Should you pay? Moral Obligation renamed

I appreciate your way of thinking :D

Morally I should always pay back the debts that I owe. However, I will be thinking twice while paying to collection agencies and in my opinion, there is simply no reason to pay for a charged-off debt. Creditors show the charged-off debts as bad debt in their balance sheet and they get some discount on business tax for that I guess. Then why should I pay to a debt buyer for the same debt? Don????????t you think it is illegal to sell charged-off debts?

Texas, I recognize the thinking and appreciate it as well. I'm a paralegal, so ethics and moral obligations are always in the back of my mind. Is there a moral obligation? In my opinion, yes. But, as you pointed out, necessities take precedence. The need to keep moving in a forward direction despite the psychological weight of doing what is morally right with respect to debt issues is tough and over a long period of time, it wears you down. The only way I could counter that was to educate myself. Regretfully, something I should have done years ago since I am now reaping the reward of taking credit and money management for granted. The interesting aspect of the education is that it helps relieve the psychological burden because you're able to discern your situation and determine exactly what criteria fits into the area of moral obligation. An example, I took out an internet payday loan for $300. I had a good record with the company before and I expected to be able to do the same again. Something unexpected came up and my priorities shifted. I had no ability to pay the debt for several months. During that time I felt like I has stolen and that I had lost my self esteem. I didn't even contact the company and all the time they kept hitting my account time and time again until finally the bank closed it. I found myself in a downward spiral, psychologically, emotionally and financially. Yet, instead of taking charge of that situation, I focused on the basics ... food, utilities, transportation, etc. because I knew that if I didn't focus on those things, I would NEVER be able to pay the debt. By the time things slowed down and I started looking into paying them back, I found that they wanted over $2,000. So, my sense of moral obligation changed again. This time I decided it was immoral for anyone to try to take advantage of me. I had paid the company the principal and more than enough to cover interest in accordance with the laws of my state. In fact, this company owed me money. I no longer felt a moral obligation to this company and wrote them to advise that I had discovered they weren't legally registered in my state and requested a PIF letter. I got it and thus, my sense of moral obligation to that company was satisfied.

Taxes: Excluding a settlement, the debt should not go away. Everyone uses tax dollars, for example the mone that pays for the protection of consumers from abusive debt collectors.

Judgments resulting from personal injury/property damage: Debt should only be erased on payment in full (or an acceptable settlement with the person to whom it is owed). Example: The medical bills that Cassie's family (http://www.debtconsolidationcare.com/pub/about22385.html)will surely have to pay for her care, and will have just as surely have sue in order to recoup.

Traffic fines: Should always be paid in full. If you can't afford to pay a ticket (either by time or money) esp. for no insurance or DUI, you cannot pay for injuries/damage you may cause someone else.

Child support: Your egg or sperm, your responsibility. Sadly, too many people don't get this one. :evil: :(

Interest payments: The interest that results from a debt is a moral obligation, as well. A business service was provided, and its price is interest. See below.

Predatory lending: Interesting issue. The morality of paying an immoral debt? The morality of an issue is not determined by its legality. Therefore, a legal debt is not always a moral debt. Quantifying the moral point in time at which this type of debt should be considered PIF is something I do not feel qualified to do.

Unfortunately, many of our laws (or lack thereof) are a result of too much political influence. Money was borrowed, and there is a moral obligation to repay it. However, morally bankrupt tactics such as crippling interest rates and universal default clauses should be banned outright, as they lead to finacially bankrupt individuals. The government should take a proactive, not reactive approach to illegal schemes like the IPDL's, and ban wage garnishment clauses as well.

Consumer credit: Money was borrowed, therefore there is a moral obligation to repay, regardless of the SOL. I am in total agreement with Stanley. If a debt was logged as a loss (and a corresponding tax write off), the debt should be nullified, and reported as such on a credit report, and the sale of said debt, outlawed.

A word is on the tip of my tounge, defined as the set depreciation rate of an asset over time. Perhaps using this [missing word] as a basis of defining repayment schedules/charge offs on extremely delinquent debts could lead to higher repayment to original creditors (while simultaneously, 3rd party collections on consumer debts would be eliminated). Talk about a pipe dream.

Financial priorities: My wife and child will always have food, shelter and clothing. They are the top priority, and always will be. I would be derelict as a husband and father were it any other way.

