WMN: t3_2yo9nm_t1_cpbfb8o

[TITLE]

CMV: Governments should enact a true Jubilee for much of their internal debt, forgiving or vastly reducing it to better people's lives and banning harsh collection tactics.

[Nepene]

Debt sucks. It increases the [rate of depression and suicide](http://www.ncbi.nlm.nih.gov/pubmed/24121465) according to this metastudy and unsecured debt of greater magnitude [decreases mental well being.](http://www.ncbi.nlm.nih.gov/pubmed/24637231) which make it a heavy net public negative for many. I want a law that all debt would have to be tied to income- any debt which was above what a person needed to live a safe and happy life wouldn't be legally enforceable and would be abolished. Since many people have crappy incomes this would include much or all of poorer people's debts. No one should feel worried that due to debts they have that they will lose their family, home, car, stuff like that. The super rich would be affected by this in that if their debts would cause them to go below the amount of money they need to live those debts wouldn't be enforceable. I see those who use excessive debt to extract lots of money from people as parasitic, worsening society with the forgetfulness and poor decisions of people. I don't believe that poor decisions should lead to heavily negative arguments so any arguments to change my view based on it being a net positive that the poor are hurt because they're stupid or have it coming is likely to not change my view. I'll note now I don't really care that much about large debts of businesses or super rich individuals- the 1% and such, who control the majority of money. If your suggestion to change my view is that businesses would be ruined by this it is less likely to be an effective argument. I am not suggesting we touch their debt with this law unless they are caused to be in poverty by their debt. I'd also support banning debt collection agencies. Any debt collection that's necessary should be done by the police or via wage garnishing. [Debt agencies have a long history of being abusive](http://articles.economictimes.indiatimes.com/2013-07-21/news/40696602_1_recovery-agent-hdfc-bank-loan-mix/3) and I don't believe people should lose their personal possessions as a result of debt, unless they're rich enough to have spares- most need a car, taking it to repay a debt worsens their life with minimal benefit to others. Countries are large enough to survive debt, it'd probably be counterproductive banning cross country debt. I don't really know who holds exactly what proportion of debts, but answers based on most debt being held by super rich billionaires or something aren't likely to change my view. That would make my measures better- this would then have less negative impact on the economy. An effective answer that changed my view would show that there were large benefits to debt for most people that couldn't easily be replaced by kinder government lending, and that forgiving most debt would cause negative problems for many people like suicide or death or depression. So, CMV. _____ > *Hello, users of CMV! This is a footnote from your moderators. We'd just like to remind you of a couple of things. Firstly, please remember to* ***[read through our rules](http://www.reddit.com/r/changemyview/wiki/rules)***. *If you see a comment that has broken one, it is more effective to report it than downvote it. Speaking of which,* ***[downvotes don't change views](http://www.reddit.com/r/changemyview/wiki/guidelines#wiki_upvoting.2Fdownvoting)****! If you are thinking about submitting a CMV yourself, please have a look through our* ***[popular topics wiki](http://www.reddit.com/r/changemyview/wiki/populartopics)*** *first. Any questions or concerns? Feel free to* ***[message us](http://www.reddit.com/message/compose?to=/r/changemyview)***. *Happy CMVing!*

[Circle_Breaker]

So I can spend beyond my means and not have to worry about it? Awesome!

[Nepene]

You can indeed spend beyond your means, and if you do so and appeal to a judge, under my system, some of your debts can be automatically written off! Joy! Although your credit will suck.

[looklistencreate]

I mean, yes, it would be good for you if everyone gave you money and never expected any of it back. That's fairly obvious. But that's up to them, not you, and you need to realistically offer them assurance that you'll pay them back. You can't make people give out loans they're going to lose money on. They just won't do it and that'll collapse credit.

[Nepene]

I believe they should have a right to garnish my wages a reasonable amount, certainly.

[looklistencreate]

If you limit the tactics by which one can collect on a debt, people are only going to be loaned as much as can be reliably recovered by these methods. Harder credit for poorer people means it will be harder for them to improve their lives.

[Nepene]

Do you have evidence that better access and use of credit to poor people tends to lead to an improvement in their quality of life?

[looklistencreate]

That should be somewhat obvious. How are you going to get an education, or a decent place to live, if you can't afford it? Going into debt allows you to spend money you haven't made yet, which allows you to invest in your own future and improve your life. That's true for everyone.

[Nepene]

Federal loans and renting, already the norm. Buying houses is already quite hard for the poor. Do you have scientific evidence that increased access to credit has a net effect of increasing social mobility?

[looklistencreate]

Federal loans are debt just like any other debt. [Here's one report.](http://mds.marshall.edu/cgi/viewcontent.cgi?article=1116&context=mgmt_faculty) Do I really need to explain why credit is important for social mobility? If it didn't improve people's lives there wouldn't be loans at all.

[Nepene]

By a study that shows that credit increases social mobility, I mean one that actually examines it, preferably in a western country, not one that examines it in Guatemala and produces vague results. [STA-CITE]>If it didn't improve people's lives there wouldn't be loans at all. [END-CITE]I don't count logic as scientific evidence. There are many reasons loans could be offered. I understand why people think it improves social mobility, what I want is actual evidence that this is true, and that there is a major benefit to people that the government couldn't easily replace.

[looklistencreate]

[STA-CITE]>I don't count logic as scientific evidence. [END-CITE]Well there's your problem. If giving poor people money doesn't increase social mobility then what will? Everything that increases social mobility requires money. Education, starting a business, or any other investment require loans, government or otherwise. [STA-CITE]>There are many reasons loans could be offered. [END-CITE]If it didn't benefit the person loaning the money he wouldn't offer it, and if it didn't benefit the person accepting the loan he wouldn't take it. Otherwise you're assuming that the entire finance industry is based on lies and incompetence. [STA-CITE]>there is a major benefit to people that the government couldn't easily replace [END-CITE]The government does not have an infinite supply of money to spend on loans. The US financial industry is worth like eight percent of our GDP, well over a trillion dollars. The federal government is at a deficit already.

[Nepene]

[STA-CITE]>If giving poor people money doesn't increase social mobility then what will? [END-CITE]Some proportion of poor people will gain an increase in social mobility from loans. Some will gain a decrease. Some will have no effect from it. Logic can't tell you which will be dominant. [STA-CITE]>Otherwise you're assuming that the entire finance industry is based on lies and incompetence. [END-CITE]Sounds about right from personal experience with friends in it, though that may just be the UK one. Anyways, there could be many motivations. Profit seeking. Social welfare. Good numbers. Living well. Paying off medical fees. [STA-CITE]>The government does not have an infinite supply of money to spend on loans. The US financial industry is worth like eight percent of our GDP, well over a trillion dollars. The federal government is at a deficit already. [END-CITE]So if there were massive benefits to debt you could show me and I'd be all "Yeah, clearly we need to keep that, have a delta, the government couldn't do all that."

[bnicoletti82]

What do you have against Chapter 13 Bankruptcy as a solution? When you file for this, you get to keep your property and your debts are prioritized and put on a reasonable repayment plan. If you suffer a hardship, you can then petition for some debts to be forgiven. This satisfies your desire for people to sleep well knowing they won't lose their home/car/property, without leaving the lender out in the wind.

[Nepene]

After potentially years of stress and medical problems and severe issues. I like people being happy so that seems sad to me. Plus, they may lose their house and car due to lack of money to maintain them in the meantime.

[bnicoletti82]

Why would anyone have their debt forgiven for property they can't afford when they can sell it and break even?

[Nepene]

I'm not sure what your question is. The structure confuses me, could you rephrase please?

[bnicoletti82]

If you own property, you can still sell it to get out of debt. In fact, you can even profit off of it if you work hard enough. You're justification comes off as saying "I can't afford this thing, but it would make me sad to get rid of it, so I need to keep it."

