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Paying consumer debts is basically optional in the United States

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Re: Paying consumer debts is basically optional in the United States

#61

Post by warner25 »

ta20230813 wrote: post #20
blcknight wrote: post #3

Sort of. I got into a rough spot after I got out of the military and I ended up defaulting on all my credit card debt. I got kicked out for being gay with no notice and had no savings. What little I had went to moving and finding a new job. Only AmEx sued me (and we settled). I later sued most of the collection companies with the help of a lawyer and netted about $40K in settlements. Some had called my parents and to…

> I got kicked out for being gay with no notice and had no savings. Same, in December 2002. Feels a little strange how it works now, compared to be drug out of the barracks by MPs like a criminal. The Army never apologizes.

I'm curious about this. 2002 was before my time, and DADT was mostly before my time, but I've overseen a couple dozen administrative separations for other things (ranging from actual criminal conduct to repeated fitness test failures) as a platoon leader and commander, and I've never seen anything like this.

The bureaucracy will drag out any separation action for months; like at a minimum it will include a series of formal counseling statements by your first-line supervisor and commander, visits to Trial Defense Services, and mental and physical health assessments that take weeks to schedule.

Even in cases of actual criminal conduct, the MPs are very rarely involved. A first-line supervisor NCO would handle the task of escorting the person to their appointments and pulling guard duty if there were some restrictions in place (also rare).

Is there more to these stories?

Re: Paying consumer debts is basically optional in the United States

#62

Post by pavel_lishin »

lukas099 wrote: post #57
pavel_lishin wrote: post #28

Earlier quoted context omitted.

Once the debt has been sold off, it's very likely that your credit score has already been impacted. On the ethics front: let's say I owe money to a credit card company. They sell it off to EZ-Sleez, the debt collection company. What do I owe to them? I certainly didn't borrow money from them. We have no particular relationship. They have one with the credit card company, but that's none of my business, from an ethics…

I'm guessing you agreed that the CC company could sell your debt when you signed up for the card.

Could be! But I'm not sure that a coerced choice - "if you don't pay us exactly on time, we'll sell your information to criminals who'll harass your family" - is itself ethical.

And yes, it is a coerced choice. It's difficult to live in modern American society without a credit card, or a credit score which is very difficult to keep high without a credit card.

Re: Paying consumer debts is basically optional in the United States

#63

Post by MerelyMortal »

rsynnott wrote: post #43

From the linked piece: > Well, not all of it. I didn’t inherit the assets. She didn’t leave a will, which meant the state of Tennessee inherited her house. What I inherited was her debt. Wait, is this right?! In Ireland, and I thought most common-law places, if someone dies intestate, an administrator is appointed, in practice generally the next of kin. Any assets go in the estate, the administrator pays any debts ou…

That's how it pretty much works in the whole United States. This isn't the first article I've seen where the author passes on the notion that debts are inherited. You would think an author would have a duty to their audience that they should inform them about the truth and help prevent them from falling into this trap, but instead we get stories about people working to pay off inherited debts, normalizing it.

Re: Paying consumer debts is basically optional in the United States

#64

Post by pavel_lishin »

singleshot_ wrote: post #49
pavel_lishin wrote: post #28

Earlier quoted context omitted.

Once the debt has been sold off, it's very likely that your credit score has already been impacted. On the ethics front: let's say I owe money to a credit card company. They sell it off to EZ-Sleez, the debt collection company. What do I owe to them? I certainly didn't borrow money from them. We have no particular relationship. They have one with the credit card company, but that's none of my business, from an ethics…

You have a relationship; creation of the relationship was enabled if not formed when you signed the card agreement and agreed that your debt could be sold, transferred, or exchanged to or with a third party. If you thought that was unethical, you should have redlined it at the time.

And then the credit card company would have told me to piss right off, and I'd be struggling to live in American society without credit cards or a credit score.

Re: Paying consumer debts is basically optional in the United States

#65

Post by pavel_lishin »

cyberlurker wrote: post #25
Bostonian wrote: post #2

You can believe that collection agencies behave illegally and also think that is unethical not to pay your debts to the best of your ability. Even if paying consumer debts is optional, not being able to get credit in the future, especially a home mortgage, is an incentive to pay. Some employers check the credit scores of applicants, and such scores probably are a decent indicator of whether someone has their life in…

In both California and New York I had to prove I had good credit to rent a half decent apartment. And I don’t blame the landlords, plenty of people sign leases and never pay. I think lots of people take advantage of a system that is designed to have protections for those who hit hard times.