Quote:

I really enjoyed your post. And I agree with your moral obligation. I feel that I have a moral obligation to pay all necessecities, and if a creditor doesn't want to work with me, then I do not have a moral obligation because it would interfere with my priorities of taking care of my family's needs first.

Stanley,

You bring up an interesting point about charged off debt. I have three credit card accounts that were charged off while I was in a debt settlement program. I have since ended that program because they were not doing their jobs. I paid their excessive fees up front and they blamed me for not being able to do their jobs. That situation has since been remedied but now I am dealing with the aftermath of their mistakes. I have been contacted by three different collection agencies on these accounts. All three threatened to sue me if I didn't give them my banking information on the spot. I knew better than that and sent my dv letters to each agency. Not one has validated my debt and I am in the process of sending follow up letters. One CA I have at least six violations of the fdcpa. They are well known for their illegal tactics. I have been sending payments to the original creditors and they have cashed those payments. I do feel a moral obligation to pay what I charged on these accounts but what about the hundreds of dollars they've added on for late charges, interest, etc? Two have nearly doubled in the amounts that I actually owe them. How should I approach this type of situation?

Mishele, I'm curious. You say you dropped your program because they weren't doing their job. Weren't you with Superior Debt? I'm just asking because that's who I'm with, and so far they don't seem to have done a damn thing except take our money. We have been turned over to debt lawyers and whenever we tell them it's always the same thing-- ignore all calls and keep up what we are doing now.

Any advice?

sorry for the double post. Sticky mouse key made it post twice!

A very thought provoking post, one that I've pondered many times. Most of my debt occurred while being in business for myself. I'm single and had only one other source of income, my disability payment from the Veterans Administration. I called my creditors and informed them that my business was in trouble and my income was very limited. I offered to pay the interest on the loans I had and not one of them accepted my offer.

Several years have passed and I'm in the process of making restitutions. I often think that part of the reason I'm in this situation is the refusal of my creditors to accept a partial payment. Many turned the accounts over for collection and the total amounts of the monthly payments I make are less than the original monthly payments. Not to mention, the CA is keeping a percentage so the original creditor is receiving much less than they could have received. I never understood their logic, or lack thereof. Why wouldn't a creditor accept a payment even if it were much less than the agreed upon amount?

I take solace in the fact that I'm repaying my debts and eliminating the guilt I felt for getting into this situation to begin with. However, I still believe most if not all of this could have been avoided. I've learned that creditors aren't necessarily the brightest stars in the sky. I didn't file bankruptcy when I could have, and I haven't ignored the responsibility I have in repaying my debts. What does all of this mean? It means that most of us have a higher moral character than those creditors, attorneys, and CA's that attempt to make us think otherwise while collecting a debt. I have no problem with the person I see in the mirror, well, at least not from a moral standpoint. I wish I were handsome enough to get Jennifer Aniston to marry me. That's another subject for another board.

I believe I've addressed your question of moral obligation and the only plausible explanation I can derive is this: I'll repay my debts and in the process, everybody can kiss my royal, olive skinned Italiano ass.

Well let me chime in with my vote!
I have learned thru various methods and research that banks and finance ins. expect a certain percent not to pay. My hometown bank has never given me any flak when either my wife or me had any issues with accounts. Now granted this is what you would classify as a hometown bank. Personally I feel if they are unwilling to work something out with their customers then why should I feel any obligation to pay them back after they have charged off my credit and in process ruined my credit for 7 years and made a DAM* profit in the process.

In my opinion you should look at finances as a business decision instead of being bound with morals that they no longer possess.Just my $.02.

minicrazy,

How long you have been in the program?

Almost 10 months.

I tend to lean the way of cajunbulldog. The lenders look at the rest of us as a business decision. Why not look at them the same way?

For those who base their moral values on God/the Bible, please think about this. Deuteronomy 15:1 says: "At the end of every seven years you must cancel debts." Read the context so you don't think I am just taking the part that fits my purpose.

Do you think God requires us to repay every debt no matter how long it takes? I would suggest that God knew that debt could create a lifetime of slavery and therefore required debt forgiveness EVERY 7 years.

Certainly this is not a business model we see today, but if we base our "moral obligation" on our core spiritual values and beliefs we should read and understand the source of those values and beliefs. (at least in the Christian sense in this example)

If this paints the lenders in an evil light, then so be it. I am not saying what is right or wrong, just offering my perspective on a situation where one party views it objectively as a business decision of dollars and cents and then tries to GUILT the other person into paying.