[AliceHouse]

You're saying that property value is equal to debt, you're saying that people will buy any ol' property willy nilly, and you're saying no matter how crippled or disabled you are or lack of resources you have, magically everything will get better through the power of elbow grease. Think about that. If after five minutes you still believe it to be true, then I have some land to sell you. I can't do anything with it because it's highly irradiated and it's given me cancer so I can't get off the bed. But I'm sure you can roll your sleeves up and turn yourself into the richest jabroni on the planet with it.

[Nepene]

I'm still not really sure what your argument is.

[HilariousEconomist]

1). Like everyone else has said your idea would cut off credit to the lowest income people and small businesses, which would drastically increase poverty. 2). If like you said the government could just give out loans then you have some useless government banker deciding the flow of capital. The government has a pretty horrible track record with banking and finance (they don't even understand the regulations they made) imagine how terrible the banking sector would be if it was public. This is why most banks were privatized already, because it's a bad idea for them to be publicly run. No matter how bad our banks may be, at least they're not susceptible to political meddling, favoritism, and loss-making inefficiency. 2). But wait, you don't think the government should control the entire banking sector, only that it should provide loans to the poor then? Well loans are a pretty bad way of increasing welfare for the poor, why not increase tax credits, housing voucher, etc?

[Advocatus___Diaboli]

Okay, lets clarify a few things here because from what I'm reading, what you want is essentially the complete and total destruction of credit.   [STA-CITE]>I want a law that all debt would have to be tied to income... [END-CITE]The only way for this to work would be for it to apply to income at the time of the loan, which is essentially the system we have now. If you intend for it to apply to the borrowers income over the life of the loan, then you can forget about anyone with a job as their primary source of income ever being able to borrow money.   [STA-CITE]>any debt which was above what a person needed to live a safe and happy life wouldn't be legally enforceable and would be abolished. Since many people have crappy incomes this would include much or all of poorer people's debts. No one should feel worried that due to debts they have that they will lose their family, home, car, stuff like that. [END-CITE]And how will that be measured? Who sets that standard? Approximately [50 Million Americans live below the poverty line](http://aspe.hhs.gov/poverty/13poverty.cfm), that's roughly 16% of the population. Surely someone living below the poverty line would have to qualify, so that's 50 million people who can forget ever buying a home, or a decent car. The can pretty much forget having any hope of ever having access to credit. But let's take it a step further. There are around [110 million Americans](http://kff.org/other/state-indicator/population-up-to-200-fpl/) living at, or below, 200% of the poverty level (a little under $50,000 a year), you're knocking them completely out of the housing market, and you're relegating them to only being able to buy cheap new cars (which wouldn't stay cheap very long).   [STA-CITE]>I see those who use excessive debt to extract lots of money from people as parasitic, worsening society with the forgetfulness and poor decisions of people. I don't believe that poor decisions should lead to heavily negative arguments so any arguments to change my view based on it being a net positive that the poor are hurt because they're stupid or have it coming is likely to not change my view. [END-CITE]This is really the part of your view that I have the biggest problem with: this notion that people shouldn't be held responsible for their own actions. Choices have consequences; you don't get to abdicate responsibility for your mistakes simply because you don't like the consequences.

[catastematic]

The ancient Israelite "jubilee" was a forgiveness of debts every 7 years and a return of leased property to its original owner every 49 years. (IIRC.) In the United States we don't have clan property awarded to the original conquerors and descending in the male line, but we *do* have a debt jubilee every seven years. In fact, we have a *rolling* jubilee! You can claim your jubilee whenever you want to, and then you can claim it again after you've waited seven years. (Depending on the exact bankruptcy law you file under.) Given that people already have the ability to declare bankruptcy, and only a few debts (like income taxes) that don't hurt the poorest Americans can't be discharged in bankruptcy, what is the advantage of adding on this additional rule? [STA-CITE]> most need a car, taking it to repay a debt worsens their life with minimal benefit to others [END-CITE]First, while most people need cars, most people buy cars with financing. 85% of new cars and 53% of used cars are financed. If you can't repossess cars to settle loans, no one is going to offer loans to help poor people buy cars. That doesn't matter if you're rich and have cash sitting around in your bank account, but if you have cash sitting around your bank account, you probably aren't going to get repossessed, anyway.

[Nepene]

Child support and spousal support, issues close to my heart as a MRA, isn't forgiveable, and student debt, a very common and important thing for social mobility, isn't forgiveable. Plus they have a lot of very tight restrictions for bankruptcy and it's not a nice process to go through, I'd prefer if it was done nicely by the government. [STA-CITE]>If you can't repossess cars to settle loans, no one is going to offer loans to help poor people buy cars. [END-CITE]Evidence?

[catastematic]

[STA-CITE]> Child support and spousal support, issues close to my heart as a MRA, isn't forgiveable, [END-CITE]Child support and spousal support are not *debts*. You don't borrow money from your infant son and pay it back to him in monthly installments. You can't compare asking forgiveness for loans from a bank to screwing over your son by letting child support go into arrears. [STA-CITE]> and student debt, a very common and important thing for social mobility, isn't forgiveable. [END-CITE]Only federally guaranteed or subsidized loans are treated differently than other private bank loans *at all*, and even then this claim isn't true. The exact standard mentioned in the OP (undue hardship) is how you decide whether student loans can be forgiven. In 40% of cases where bankrupts request that federal stident loans be discharged, they are: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1894445 And even if there is no hardship, loans can be forgiven in exchange for public service or for people who become disabled. I don't think the federal gov't is necessarily obligated to forgive its debtors in any case (accepting aid from the government is different from a commercial agreement with a bank), but we don't need to have that argument because these laws do forgive loans. [STA-CITE]> Plus they have a lot of very tight restrictions for bankruptcy and it's not a nice process to go through, I'd prefer if it was done nicely by the government. [END-CITE]It's not "nice"? Who do you think administers bankruptcy courts? That is the government right there. The judicial system is run by the government. [STA-CITE]> Evidence? [END-CITE]Do you understand how loans work? The lender wants to earn the risk-free rate of interest plus compensation for the risk he's taking if the borrower stops paying. If I lend you cash, then the biggest possible risk is that you stop paying and I have *nothing*, big fat zero. If I lend you money to finance a car purchase or a home purchase, I know there is still a car or a house if you stop paying, so I know that the *least* I can get is the value of the house/car. Are you understanding the basic borrower/lender dynamic there?

[Nepene]

[STA-CITE]>Child support and spousal support are not debts. You don't borrow money from your infant son and pay it back to him in monthly installments. You can't compare asking forgiveness for loans from a bank to screwing over your son by letting child support go into arrears. [END-CITE]Who is stopping me comparing the too? I can compare them, and arguments which allow comparison are more likely to convince me. On student loans. "The real failing of the student loan discharge process is lack of participation by those in need. Incredibly, only 0.1 percent of student loan debtors who have filed for bankruptcy attempt to discharge their student loans. That statistic is even more surprising in light of this Article’s finding that a debtor does not need to hire an attorney to be successful. In fact, debtors without attorneys were just as likely to receive discharges as debtors with attorneys were. Ultimately, the low rate of filing shows that, although the system is broken, many of its flaws stem from a failing not previously discussed in the literature." I see a 0.05% success rate as equivalent to no successes essentially. Practically, clearly, most student debts aren't cleared. [STA-CITE]>I don't think the federal gov't is necessarily obligated to forgive its debtors in any case (accepting aid from the government is different from a commercial agreement with a bank), but we don't need to have that argument because these laws do forgive loans. [END-CITE]I don't care much about who the debt is from, I care about hardship. [STA-CITE]>It's not "nice"? Who do you think administers bankruptcy courts? That is the government right there. The judicial system is run by the government. [END-CITE]Different segments of the government can be more or less nice, I am aware the judiciary is run by the government. I am proposing a more nicely run service of debt forgiveness. [STA-CITE]>Do you understand how loans work? [END-CITE]Yes, I still require actual evidence that no one would offer poor people loans. You made an extremely strong claim.

