on it, because it will be run dry by 2021.

  • Posted By: reality check161 @ 01/04/2009 11:05:25 PM

    Teacher, Ihave been without a place to live...do to poor choices I made and I took full resposibility those choices...That time in my life was and is very valuable to me. I learned from my mistakes. Bankruptcy/bailouts/ and all the other B.S. does not allow us to learn from our mistakes or at the very least it diminishes our desire to not commit the same mistakes. Furthermore, unemployment is incapable of incurring debt, it is a condition...

  • Posted By: joycie @ 01/04/2009 11:04:37 PM

    The advice in this column is good. Most people want to pay their bills so it is good to know there are options such as bankruptcy. What no one discusses though is the psychological impact on people who are losing jobs, their medical insurance and now forced to also sell their homes under bankruptcy if their homestead has equity of more than $125,000! In case people have forgotten, Congress introduced measures that would ensure that credit card companies get paid as much as possible in bankruptcies. The reality of the current situation is that if people that have worked hard all their lives, lose jobs and can't pay bills and have bill collectors calling them 7 days a week, they will out of desperation go through bankruptcy, but they may not be able to protect their homestead if it has more than $125,000 in equity. It is high time Congress reconsiders their directive from 2006 and help people to at least stay in their home otherwise, the psychological damage from this will be hard to measure - we will be seeing more people living in their vehicles and more kids declaring no fixed home address when they go to school.

  • Posted By: IamaPatriot @ 01/04/2009 10:56:44 PM

    People deserved to be informed, I think this a fine article. As a business owner I have been very good to people; customers and employees alike. The company has a padded bank account now due to the fact greed is nowhere on my list, however if the economy continues to struggle I will have no choice but to painfully put people on the street, this will be my absolute last option, as I care about the families that depend on my business. Bankruptcy may be the only alternative for the recently unemployed since they are already in the hole. To state that people are obligated and should sell off everything they own, surrender retirement or college funds, surrender their their home, etc. etc. in order to satisfy a creditor that has benefitted from inflated loan shark rates is ludicrous. I believe the system has failed, and the greedy with a chip on their shoulder need to use their power to change the system to protect themselves instead of ruin people. I am convinced that there truly exists no compassion in the world today, it amazes me how the knives start to fly when money is at the root of a conflict...

    • Posted By: allseeingeyeball @ 01/04/2009 11:04:13 PM

      I was in the same situation, and here in Michigan we are at the cutting edge of the economic destruction. My advice to you is that when the deflationary spiral hits you, you must match price and cut all expenses (including payroll) accordingly. In the long run your employees may have to live on less, but your cash reserves can burn up fast. You will save jobs in the long run. Good luck.

  • Posted By: portside1 @ 01/04/2009 11:03:01 PM

    Enter Your Comment

  • Posted By: portside1 @ 01/04/2009 11:02:50 PM

    Are you kidding?? My house is in Florida where values have tanked. I've lost my business and after 5 months of looking for work I'm down to to the bottom of the barrel. I have a credit rating of 810, no credit card debt and am considering foreclosure or bancruptcy. You guys think I want to do that??? I'm 50 years old and gonna screw up my credit. I've talked to the bank, but you need to be behind 3 months and have a job to get any options. In my county 1 in every 4 houses. is behind. There is a huge space layoff coming which will increase those numbers astronomically Each situation is unique. I suggest compassion and no finger pointing. I never thought this would happen to me. It could happen to you!

  • Posted By: jwatpsi @ 01/04/2009 11:02:32 PM

    Bankruptcy is a signal that serious mistakes have been made regarding revenue vs costs. That goes for personal as well as business. When all else fails, take the bankruptcy route, but be informed now that bankruptcy is the failure route and it will discolor your future, personally and businesswise.
    Jack Watkins, President and owner of a small bsiness some 25 years old.

  • Posted By: nunyabizziness @ 01/04/2009 11:02:20 PM

    People today dont want to make sacrifices. It's easier to lay it on someone else. How about sell you junk and live in a RV (no taxes). BK is not the answer for most. Get a job any job and stop spending money...it's not that hard. The hard part is coming to the reality your life is going to change. You can do it with dignity or you can be drain on the system. Be strong. BK isn't for failures.

  • Posted By: madlock @ 01/04/2009 4:32:54 PM

    This is the most egregious advice I've yet to see offered by a so-called financial "professional". It encourages rushing headlong into the same kind of responsibility avoidance that has led us to the precipice at which we collectively stand.

    • Posted By: mithots @ 01/04/2009 11:01:54 PM

      I agree. While I realistically know that there are many who have valid reasons for filing bankruptcy and have no other choice, I was shocked at how cavalierly the advice was given in this column to en masse jump on the bandwagon of debt responsibility avoidance. SOMEONE will be responsible for satisfying that debt--it is NOT just readily absorbed by the big companies. Debt just doesn't go away--it is redistributed to the rest of us who are struggling, too. I am all for helping my neighbor, and do so, but as a widowed mother of 2 who lies awake at night trying to mentally figure out how I am going to stretch my $14,000 a year take-home pay to cover what we need, I only hope those who do choose this way to "start over again" have exhausted all other means to pay the debt they incurred.