Don't get me wrong, if you have the money, then pay off your debts and be free. But if the practices of the credit industry, unemployment, or illness put you in a position of hopelessness, repaying an unsecured debt should be the last worry you have.

mini,

I was with them for eleven months. It turned ugly at the end but I don't want to go into all of the details. I would check with your debt counselor to see what the status of your accounts are. I don't know your situation, how much you have in your escrow account, and what the total of your debts are. I just did what was best for me at the time. Texaslawyer, you bring up a very valid post in your last post. I had one debt for less that five hundred dollars turned over to a CA in November. Of course I was getting the threats of being sued because I would not give him my banking information. I am finding this to be a common tactic. I sent the DV letter, no response. I called them and they told me they were sending the DV letter. Nothing and nothing to the follow up letter that I sent. Now, I received a letter in the mail yesterday from the original creditor. It stated it had been turned over to a different CA with just a name and phone number. This gets old because it's like starting all over again. They also included some print screens of my account which I guess is their way of validating the debt. It states in the letter that I have to call the CA to make payment arrangements with them. So I have to find their address to send another DV letter to start the process over because the dollar amount does not match anything that I have. I had written a letter to the original creditor to try and settle the account with them but I guess this is their response. :roll: It does get old so I can understand your point.

Trying to collect an amount not due is another violation of the law, just like failure to validate. You should save those letters with incorrect amounts as evidence in case you get a lawyer.

I do have a lawyer who I'm meeting with today. I will show him these newer papers as well. I think anyone can do a print screen to attempt validation of a debt.

My thoughts on the moral issue are this. Yes you owe the debt...from $1 to $10,000. I partly think yes you should pay.

The flip side is that the company is allowed to charge off the debt and receive some sort of "benefit" or "refund" for not receiving this debt, so they are some how paid for this debt if not by the original debtor.

Additionally, this bad debt is on your credit report for 7 years. This negative reporting leads to the inabillity to get credit and any credit you get is usually in the form of a much higher interest rate than you would have if the debt had been paid. Granted it is the fault of the debtor for not paying the bad debt in the first place, but the consiquence and punishment of not doing so is the higher interest rate which leads to paying much more for the car you need to support your family and possibly the other things you need to feed and clothe them...not to mention the fact that many are using credit cards(most likely higher interest rates) to pay medical bills.

So my point is, not paying debts result in many forms of punishment related to not paying it. So has your debt not been paid 10 fold by other means, even though the bad debt hasnt been paid?

It is a benefit of sorts to the credit industry for debts to fall off...this allows them to give credit over and over again to those that have had debt problems to begin with. Most of those with debt problems pay huge rates and end up paying many times over the value of whatever goods and services they received....granted it is their choice to use credit, but in many cases (IE: purchasing a car) you dont have much of a choice.

The laws are in place for a reason and I assume written as such to protect both the debtor and the collector. They should be followed on both ends as well as respected.

Tex,
Good topic. Here are my thoughts. As far as the 7 year rule, aside from what the Bible tells us, there is no special commission that defines a consumer was credit rehabilitated at 7 years. Why do I have to wait 7 years for a negative item to disappear? The laws do state that after 7 years that negative items must drop off the credit report, otherwise if it were not for those laws, you can bet that the creditors and credit reporting agencies would go on reporting items for as long as they could. Interestingly enough, if the items drop off of your credit report after 7 years, isn????????t that a form of credit repair that the credit reporting agencies are doing? Here is another good point that I have said in a previous post, the credit bureaus are in the business to make money, right? We know how they make money by capitalizing on our information. So why do I have to support there capitalistic ventures which can have a potentially profound negative impact on my financial life? I have no moral obligation to support corporate greed because of that. I feel that I get punished enough with all the debts and CA's I have to deal with and the high interest rates that I am charged. Do you really think that credit reporting agencies play fair? We all know that some or most collection agencies do not play fair. Or how about when I have paid on a debt and it ends up in some collector????????s hands. I know I have paid on the debt but now I am being asked to pay 10 times the amount just because they can charge that? Now, I????????m not an advocate of running up a bunch of bills and then refusing to pay under the protection of the fdcpa, I believe that we should pay our debts. But let????????s be fair about it and the industry is definitely stacked against the hard working consumer who is trying to feed and clothe his family or provide shelter.