[catastematic]

[STA-CITE]>> You don't borrow money from your infant son and pay it back to him in monthly installments. You can't compare... [END-CITE][STA-CITE]> Who is stopping me comparing the too? I can compare them, and arguments which allow comparison are more likely to convince me. [END-CITE]Let me rephrase this. The general claim "debts ought to be forgiven" generally, before getting into any specifics at all, makes assumptions about what *debts* means and *why* you would forgive someone's debts. Agreed? And what a "debt" is, is the amount that you owe someone on the basis of a loan. They loan you $X, and then you are obligated to repay them $X, plus an agreed interest, at a later date. Now, there are tons of *other* reasons you can owe someone money. You could, for example, beat the ever-living shit out of a guy, and have the court order you pay him money in punitive damages. You should get drunk and drive your car into someone else's car, and be forced to pay for repairs. You could be convicted of drug-dealing and be ordered to forfeit all your profits to the government. You could sign a contract for a house that specifies you'll give someone the price in cash when the deed is transferred. In all of these cases you owe someone money. You can call that a debt if you want. But when people talk about debt-forgiveness, they're talking about loan debt: debts where the reason you need to repay a total of $X is an abstract equality between the amount that you borrowed, which was also $X. There is no moral reason for you to give them $X other than honoring that abstract equality (although that isn't meaningless!), and if giving the lender $X makes your life unbearably painful and barely matters to your lender, there may be moral reasons *not* to force you pay him back. The other cases are totally different from loans in this respect. When you owe someone money because you're being punished for a crime, the court is looking at *the gravity of the offense* to decide you need $X. When you owe money for damages, $X is based on *the cost of repairing what you destroyed*. When you owe money as a forfeit, $X is based on *taking away ill-gotten gains*. When you owe money as payment for a purchase, $X is the price at which someone is selling something to you. You can't assault someone, damage other people's property, run an illegal business, make arrangements to buy things, and then expect people to consider all of *those* obligations to be morally meaningless just because you would suffer if you actually paid it, since there is already a moral calculation built into how much you owe. Call them "debts" all you like; but the interest in debt forgiveness is all based on credit, on forcing lenders to take losses to make their debtors better off. Meanwhile, the *criterion* for a loan to be potentially worth forgiving is that the debtor has to be really suffering - barely able to feed his children, for example - while the lender is doing just fine. I assume you agree? You say this: [STA-CITE]> I want a law that all debt would have to be tied to income- any debt which was above what a person needed to live a safe and happy life wouldn't be legally enforceable and would be abolished. [...] No one should feel worried that due to debts they have that they will lose their family, home, car, stuff like that. [END-CITE]This seems to alluding to the basic idea; both of us agree that the purpose of debt forgiveness is to allow poor families in debt to suffer less. But then you tell me that one of the major sorts of forgiveness you want is for *child support*, and that any sort of debt forgiveness that doesn't forgive child support (like bankruptcy laws) won't satisfy you! This fails in two ways. First, *unlike loans*, the dollar value of child support isn't supposed to be abstractly equal to an amount you borrowed from the recipient (your children?), a court determines it based on what your children need to live, as you put it, "a safe and happy life," and how much of that you can provide. Second, we can't help *your family* live a safe and happy life by telling you that you don't owe *child support*, because child support is the money that is used to pay for your children's needs. So you can call a few years of unpaid child support whatever you want: "arrears," "back-payments", "debt," "an easy way to identify a shitty person", the point is doesn't share any characteristics with the loan-debt that debt-forgiveness advocates are interested in. [STA-CITE]> I see a 0.05% success rate as equivalent to no successes essentially. Practically, clearly, most student debts aren't cleared. [END-CITE]You didn't quote the very next sentence, in which she says what the "failing not previously discussed in the literature" is: people spreading the myth that student loan debt can't legally be discharged. A few hours ago, you were inadvertently spreading the myth. Saying "The problem with student loan debt is that not enough people know it can be discharged" is very different from saying "The problem with student loan debt is that we don't offer any sort of allowance for personal hardship." No one (so far as I know) would say there is *nothing* we could change about the student loan system. But you can't say "The prevalence of student loan debt supports the case for an enactment of a 'jubilee' that would discharge debts in cases of hardship" if there are *already* provisions enacted in bankruptcy law that discharge debt in case of hardship. Given that these provisions already exist, all student debts *can* be discharged in case of hardship, so the prevalence of student debt isn't relevant to changing rules for discharging *other* types of debt. [STA-CITE]> I don't care much about who the debt is from, I care about hardship. [END-CITE] Unless the people suffering hardship are still minors? :) Just kidding. More seriously, like I said it's a separate issue, since federal student loan debt *can* be discharged in cases of hardship, but in my view, if the government offers you a loan that you would not be able to get from a private lender, because the loan does not make any financial sense, accepting that loan is conceptually similar to accepting food stamps, public housing, or any other sort of government aid, and people who accept the aid may be liable to accept conditions that would be unreasonable or unethical if they were imposed by banks (lending money purely for profit), grocery stores (selling gift cards you can use to buy food for profit), or real estate agents (selling homes and apartments for profit). This is true both because many of the ethical and legal limits on commercial transactions are there purely to make sure both sides "play nice", and because the purpose of these aid problems is to *relieve* hardship, so conditions that may make some beneficiaries less comfortable still lead to less hardship overall if they make the program work better. [STA-CITE]> Different segments of the government can be more or less nice, I am aware the judiciary is run by the government. I am proposing a more nicely run service of debt forgiveness. [END-CITE]Okay, if your view is actually not about "enacting a jubilee" per se, but about how the government administers the programs that permit the discharge of debts, what problems do you have with the judicial system and how would you like it to work instead? This isn't really the focus of your post, but who knows, maybe I'll agree with you. But like I said, actual bankruptcy court (which permits even people who *aren't* suffering from hardship to discharge debts) would probably be much more generous than a hypothetical institution that does what you describe (that is, only discharge debts for people who are suffering, and can't be happy if their debts aren't discharged). [STA-CITE]> Yes, I still require actual evidence that no one would offer poor people loans. You made an extremely strong claim. [END-CITE]So what I said was: [STA-CITE]>> no one is going to offer loans to help poor people buy cars. [END-CITE]I hope it was clear from context that what I meant was, "Currently, automotive financing permits poor people to borrow money (with the car as collateral for the loan) at lower rates than they could borrow it otherwise." So no one could offer loans that were affordable to the poor *specifically* because they were for cars. A fairly typical rate for an unsecured "payday" loan would be a $15 charge for a two-week loan of $100. Given that the payday loan industry flourishes despite the stupidity of borrowing money at that rate, we can assume that most poor people *cannot* get bank loans at a better rate than that. $15/2wks on $100 translates into *375%* interest annually, but if you wanted to borrow $100 at that rate and pay back both the interest and the principal in a year (and it's pretty standard that if you need a loan now, you won't be able to repay for at least a year), you would owe more than $3,300 dollars at the end of the year. Compare this to automotive financing rates. What exact rate you can get depends on different variables, but the highest rates are generally around 10% APR (and go all the way down to 0% depending on who is buying what). That means that any poor person who bought a car with financing, but would otherwise have to resort to a payday lending for an unsecured loan, is cutting their annual interest rate by 365 percentage points. Another way to think about it: if you borrow $100 at 10% APR, make no payments for a year, and compound the interest every two weeks (like we did for the payday loan), you owe $110.50 at the end of the year, which is about 1/30 of what we calculated you would owe on a payday loan you kept rolling over for the say period. That is the difference between a loan with collateral that can be repossessed and a loan without collateral.