Every ecosystem will have parasites, at every trophic level.

Re: Paying consumer debts is basically optional in the United States

#66

Post by SoftTalker »

h2odragon wrote: post #32

Wife and I tried to start a business a couple years ago; ran onto circumstances that made it difficult, went bankrupt. We talked to all our credit card issuers about our troubles beforehand, trying to get some better option than "just stop paying"; they were not interested. Discover actually laughed at my wife when she asked about it: "you're not even delinquent yet!" We were going to be the next day, and would've li…

They don't have the people, systems, or process to deal with individually negotiated delinquincy plans. They have batch jobs that run daily, if you miss your payment date they hit you with a late fee, then another one in another 30 days, and maybe after 90 days they will close the account and sell the debt. That's all they do, it's strictly based on dates and payments.

You'd think with all the personal profile data they're able to buy and collect themselves, they could identify the accounts that are just in a temporary bind vs. those that are going to be long-term problems. But AFAICT they don't do this.

Re: Paying consumer debts is basically optional in the United States

#67

Post by cj »

l33t7332273 wrote: post #4
blcknight wrote: post #3

Sort of. I got into a rough spot after I got out of the military and I ended up defaulting on all my credit card debt. I got kicked out for being gay with no notice and had no savings. What little I had went to moving and finding a new job. Only AmEx sued me (and we settled). I later sued most of the collection companies with the help of a lawyer and netted about $40K in settlements. Some had called my parents and to…

> Another called me work repeatedly and told my boss Even from a purely self serving perspective, why would they do this? If your boss gets mad that you have bad debt and fires you, then it’s now even less likely that you will be paying off the debt, no?

This may be hard for HN readers to believe given the anti-employer sentiment in many threads here, but...

My friend owns 15+ apartment buildings in "not so desirable" neighborhoods. He deals with a lot of tenants who don't pay rent and eventually he has to evict them.

3 months ago he was evicting someone for not paying rent for 12+ months, and a week before the police were going to help get the tenant out of the apartment, his employer stepped in and paid the landlord his back-rent in full.

The tenant was employed at a local roofing company. Apparently he was a good roofer, and the owner of the company didn't want to see the worker homeless, so he stepped in and paid a year of the guy's back rent. (And here's the twist... after his employer stepped in and settled his back rent, the tenant still refuses to pay rent, and will be evicted again 6-9 months from now)

Maybe debt collectors have had similar luck as the landlord in this story, but that's probably a secondary motivation. Primary motivation for the debt collector is intimidation. Debt collection agencies are ruthless in all ways imaginable.

Re: Paying consumer debts is basically optional in the United States

#68

Post by willprice89 »

> One other thing debt collectors due is robo-sue their targets, bulk-filing boilerplate suits against debtors, real and imaginary. If you don't show up for court (which is what usually happens), they'll get a default judgment, and with it, the legal right to raid your bank account and your paycheck. That, in turn, is an asset that, once again, the debt collector can sell to an even scummier bottom-feeder, pocketing a lump sum.

I feel like this paragraph basically invalidates the rest of the article. If it's this easy for them to sue and get legal access to your money how is paying "optional"?

Re: Paying consumer debts is basically optional in the United States

#69

Post by crazygringo »

This headline/article is silly.

Yes, it's optional in the sense that you won't go to prison.

But if you want any chance of being able to take out a mortgage on a house, or to finance a car purchase, then it's not very optional. Not to mention a bad credit score makes it much harder to even rent many apartments.

Also, lenders will sue you if you have the money. In which case it's no longer optional either, when they win.

The article is about shady practices of debt collectors, but in no way does that ever make a leap to the idea that paying consumer debt is "optional". If you don't pay, it generally has real negative consequences. It's up to you whether those consequence are worth it.

Re: Paying consumer debts is basically optional in the United States

#70

Post by p1esk »

yieldcrv wrote: post #9

One reason to pay is because you plan to borrow again But if its already reached collections then it doesn’t really make a difference to your credit eligibility for the next X many years

I thought once you paid the debt the credit score should improve, no?
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