  • Posted By: portside1 @ 01/04/2009 11:01:24 PM

    Are you kidding?? My house is in Florida where values have tanked. I've lost my business and after 5 months of looking for work I'm down to to the bottom of the barrel. I have a credit rating of 810, no credit card debt and am considering foreclosure or bancruptcy. You guys think I want to do that??? I'm 50 years old and gonna screw up my credit. I've talked to the bank, but you need to be behind 3 months and have a job to get any options. In my county 1 in every 4 houses. is behind. There is a huge space layoff coming which will increase those numbers astronomically Each situation is unique. I suggest compassion and no finger pointing. I never thought this would happen to me. It could happen to you!

  • Posted By: allseeingeyeball @ 01/04/2009 10:59:48 PM

    The Greedy Geezers pontificate about how irresponsible the BKs are. On the issue of Social Security what was the cap on the "greatest generation" income subject to FICA? Now it's over $103,000 with no end in sight, increasing every year. Every year it goes up and up. You must be older to retire, the percentage of the tax itself is higher now then ever before, the Feds tax your benefits more, and the cap keeps going higher and higher, and DURING A RECESSION as the kicker. We are now at a 50% effective tax rate. NOW THEY WANT TO REFORM IT - TAX YOU MORE. Hold on to your socks, here it comes.....The thing that bothers me is after they squeeze a generation dry, they have the chutzpah to call people irresponsible when they try to grab a BK lifeline. I agree that America should reindustrialize, but Wall Street made decisions 25 years ago. they want that $1 day labor from China (and the rest of Third World and Mexico) and the rape of their environment, and child labor. How can America compete when America is rasing the minumum wage and increasing environmental protections? It was a trap: cheap consumer goods.

  • Posted By: Teacher1971 @ 01/04/2009 10:57:22 PM

    Anyone who says unemployment does not incur debt has not spent a few nights on the streets because they lost their home. But one man's perspective is his own and is subject to exprience. So point is taken (Semantically speaking) thanks.

  • Posted By: reality check161 @ 01/04/2009 10:55:16 PM

    teacher, the loss of 19,000 has made retirement out of reach? How long were you expecting to live after retirement??

  • Posted By: punkygemini @ 01/04/2009 7:29:57 PM

    Hey, digusted in NY...I'm disgusted by your extreme use of bad spelling. Guess that college degree you worked so hard for didn't include basic English courses. Before you start getting so self-righteous and looking down on others, maybe you should crack open a dictionary first!

    • Posted By: SuzyQ1 @ 01/04/2009 10:55:11 PM

      Hey, punkiegemini, or whatever. Bet you catch all the times the cursor jumps from the line you are typing on four or five lines up. I prefer postings that are easier to read because the spelling is correct and the grammar is somewhat close to what used to be required of literate folk, but I can usually figure out what a person is trying to convey. Is that beyond your capabilities?

  • Posted By: allseeingeyeball @ 01/04/2009 9:50:44 PM

    So it is irresponsible to want to own a home? This is probably from members of the "greatest generation" which has overseen the greatest expansion of a government in the history of the world. Furthermore, the ravenous appetite of this so called greatest generation has seen the looting of the social security system by the "greedy geezers." What percentage of their income did they pay in to the system? At what age did they retire to earn full benefits? Now they sit and judge the very people who have propped them up. I believe people should be able to own a home for their families and have decent affordable health care. I think George Bailey summed it up nicely:

    "Just a minute - just a minute. Now, hold on, Mr. Potter. You're right when you say my father was no businessman. I know that. Why he ever started this cheap, penny-ante Building and Loan, I'll never know. But neither you nor anyone else can say anything against his character, because his whole life was - why, in the twenty-five years since he and Uncle Billy started this thing, he never once thought of himself. Isn't that right, Uncle Billy? He didn't save enough money to send Harry to school, let alone me. But he did help a few people get out of your slums, Mr. Potter, and what's wrong with that? Why - here, you're all businessmen here.

    Doesn't it make them better citizens? Doesn't it make them better customers? You - you said - what'd you say a minute ago? They had to wait and save their money before they even ought to think of a decent home. Wait? Wait for what? Until their children grow up and leave them? Until they're so old and broken down that they... Do you know how long it takes a working man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you're talking about... they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn't think so. People were human beings to him. But to you, a warped, frustrated old man, they're cattle. Well, in my book he died a much richer man than you'll ever be. " Amen George. Thank you Frank Capra.

    • Posted By: allseeingeyeball @ 01/04/2009 10:52:46 PM

      The Greedy Geezers pontificate about how irresponsible the BKs are. On the issue of Social Security what was the cap on the "greatest generation" income subject to FICA? Now it's over $103,000 with no end in sight, increasing every year. Every year it goes up and up. You must be older to retire, the percentage of the tax itself is higher now then ever before, the Feds tax your benefits more, and the cap keeps going higher and higher, and DURING A RECESSION as the kicker. We are now at a 50% effective tax rate. NOW THEY WANT TO REFORM IT - TAX YOU MORE. Hold on to your socks, here it comes.....The thing that bothers me is after they squeeze a generation dry, they have the chutzpah to call people irresponsible when they try to grab a BK lifeline.

  • Posted By: Teacher1971 @ 01/04/2009 10:51:59 PM

    I have seen it destroy families, while we who can offer support and help pick up the pieces of lives and dreams, so I agree with Vic Bankruptsy is the last resort. Bankruptsy protection for a 401? get real! I sat down with my financial assistant 3 weeks ago while he explained my portfolio was worth 1000, one year ago it was worth 20,000 kiss retirement goodbye.

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