[Nepene]

[STA-CITE]> > > Let me rephrase this. The general claim "debts ought to be forgiven" generally, before getting into any specifics at all, makes assumptions about what debts means and why you would forgive someone's debts. Agreed? [END-CITE]No. I am not supportive of arbitrarily classifying debts in some way that allows us to punish bad debtors. Also debts just means money owed to another party, it doesn't require a loan. [STA-CITE]>You can't assault someone, damage other people's property, run an illegal business, make arrangements to buy things, and then expect people to consider all of those obligations to be morally meaningless just because you would suffer if you actually paid it, since there is already a moral calculation built into how much you owe. Call them "debts" all you like; but the interest in debt forgiveness is all based on credit, on forcing lenders to take losses to make their debtors better off. [END-CITE]I'm not really fond of the poor having excessive debt from courts for things they do. I don't distinguish between 'just' causes to extract money from the poor that the police mostly target and 'unjust' causes especially since the state has a history of targeting minorities and the less well off and extracting fees from them. [STA-CITE]>So you can call a few years of unpaid child support whatever you want: "arrears," "back-payments", "debt," "an easy way to identify a shitty person", the point is doesn't share any characteristics with the loan-debt that debt-forgiveness advocates are interested in. [END-CITE]I'm not likely to be convinced to change my view by you telling me certain other people don't support my proposal. I am aware my proposal isn't hugely popular. [STA-CITE]>if there are already provisions enacted in bankruptcy law that discharge debt in case of hardship. Given that these provisions already exist, all student debts can be discharged in case of hardship, so the prevalence of student debt isn't relevant to changing rules for discharging other types of debt. [END-CITE]The existence of erratic and varying and confusing standards for how to do a Adversary Proceeding that are rarely used are, in my books, a good reason for changing the rules for discharging types of debt. They point to part of why I prefer a Jubilee over bankruptcy proceedings- the courts tend to be rather complicated for most people and costly in time and effort, I don't want a law that only supports people with lots of free time and money. As to how to improve the situation, that would require actual guidance on what to do in each state. The rather long rest of your post doesn't seem to contain much that is likely to convince me, and I don't think it's likely you'll convince me since you seem to support rules and procedure as important to preserve and I clearly don't, and you're not offering actual evidence that is likely to change my view.

[catastematic]

[STA-CITE]> No. [END-CITE]In this case you need to make a much stronger argument in favor of canceling *all obligations*. If you want to call any sort of obligation to provide goods, services, money, or anything else a "debt" when you provide this argument you are welcome to, but I would find it easier to follow if you used some symbol to follow your very broad understanding of "debt" - maybe you can call it "debt(2)" so that I know exactly when you don't mean what other people who are in favor of lenders forgiving debtors, i.e. a "jubilee", mean. There has been extensive thought and analysis put into forgiving debtors - that is, people who can repay their loans - for centuries, and if you were to rely on that you don't need to explain your thought process too much, since many of the arguments are familiar. But if you're trying to start from scratch with "debt(2)", i.e. an ability to escape any and all obligations, then you need to build the reasoning for your position from scratch, too. [STA-CITE]> I'm not likely to be convinced to change my view by you telling me certain other people don't support my proposal. I am aware my proposal isn't hugely popular. [END-CITE]It isn't the popularity that is important. Look, let me put it this way: if I say "I think the government should be funded entirely by property taxes," that isn't a popular view, but people know what other people who talk about the tax system mean when they use the words "property taxes". But if I suddenly break in and say, "Oh, no no, when I say *property taxes* I include someone's talents, skills and education as part of their *property*. I would want to assess the value of those properties to that taxpayer and then base his total tax bill on that value." --- well, now we need to start the whole discussion over again from scratch, because even though that's actually a pretty common meaning of the word "property", *nothing* that people are used to saying about "property taxes" is based on that specific meaning of the word property. So if you are treating your view as a fairly simple extension of the basic points made by other advocates of debt forgiveness, then the extent of the reasoning you give for your views is reasonable but you are limited to what other people mean by "debt" in discussion of this topic. But if you are treating your view as a completely radical new idea that has never been discussed before, with a completely new use of the word "debt" (or ideally, a new word so that other people will know when you are talking about loans and credit, and when you are talking about obligations of all sorts), you haven't even started to explore the consequences of your view, let alone justified it. That is why people typically remind each other of how other people use words in similar sorts of arguments: because so many premises are built into the argument by the assumption that you are speaking the same language as everyone else. [STA-CITE]> They point to part of why I prefer a Jubilee over bankruptcy proceedings- the courts tend to be rather complicated for most people and costly in time and effort, I don't want a law that only supports people with lots of free time and money. [END-CITE]If your objection to bankruptcy (as opposed to "jubilee") is that you don't like how bankruptcy is administered, but you don't have any ideas about how jubilee will be administered either, then how can you possibly say that jubilee is administered better than bankruptcy? [STA-CITE]> and you're not offering actual evidence that is likely to change my view [END-CITE]If the actual interest rates on unsecured loans for the poor versus secured automotive loans wouldn't change your view, why did you ask for it? I mean, you could have found that information yourself without asking me, but what did you believe *beforehand* that led you to ask for evidence if nothing changed once you had the evidence?

[Nepene]

http://fiscal.treasury.gov/fsservices/gov/debtColl/dms/top/chldSprtEnforcmnt/debt_top_childsupport.htm [STA-CITE]>The Debt Collection Improvement Act of 1996 (DCIA) authorizes the Secretary of the Treasury to collect past-due child support by the administrative offset of federal payments. Executive Order 13019-Supporting Families: Collecting Delinquent Child Support Obligations (September 1996), requires the Secretary of the Treasury to promptly develop and implement procedures necessary for the collection of past-due child support debts by administrative offset (the reduction or withholding of a payment). [END-CITE]The US government calls child support debt. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/214338/cm-arrears-and-compliance-strategy-2012-2017.pdf [STA-CITE]>In addition, the majority of people recognise the ti me to pay child maintenance is when it’s due, not years later when the debt has escalated in to thousands of pounds. We should not have to use draconian remedies like forcing the sale of par ents’ homes in order to get them to face their responsibilities. [END-CITE]The UK government calls child support debt, and notes my sort of scenario, that people can be forced to sell their home to pay child support. I'm getting rather frustrated- I don't enjoy semantics debates and you are arguing that the word debt can't be used for child support when official government websites use the term debt for child support. If you're from Canada or Australia I could also easily provide a cite that their governments use the term debt for child support. An entirely pointless debate where you are arguing for a non standard definition of debt is very frustrating for me. [STA-CITE]>But if you are treating your view as a completely radical new idea that has never been discussed before, with a completely new use of the word "debt" [END-CITE]https://www.law.cornell.edu/uscode/text/42/666 [STA-CITE]>another law, specifying indicia of fraud which create a prima facie case that a debtor transferred income or property to avoid payment to a child support creditor, which the Secretary finds affords comparable rights to child support creditors; and [END-CITE]Here, in the law where they ban reduction of child support, they call it a debt. As I noted before, I am getting rather frustrated at being accused of using the term debt in a non standard way when a few seconds of googling could easily show that this is the official way to use the term. This definitely isn't going to change my view- I'm not going to change my view based off a false fact that I can disprove by googling it. [STA-CITE]>If your objection to bankruptcy (as opposed to "jubilee") is that you don't like how bankruptcy is administered, **but you don't have any ideas about how jubilee will be administered either**, then how can you possibly say that jubilee is administered better than bankruptcy? [END-CITE]I haven't actually said that, and I do know how this Jubilee would be administered- you wouldn't have to show undue hardness, so the vast majority of people could get debts forgiven. [STA-CITE]>If the actual interest rates on unsecured loans for the poor versus secured automotive loans wouldn't change your view, why did you ask for it? [END-CITE]I didn't, I never actually asked you for that, I asked you to justify your claim that no one would offer loans to the poor. You decided to answer an unrelated point.

[wahtisthisidonteven]

[STA-CITE]>I don't believe that poor decisions should lead to heavily negative arguments so any arguments to change my view based on it being a net positive that the poor are hurt because they're stupid or have it coming is likely to not change my view. [END-CITE]You don't want people to be able to take risks. You do understand that by making it illegal to get behind by poor decisions, you're simultaneously making it illegal to get ahead by good decisions, right? [STA-CITE]> I don't believe people should lose their personal possessions as a result of debt [END-CITE]So once you own something it should be yours forever, even if you only own it because you borrowed money for it? What you propose in this CMV would be the death knell of social mobility. Since poor people will be unable to start businesses or afford education, they will forever remain poor.