This topic has been very interesting. It's neat to learn everyone's different opinions on these issues. I do want to pay these debts that were charged off while I was in a bad debt settlement program. I just want the creditors to be fair about it. I have been paying on two religiously and the original creditor has been cashing the checks and posting the payments to my accounts. I have dealt with some scavenger debt collectors also during this process.

You want my 2 cents? Why should I feel a moral obligation to pay a company that can violate the contract I signed with them at any time, and can change the terms with just a mimimum of notice to you? But yet if I violate that same contract they can take me to the cleaners.

Sorry for sounding so harsh, but I am steamed right now. I got served papers for my CapOne account, and I am royally screwed.

What about a call made stating you owe a debt well over the SOL? I did not acknowledge it, as they didn't appear to know my address or phone #. Said item not on any credit reports, so I'd hurt myself by even considering payment. In CA, I hear you have to give permission for anyone to see your credit report. GOOD IDEA!

This brings up an interesting point about being past the SOL. My husband signed up with CCCS this past fall and had a Sprint phone bill that was past the SOL. They were trying to get him to settle on it but his debt counselor told him not to worry about. Just to make sure it was removed from his credit report since it was over 8 years old.

Interesting reading here. I'm learning alot on here.

There's a link you can check the SOL in your state on this site, also on MSN.

im needing the limitation on collection for the state of missouri, the company in question allide interstate, i think i spelled it right the loan was given by the dept of education and the colletion services has been calling me and my family for years on this claim. the claim was not taken care of because i don,t see the right where i have to pay it if i never got the services by the school who made the loan. this has been going on from the start the loan was given in 1990 this is now 2007 well over a limitation.

It seems that some of the people posting have what I would call a morality of convenience. When you accepted the money from a a lender, did you accept the legality of the need/requirement to pay it back? Some people have a strange definition of "necessities". For some people, going out for a drink after work is a "necessity", even if it gets in the way of paying back what one owes to another. Is having children you can't afford to support or living in a big house with a mortgage you can't pay a necessity?

I agree that there are times when a person simply cannot pay back what he or she owes. But let's not get this confused with it being a moral decision. When one makes a loan or accepts credit, you make a moral and legal promise to pay it back. The morality of it does not change even if the legality goes away.

I have very little sympathy for most of our credit industry. With a major bank on every street corner in the nicest building and you wonder where they made all that money. I feel no moral obligation to pay any PDL or IPDL other than maybe the principle if it is a store front. I think they should all be illegal. I feel no moral obligation to pay fees in order for banks to make fat profits i.e. late fees, over limit fees and what ever other fees they have conjured up. I feel no moral obligation to pay the interest on a high interest rate loan especially when they agreed to one rate and later they switch it to 29% or whatever the max rate is. I feel no moral obligation to repay any debt after bankruptcy other than debts that can not be bankrupted i.e. taxes and student loans.

Frankly our banks are out of control when it comes to handing out credit and there biggest profit is made on those that really can not afford the debt to begin with. Basicly they make a lot of money when you default. Personally I think all credit interest rates should be capped at prime + a couple percentage points on all loans. This would force creditors to take caution when they hand out credit and it would force borrowers to learn to live at their means. It would end the days of CC companies handing out cards to people with no jobs, diasabled, students, mentally retarded, deceased, pets and people that never even existed.

The only credit I think our society benefits from is low interest home mortgages and maybe auto loans. The rest of it is garbage and is only offered to take money from you and put it in the pocket of a banker. A couple of great quotes are "Cash is King" and "The borrower is slave to the lender".

dollarsandsince,

wow, did you say a mouth full. I wished you where with me when I made some the most dumbest financial mistakes of my life, I would be better off now. keep on preaching.

thanks

85% of the population who are getting credit to purchase items or enter contracts for a service have/had every intention of paying for them.

I believe that at least 30% of these people are trying to live above their means and become a victim of circumstance by a loss of employment, death in the family, medical illness.. ect. Only half of this 30% will ever pay for the things they purchased or services they recieved on credit.

I also believe that everyone should pay for the services provided and also for the things they purchased because I consider it stealing not to.

Everyone should take care of their family and their necessary needs first. If a person finds themselves in a situation where they hit a bump and got snowballed with bills then they should pay for those services when they can. Even if it takes 10 years.