[Nepene]

[STA-CITE]>You don't want people to be able to take risks. You do understand that by making it illegal to get behind by poor decisions, you're simultaneously making it illegal to get ahead by good decisions, right? [END-CITE]Do you have statistical evidence that loans, on net, increase social mobility? I do agree with the goal of increasing social mobility, but I would support doing it more by increasing funding of education, reducing the number of people imprisoned on silly charges and such. Do you have evidence that an increase in debt tends to result in an increase in social mobility? [STA-CITE]>So once you own something it should be yours forever, even if you only own it because you borrowed money for it? [END-CITE]If someone is unable to pay back their debts safely you shouldn't be giving them borrowed money. If they do have the money to pay back debts you could get their wages garnished. [STA-CITE]>Since poor people will be unable to start businesses or afford education, they will forever remain poor. [END-CITE]Most student loans are federal aren't they? I have indicated elsewhere that I would be happy with more federal loaning. Student loan repayment should be tied to income- I believe it already is in the UK.

[TheNicestMonkey]

[STA-CITE]>I want a law that all debt would have to be tied to income- any debt which was above what a person needed to live a safe and happy life wouldn't be legally enforceable and would be abolished. [END-CITE]Honestly, I don't think this (which seems to be the core part of your view) even makes sense. Debt is a long term liability and has nothing to do with your annual income. If you can't service your debt on what you make this year then the term of the debt can be lengthened and you can pay back smaller amounts over longer periods of time. The only limit to this is that the borrower must be able to service the annual interest on the debt lest his liability grow over time. [STA-CITE]> No one should feel worried that due to debts they have that they will lose their family, home, car, stuff like that. [END-CITE]I don't think you are very familiar with how debt repayment and bankruptcy work (at least in the US, apologies if you are writing from somewhere else). For most types of debt the primary residence, a car (up to a certain value), and a surprisingly large amount of personal property, are *exempt* from bankruptcy proceedings. A lender can't just take everything you own to service your debt. In reality it is only for secured debt (mortgages, car loans) where a specific piece of property can be seized. And in those cases the remainder of your assets are protected. Honestly I think you should change your view on the basis that a framework for mitigating the impact on debt repayment by the poor already exists and that simply expanding those protections will achieve much of what you want without requiring a "debt jubilee" which would be economically disruptive. I mean if more debt was made dischargeable in bankruptcy and the magnitude of exemptions was increased would this not remove much of the burden the exists for getting out of unpayable debt? If so why not do this vs your unnecessarily radical proposal.

[Nepene]

[STA-CITE]>Debt is a long term liability and has nothing to do with your annual income. [END-CITE]This is what I think should change. It isn't currently anything to do with your annual income. [STA-CITE]>If you can't service your debt on what you make this year then the term of the debt can be lengthened and you can pay back smaller amounts over longer periods of time. [END-CITE]Or you could end debt when people can't repay it. [STA-CITE]>In reality it is only for secured debt (mortgages, car loans) where a specific piece of property can be seized. And in those cases the remainder of your assets are protected. [END-CITE]I am also aware that they also can't legally seize members of your family- I was more concerned about the issue that if people have no money they can't maintain a car. [STA-CITE]>I mean if more debt was made dischargeable in bankruptcy and the magnitude of exemptions was increased would this not remove much of the burden the exists for getting out of unpayable debt? If so why not do this vs your unnecessarily radical proposal. [END-CITE]If you have to get to the point of bankrupcy then that means potentially years of stress, missed medical appointments due to poverty, risky driving in environmentally unfriendly cars. I'd prefer to limit people's liability for debt before bankruptcy, not just after.

[TheNicestMonkey]

[STA-CITE]>Or you could end debt when people can't repay it. [END-CITE]The question is why. A loan for 200,000 over 30 years is very different from a loan for 200,000 over 5 years so pretending like there is "an amount of debt" independent from it's term doesn't make sense. In the example given the first debt is common (in the form of a mortgage) and something many families manage. The second debt is very burdensome. Under your system why would we strike the second debt rather than convert it into the first. If we consider the first debt to be OK why not take debts that are *not* OK and alter them such that they are. [STA-CITE]>I am also aware that they also can't legally seize members of your family- I was more concerned about the issue that if people have no money they can't maintain a car. [END-CITE]Then you declare bankruptcy. The tools for escaping overly burdensome debt while retaining a home, transportation, and enough property and income to live safely on, already exist. When people choose not to declare bankruptcy its because they believe they can service their debt without having to subject themselves to court ordered liquidations and payment schedules. [STA-CITE]>If you have to get to the point of bankrupcy then that means potentially years of stress, missed medical appointments due to poverty, risky driving in environmentally unfriendly cars. [END-CITE]Then your proposal should be to expand bankruptcy protections to make it easier for people to declare and expand exemptions to allow them to keep more stuff. A bankruptcy is an orderly unwinding of a persons assets and liabilities such that their creditors receive something while they are offered a chance to restart their lives. Why wipe the books when an organized restructuring could happen. And hey, if you somehow have extremely high (dischargeable) debts but very very low income - a bankruptcy often functions very similar to your proposal.

[Nepene]

[STA-CITE]>If we consider the first debt to be OK why not take debts that are not OK and alter them such that they are. [END-CITE]In case it wasn't clear from the post, I don't view debt as a positive thing that we should try to carefully preserve and modify as little as possible. I have doubts that an incremental approach would be that effective- banks would lobby, people would carve out exceptions, the effectiveness of a half measure law would be far more limited. This is of course a good chance to change my view- if you could make me think debt was better with strong, source supported arguments I'd be more against modifying it. [STA-CITE]>Then you declare bankruptcy. The tools for escaping overly burdensome debt while retaining a home, transportation, and enough property and income to live safely on, already exist. [END-CITE]There are a number of debts that carry over past bankruptcy and also you're ignoring the many cons of bankruptcy like often loss of job, humiliation, and the trickiness of dividing up your purchases into luxuries and non luxuries. [STA-CITE]>Why wipe the books when an organized restructuring could happen. [END-CITE]Because I don't view debt as a positive, glorious thing.

[TheNicestMonkey]

[STA-CITE]>In case it wasn't clear from the post, I don't view debt as a positive thing that we should try to carefully preserve and modify as little as possible. [END-CITE]Sure. I understand that your concerns only lie with the borrower. But that doesn't make your forgiveness in lieu of restructuring a logical perspective. Going back to the example I gave: * Two identical families with 200,000 debts of different terms (30 years and 1 year). Under your proposal you would wipe the debt of the family with the 1 year debt but leave indebted the family with the 30 year debt. Why? It is arbitrary. [STA-CITE]>I have doubts that an incremental approach would be that effective- banks would lobby, people would carve out exceptions, the effectiveness of a half measure law would be far more limited. [END-CITE]Arguing about the real-politic of a radical measure like this isn't very helpful. If we wanted to be realistic we could easily point out that banks would lobby and your proposal would never see the light of day in the first place. And by that token we should only discuss much more limited solutions that might be palatable to the entrenched interest groups. Of course that's boring and we discuss more far fetched ideas because that's fun. [STA-CITE]>This is of course a good chance to change my view- if you could make me think debt was better with strong, source supported arguments I'd be more against modifying it. [END-CITE]Ok. [STA-CITE]>[In most cases, purchasing power is associated with income; however, credit can bridge gaps between future income and immediate consumption to build wealth and has become a major factor in the development of a consumer's purchasing power. Credit and debt can be positive when used for purchases associated with home ownership, education, and vehicles, provided that these purchases are used to better a consumer's economic and social standing. Credit can be negative when used to consume goods beyond what future income can sustain.](http://mds.marshall.edu/cgi/viewcontent.cgi?article=1116&context=mgmt_faculty) [END-CITE]The denial of credit eliminates one of the great equalizers between labor and capital. If you do not possess wealth you are limited to working for someone who will reap the profits of your labor - paying you as little as possible while extracting maximum benefit. Those that lack wealth, and are denied access to credit, will remain in this position *indefinitely*. If I cannot afford training I cannot make more money. If I cannot make more money, I cannot afford training. Credit breaks that cycle allowing you to consume not just future earnings but *expected future earnings*. A student loan allows you to pay for your engineering degree not just with the money you earn as a fry cook *but with the future earnings you will have as an engineer*. You may never be able to pay for your degree with your fry cook wages and without credit you are simply denied the opportunity to better yourself. Now obviously in a world where education is free (i.e.: not the US) the above example doesn't hold. However even then having access to education only solves the problem partly. You will still need to save for a long time to have enough capital to start a business, by which time you are unable to exploit the market opening you had originally envisioned. The denial of credit to people, and especially poor people, simply retrenches the already wealthy. If you have a novel idea you could finance it through a loan. However in the absence of credit the only other option you have is equity and you might have to give up half your company to secure that financing. If you are a success then that equity financing will be far more expensive and the person who receives that additional windfall will simply be some rich guy. [STA-CITE]>Because I don't view debt as a positive, glorious thing. [END-CITE]The inability to receive credit simply ensures that poor people stay poor by eliminating a tool with which they can better their position.

[Nepene]

[STA-CITE]> Two identical families with 200,000 debts of different terms (30 years and 1 year). > > Under your proposal you would wipe the debt of the family with the 1 year debt but leave indebted the family with the 30 year debt. Why? It is arbitrary. [END-CITE]Because they can afford the 30 year debt but can't afford the 1 year debt. It's not arbitrary because there's a key difference. [STA-CITE]>Arguing about the real-politic of a radical measure like this isn't very helpful. If we wanted to be realistic we could easily point out that banks would lobby and your proposal would never see the light of day in the first place. And by that token we should only discuss much more limited solutions that might be palatable to the entrenched interest groups. [END-CITE]It's a historic measure that's been done before by popes say. It serves to empower a leading group (vote for me or you'll be slaves again) and serves to reduce the power of entrenched economic interests that have large control over people's lives. A radical government would presumably ram it through after getting into power. [STA-CITE]>The denial of credit eliminates one of the great equalizers between labor and capital. [END-CITE]I read the paper. It had a single cite from a study in Guatamala that I saw that addressed my actual query, the rest was unrelated stuff. Though it did note the key thing that determines social mobility was education. In supporting social mobility I wouldn't look to debt, I'd look more to increasing education funding. [STA-CITE]>A student loan [END-CITE]As I've repeatedly stated, I am not proposing banning federal loans. Most student loans are federal loans. They'd have more rules of course. [STA-CITE]>You will still need to save for a long time to have enough capital to start a business, by which time you are unable to exploit the market opening you had originally envisioned. [END-CITE]For a quality business people would probably still make loans. Most profits angel investors make is from the rare super successes anyway who can afford to pay them back. Anyway, your argument hasn't served to convince me of the actual high benefits of debt, partly because your source didn't have anything from a western country, partly because your argument assumed I was suggesting banning federal loans.

[TheNicestMonkey]

[STA-CITE]>Because they can afford the 30 year debt but can't afford the 1 year debt. It's not arbitrary because there's a key difference. [END-CITE]But, as I mentioned, one can extend the terms of the 1 year debt to 30 years. The debt burdens are now the same. Opting for full forgiveness when a less disruptive solution exists seems utterly arbitrary. [STA-CITE]> A radical government would presumably ram it through after getting into power. [END-CITE]From a feasibility perspective your proposal is entirely fanciful. It is far more likely that reformist policies survive evisceration by special interests than a radical government actually coming into power and enacting your policy. [STA-CITE]>I read the paper. It had a single cite from a study in Guatamala that I saw that addressed my actual query, the rest was unrelated stuff. [END-CITE]The rest explained how they believed that lack of access to credit interferes with career mobility, which interferes with economic mobility, which interferes with social mobility. This is precisely what you were getting at. [STA-CITE]>Though it did note the key thing that determines social mobility was education. In supporting social mobility I wouldn't look to debt, I'd look more to increasing education funding. [END-CITE]That's a separate issue. If funding for education, medicine, small businesses, etc was all handled by the government without question then yes you would have far less need for credit. Of course that's not the case and therefore policies that hurt people's ability to obtain credit *in isolation* are extremely detrimental to people's social mobility. [STA-CITE]>As I've repeatedly stated, I am not proposing banning federal loans. Most student loans are federal loans. They'd have more rules of course. [END-CITE]Your proposal doesn't ban loans. It just makes them un-enforceable in a wider variety of scenarios. This natural reduces the market for credit making it more difficult for people to borrow. [STA-CITE]>For a quality business people would probably still make loans. [END-CITE]Again, if you make a large number of loans uncollectable you will necessarily make it more difficult for *everyone* to get loans. Not only do lenders have to factor in bankruptcy into their calculation they also have to factor in whatever threshold your set at where the loan is magically scrubbed. Also if loans are as terrible as you say why would you care if the quality business people get them? [STA-CITE]>Most profits angel investors make is from the rare super successes anyway who can afford to pay them back. [END-CITE]I'm not talking about Angel Investors. I'm talking about Joe getting a small business loan to buy a truck and a ride on mower to start his lawn care business. If the terms of this loan are extremely onerous, or Joe is simply deemed poor enough that he may not have to pay, then Joe continues to do whatever he was doing previously with no hope for improvement. In our current environment lenders have more incentive to roll the dice on Joe which ultimately gives a larger number of people the chance to move up economically. [STA-CITE]>Anyway, your argument hasn't served to convince me of the actual high benefits of debt, partly because your source didn't have anything from a western country, partly because your argument assumed I was suggesting banning federal loans. [END-CITE]Why do you believe the debt works differently in Guatemala and Georgia? Why do you think the taxpayer is going to happily subsidize crappy loans that people don't have to pay back when they have demonstrated time and again that they have no interest in subsidizing education (which they should).

[Nepene]

[STA-CITE]>But, as I mentioned, one can extend the terms of the 1 year debt to 30 years. The debt burdens are now the same. Opting for full forgiveness when a less disruptive solution exists seems utterly arbitrary. [END-CITE]As I noted before, I don't view debt as a great positive thing to support, I'm not going to suggest the least disruptive solutions. There is clear reason to my suggestions, in that I am (obviously) not a huge fan of debt. [STA-CITE]>The rest explained how they believed that lack of access to credit interferes with career mobility, which interferes with economic mobility, which interferes with social mobility. This is precisely what you were getting at. [END-CITE]I was asking for evidence that this was a true assertion, not evidence that people believed it. [STA-CITE]>Your proposal doesn't ban loans. It just makes them un-enforceable in a wider variety of scenarios. This natural reduces the market for credit making it more difficult for people to borrow. [END-CITE]Why does the government forgiving all debts and limiting collection of debts make it harder for the government to make loans? [STA-CITE]>Also if loans are as terrible as you say why would you care if the quality business people get them? [END-CITE]More that loans are ok for most, terrible for a large minority, and great for a small minority. [STA-CITE]>I'm talking about Joe getting a small business loan to buy a truck and a ride on mower to start his lawn care business. [END-CITE]As I have noted, I'd also support an expansion of government loans to support such things. [STA-CITE]>In our current environment lenders have more incentive to roll the dice on Joe which ultimately gives a larger number of people the chance to move up economically. [END-CITE]Or it locks Joe into a cycle of debt from which he can never get out of. I am suggesting that this effect is more significant than potential positive events. Most businesses don't massively pick off. [STA-CITE]>Why do you believe the debt works differently in Guatemala and Georgia? [END-CITE]It was a microloaning project and I couldn't find the actual source, I don't know what the source says. Microloans are very different from bank loans. [STA-CITE]>Why do you think the taxpayer is going to happily subsidize crappy loans that people don't have to pay back when they have demonstrated time and again that they have no interest in subsidizing education (which they should). [END-CITE]The rich tax payer would be the one subsidizing them presumably, not the poor ones.