Americans are sadly uneducated when it comes to credit. Propaganda from coperations and people make credit seem like a really cool thing and it is. But only if you handle it responsibly by being able to plan accordingly should somehting happen.

All credit card contracts tell you that the balance can be called due at any time. Most people don't think about these things when they are signing on the dotted line for their extra 15% off of their purchase for getting approved.


I myself and still paying for things that I did well past 7 years ago. I take them one at a time. I'm not about to not let my family have a life so I budget in one old bill a month. It might have taken me forever to get it taken care of but I did. I admit I probably could have paid a lot of these things off sooner. I didn't because I was uneducated, scared and stupid.
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collection agencies are a whole 'nother matter for me because I am a collector. I follow the law, the company I work for follows the law, and those who don't in the place I work for quickly end up unemployed. I hear story day after day and I deal with complaint calls day after day about my employees. So to be totaly honest here I don't believe some of the things I see people post here. I try to be impartial and deliver the best advice I can and hope that helps them.

That last post was mine. Dunno why it logged me out to post it.

I agree that part of the debt problem today is predatory and sub-prime lending. The companies know that there is a great risk. The lend mortgages to people who can't afford a house to begin with.

I agree that there is a moral obligation to repay what is borrowed. But -- as to debt purchasers, etc. there is no moral obligation. Most of those sort of companies are totally without morals themselves, and are in it only for the love of money.

Junk debt buyers are in a way becoming the creditor. It doesn't really matter how much they purchased the debt for. It it like when some Chase credit cards were bought by CitiBank. Chase no longer is the creditor on said credit so does that mean you don't owe the debt anymore? It doesn't.

The tatics that some collectors use are completely illegal and very ignorant. But it is still a debt that the consumer made.

Well, I have to get a point in here. LVNV bought my Sears debt, which was opened in 1984 an has had no charges for 15+ years. We stupidly made payments all those years up until our last payment was 12/05-LVNV got it in January. By my calculations, I figure we have paid on that debt in the neighborhood of 13,000.00+ on a 780.00 credit limit. Now the bottom feeders want over 3 thousand dollars. Do I have a moral obligation to them-I don't know. I tried, before coming to this site, to pay them payments, and a year and a half later,when they could have had payments, we are still going around and around. I feel my debt to Sears and any others have more than been paid-in fact I think they owe me about 10,000. :D

FYI I understand your point, but it seems to me that there's a bit of a moral breakdown when it comes to debt purchasers. Is it moral for them to puchase a, say, $2000 debt for perhaps $10 or less and then try to extort the full amount from the consumer? The same with PDLs. The mafia have been doing what these two entities are doing for years. Only difference is that when organized crime does it, it's called loansharking and extortion.

Bossy, I'd say you are being robbed.

Maybe I could purchase my own debt for $10? They it would be paid? Maybe the collector will put a note on the file stating I will buy the debt when they are ready to sell it. That would be cool

Then I could pay myself and feel good about it.

You know, that's an interesting take on this, guest! That is really food for thought.....

There is nothing moral or inmoral about purchasing a debt from another company. It's buisness. It's not personal.

I'll go back to the Chase and Citi Bank thing. Citi Bank will be aquiring your credit contract for less than what you actualy owe on it. It doesn't mean you don't owe the full amount if it is called due. You intrest rates usualy change, late fee's are different in some cases. The whole user agreement could change. But you still owe it.

No offense FYI, I understand your point. But, to my liking it still amounts to organized crime. 1st, a contractual obligation must be proved to the debt buyer, 2nd, morally speaking, yes the debt in full might be owed to the original creditor, but not to some second entity only seeking to enrich themselves. And what about so many of those junk debt buyers who are nowadays trying to collect on debt on which the SOL has long ago run? Capitalism run amuk?

I can understand your point and the point of others but I am still of mind that a debt is a debt until it is paid. Reguardless if the SOL is still in play or not.

Now I don't think that making payment arrangements on something that is out of the SoL a smart move. You should be able to pay it off or settle it off within 3 months. But that is another debate.

Texas thanks for the info I had no idea this was the case. Where can I find out information about SOL in my state of Florida. :o

Question...how long is the statute of limitation?

The SoL varies in each state.

I still hold my same opinion unpopular as it is. Creditors and the sort should be treated as a business relationship. When you allow feelings to get in the way of sound business practices,you will get hurt!