[registereduser2]

[STA-CITE]>I want a law that all debt would have to be tied to income- any debt which was above what a person needed to live a safe and happy life wouldn't be legally enforceable and would be abolished [END-CITE]So struggling small business owners should not have to pay their dept to their employees?..??

[Nepene]

If they refuse to pay their employees wages they promise then whatever laws about debt collection would apply. Presumably whatever income they earn from their business could be garnished to pay their debt, unless this would put them into poverty and cause major problems.

[cacheflow]

What happens when you combine [STA-CITE]> I want a law that all debt would have to be tied to income- any debt which was above what a person needed to live a safe and happy life wouldn't be legally enforceable and would be abolished [END-CITE]and [STA-CITE]> No one should feel worried that due to debts they have that they will lose their family, home, car, stuff like that. [END-CITE]Let's say I'm a highly paid professional. I buy a really expensive house and cars on debt based on my income. It's OK, because I can afford it. Now, I've got a million dollar home and a nice car for my wife and I. Now I quit my high paid lawyer job and do something else. Something which pays a lot less. Can I be free from the worry that I might lose my house or cars? No matter how much I paid for them?

[Nepene]

I more meant that they should lose all access to homes, cars, stuff. For the super rich who own possessions substantially more expensive than the bare minimum as many poor do, I'd have no issue with them being forced to downsize. As I noted, I don't really care that much about the plight of the super rich. If they're forced to sell their house and possibly their car then whatever money they're made to give back shouldn't be so much that it would cause them to be in catastrophic financial issues.

[cacheflow]

So, take the same example and apply it to a middle-class family, or a working poor family. Let's say I buy a cheap house and a secondhand car, then stop working. Am I allowed to keep those?

[Nepene]

If the bank tries to make you repay more than your income, sure. If they allow your interest to build up to excessive levels, also yes. In terms of the mortgage, if you had no income I'd support the only income the bank getting being whatever welfare or low income tax credits a person can get to pay for rental. Removing someone from their home should be seen as a very serious and rare event and not something that can happen accidentally. If it turned out to be a big problem, people doing this, I'd support either an increase in welfare to pay for these things for some sort of testing to see if people were seeking employment. I don't see most people as inherently dishonest, so the law I suggested wouldn't initially be based off that.

[PrimeLegionnaire]

[STA-CITE]>If the bank tries to make you repay more than your income, sure. If they allow your interest to build up to excessive levels, also yes. [END-CITE]So I can buy anything as long as I have zero income afterwards? Because that's a logical consequence of rules configured like this.

[AliceHouse]

Not really. People aren't going to buy houses and cars and then quit their jobs. How will they pay the electric bill or afford gas? Don't be silly.

[PrimeLegionnaire]

But if I am not forced to repay debt, what is stopping me from taking out a huge loan and then quitting my job, thus effectively making my income zero.

[AliceHouse]

Common sense...?

[PrimeLegionnaire]

But a system that forgives debt needs a catch for this. It's non-trivial

[AliceHouse]

Ok then. Let's give it a shot. Ask me for a huge loan.

[Nepene]

I'm not saying you forgive debt for everyone. " any debt which was above what a person needed to live a safe and happy life wouldn't be legally enforceable and would be abolished. " If you take a huge loan you probably don't need all that money to live and so that would be an enforceable debt. I'm also not proposing banning fraud- if you make a loan with no intent to pay it that's still illegal.

[Nepene]

I don't think it's really needed, I suspect most people like having an income and feeling independent and not being dependent on erratic government support, but if people really want it I'm fine with giving the judge who would decide these things discretion to say no and redistribute assets if they feel that you're deliberately trying to defraud an organization.

[jfpbookworm]

You realize that this would basically kill credit for poor people, right? Nobody is going to give a poor person a loan they don't have to pay back.

[Nepene]

So long as whatever loan or debt is reasonable and doesn't cause major problems for their income the debt would be enforceable, and I would be happy if the government would step in to supply loans instead of predatory businesses.

[jfpbookworm]

[STA-CITE]> So long as whatever loan or debt is reasonable and doesn't cause major problems for their income the debt would be enforceable [END-CITE]You're still creating a substantial risk of the debt becoming unenforceable. That's going to raise the interest rates on the loans. [STA-CITE]> I would be happy if the government would step in to supply loans instead of predatory businesses. [END-CITE]Which means that either the government is going to be offering those loans at a loss, or they're going to be offering the same "predatory" terms private lenders do.

[Nepene]

[STA-CITE]>You're still creating a substantial risk of the debt becoming unenforceable. That's going to raise the interest rates on the loans. [END-CITE]For this to change my view I'd need strong evidence that presumably lower interest rates on loans from banks have lead to a substantial increase in quality of life as they have increased. [STA-CITE]>Which means that either the government is going to be offering those loans at a loss, or they're going to be offering the same "predatory" terms private lenders do. [END-CITE]Or they're going to carefully evaluate their loanees and earn a moderate profit based on careful use of statistics. I've seen things from microloans that often even though people can't enforce them strongly they can still earn a profit for people. Assuming the government can't do maths isn't likely to change my view.

[Znyper]

[STA-CITE]>Or they're going to carefully evaluate their loanees and earn a moderate profit based on careful use of statistics. [END-CITE]And current loaners don't? They already know that loaning money to poor people is risky. That's why the interest rate for poorer people is higher. If you make these loans even riskier by making certain loans unenforceable, they won't do any special math to find the perfect loan. Instead, they'll say "this is too risky" and just not make loans to poorer people. Note that by poor people, I'm referring to people whose incomes are below/right around this level you describe on your OP.

[Nepene]

Then I guess they'll lose a lot of special favors and relationships with the government when they no longer support their help the poor arrangements, and government banks will have to do more of the work. I think they are trying to maximize their profit, and in many cases pushing people to the brink of poverty to pay their debts is an effective way to do that. They don't want to push people past the brink of course.

[sousuke]

[STA-CITE]>Then I guess they'll lose a lot of special favors and relationships with the government when they no longer support their help the poor arrangements, and government banks will have to do more of the work. [END-CITE]Oh boy. Just out of curiosity, what sort of "special favors" do you think the government is giving private insurance companies?

[Nepene]

I am confused, I was talking about government special favors to banks, why are you asking me about private insurance companies?

[sousuke]

Sorry, I meant banks. I was thinking insurance because of some parallels that came to mind.

[jfpbookworm]

[STA-CITE]> For this to change my view I'd need strong evidence that presumably lower interest rates on loans from banks have lead to a substantial increase in quality of life as they have increased. [END-CITE]I'm not sure what you mean here. Lower interest rates on a loan mean that your monthly payments are lower, and it's easier to pay off / you have more money available for other things. That's a quality of life increase. [STA-CITE]> Or they're going to carefully evaluate their loanees and earn a moderate profit based on careful use of statistics. [END-CITE]My argument is that lenders already try to do this, in order to remain competitive. [STA-CITE]> I've seen things from microloans that often even though people can't enforce them strongly they can still earn a profit for people. [END-CITE]Microlending has exorbitant interest rates, generally around 30 percent. [Source 1](http://www.kiva.org/about/microfinance) [Source 2](http://www.cbsnews.com/news/microlending-do-good-make-money/) [Source 3](http://www.cgap.org/sites/default/files/Forum-Microcredit%20Interest%20Rates%20and%20Their%20Determinants-June-2013.pdf)

[Nepene]

[STA-CITE]>I'm not sure what you mean here. Lower interest rates on a loan mean that your monthly payments are lower, and it's easier to pay off / you have more money available for other things. That's a quality of life increase. [END-CITE]Or, they randomly jack up the interest rates and people have less money available. I'd need actual evidence that loans generally had a positive effect on people's lives in a way that banks would be best able to do. [STA-CITE]>My argument is that lenders already try to do this, in order to remain competitive. [END-CITE]They have to be competitive to get people to pay whatever is necessary to avoid bankruptcy, not much more competitive than that. [STA-CITE]>Microlending has exorbitant interest rates, generally around 30 percent. Source 1 Source 2 Source 3 [END-CITE]It does.

[cacheflow]

[STA-CITE]> Or, they randomly jack up the interest rates and people have less money available. I'd need actual evidence that loans generally had a positive effect on people's lives in a way that banks would be best able to do. > [END-CITE]That's not how loans work. Generally, you get a loan at a fixed interest rate. I know the interest rate I'll pay for the life of my mortgage. The bank can't just raise the rate because they feel like it. Being able to negotiate for a 3% rate vs a 5% rate on my home loan allows me to have either a) a nicer home for the same monthly payment or b) more disposable income. Both increase my quality of life.

[Nepene]

Depends on the type of loan. Not all are fixed rate, plus some supposedly fixed rate ones can have weird things in the contracts.

[cacheflow]

Yes, there are variable rate loans, usually tied to some sort of market indicator, but almost no loan allows a bank to "randomly jack up the rates". Can you give an example of what you are referring to?

[too_many_bats]

The whole idea of lenders conspiring to steal from people is preposterous--if that were the case, there would be a niche for a lender to provide lower interest rates while still remaining profitable.

[Nepene]

http://en.wikipedia.org/wiki/Adjustable-rate_mortgage "There may be a direct and legally defined link to the underlying index, but where the lender offers no specific link to the underlying market or index the rate can be changed at the lender's discretion. The term "variable-rate mortgage" is most common outside the United States, whilst in the United States, "adjustable-rate mortgage" is most common, and implies a mortgage regulated by the Federal government,[2] with caps on charges. In many countries, adjustable rate mortgages are the norm, and in such places, may simply be referred to as mortgages."

[irondeepbicycle]

Whenever you're thinking about making a public policy, you always need to be cognizant of unintended consequences. In this instance, you'd be removing any incentive the private sector would have to loan money to poor people, period. Poor people would be unable to buy homes, cars, student loans, etc. If you basically decree that people who buy anything on credit should get to keep it, regardless of whether they make payments, you'll be saying that nobody should lend to the poor, ever, end of story. You said in another comment that the government could help give them loans... but that's also debt. Your CMV isn't about exorbitant interest rates, it's about the very concept of debt. You think people should be able to simply pay less than things are worth. Seriously, debt is not some big, scary monster. It's simply an economic condition, and it can be good or bad depending on circumstances.

[Nepene]

[STA-CITE]>In this instance, you'd be removing any incentive the private sector would have to loan money to poor people, period. [END-CITE]Unless they've carefully evaluated the income of said poor people and come up with a fair plan which doesn't cause big problems for their income. [STA-CITE]>If you basically decree that people who buy anything on credit should get to keep it, regardless of whether they make payments, you'll be saying that nobody should lend to the poor, ever, end of story. [END-CITE]There are other ways to ensure compliance, like making the access to other debt dependent on members of your peer group paying, assuming the honesty of people, and higher interest rates that get a higher return from those who are successful and don't get a return from those who go into poverty. [STA-CITE]>You said in another comment that the government could help give them loans... but that's also debt. Your CMV isn't about exorbitant interest rates, it's about the very concept of debt. [END-CITE]You're taking a rather uncharitable interpretation of my argument- I'm fine with loans if people are able to repay them and have an ok car, food, a home, water, electricity, gas. [STA-CITE]>Seriously, debt is not some big, scary monster. [END-CITE]It boosts the suicide rate, that is pretty scary.

[irondeepbicycle]

[STA-CITE]>Unless they've carefully evaluated the income of said poor people and come up with a fair plan which doesn't cause big problems for their income. [END-CITE]This already happens. Have you ever bought a house? The bank wants to know everything about you. They won't loan you money if they don't think you can pay. [STA-CITE]>There are other ways to ensure compliance, like making the access to other debt dependent on members of your peer group paying, assuming the honesty of people, and higher interest rates that get a higher return from those who are successful and don't get a return from those who go into poverty. [END-CITE]I'm not really sure what any of this means. Peer group? You can get a loan if your friends will pay it off for you? Isn't that just cosigning? [STA-CITE]>You're taking a rather uncharitable interpretation of my argument- I'm fine with loans if people are able to repay them and have an ok car, food, a home, water, electricity, gas. [END-CITE]Again, I'm not sure what this means. Youre saying that I can put 20% down on a home, not pay the rest off, and be ok because debt is bad? The relevant economic principle is "moral hazard". [STA-CITE]>It boosts the suicide rate, that is pretty scary. [END-CITE]No, that's a causal argument, which your sources don't make. Plus, poverty in general is a predictor for depression and suicide, so isn't that a better target?

[Nepene]

[STA-CITE]>This already happens. Have you ever bought a house? The bank wants to know everything about you. They won't loan you money if they don't think you can pay. [END-CITE]They want you to be able to pay, they don't necessarily care if you miss medical trips because you're paying too much to afford medical care, or if you drive an environmentally unfriendly car because you can't afford to fix problems, or if you miss meals to pay for your debts. [STA-CITE]>I'm not really sure what any of this means. Peer group? You can get a loan if your friends will pay it off for you? Isn't that just cosigning? [END-CITE]If you default on a loan your peer group no longer gets loans in this scenario. Though there are other ways to secure debts. [STA-CITE]>Again, I'm not sure what this means. Youre saying that I can put 20% down on a home, not pay the rest off, and be ok because debt is bad? The relevant economic principle is "moral hazard". [END-CITE]I also support various welfare things. Whatever low income credits people had would presumably go to mortgage repayments assuming mortgage repayments weren't too high. [STA-CITE]>No, that's a causal argument, which your sources don't make. Plus, poverty in general is a predictor for depression and suicide, so isn't that a better target? [END-CITE]Well, I strongly suspect it's a positive causal argument given the strength of the relationship and the many stories of such. You can target both poverty and debt.

[irondeepbicycle]

[STA-CITE]>They want you to be able to pay, they don't necessarily care if you miss medical trips because you're paying too much to afford medical care [END-CITE]I'm still having a hard time pinning down your view. This sentiment describes all businesses, not just businesses that sell based on credit. Are you saying that businesses should be required to be charities? [STA-CITE]>If you default on a loan your peer group no longer gets loans in this scenario. Though there are other ways to secure debts. [END-CITE]Ok.... if I default, none of my friends get loans either? How are you defining peer group? [STA-CITE]>Well, I strongly suspect it's a positive causal argument given the strength of the relationship and the many stories of such. [END-CITE]This is a non sequitur, there is no reason why the strength of a relationship would imply a particular causal relationship. Poverty could cause both. Bottom line, it sounds like you're arguing against all forms of banking, instead wanting bankers to be charitable, motivated by goodness of their hearts. Is that close?

[Nepene]

[STA-CITE]>I'm still having a hard time pinning down your view. This sentiment describes all businesses, not just businesses that sell based on credit. Are you saying that businesses should be required to be charities? [END-CITE]Since I didn't state that, no, that's not my view. I would support businesses being forced to by law to care about your wellbeing. They have a crap record when doing it on their own. [STA-CITE]>Ok.... if I default, none of my friends get loans either? How are you defining peer group? [END-CITE]The bank is presumably. Also remember i was replying to this. [STA-CITE]>If you basically decree that people who buy anything on credit should get to keep it, regardless of whether they make payments, you'll be saying that nobody should lend to the poor, ever, end of story. [END-CITE][STA-CITE]>Bottom line, it sounds like you're arguing against all forms of banking, instead wanting bankers to be charitable, motivated by goodness of their hearts. Is that close? [END-CITE]This interaction isn't very enjoyable, you're repeatedly stating views I don't actually have. I am not basically saying that, or bottom line arguing that.

[irondeepbicycle]

OK so help me out. 1. You DO want banks to be operated for profit (as you stated in the comment I'm replying to). 2. You DON'T want banks to stop giving loans to poor people, en masse (as insinuated in [this comment](http://www.reddit.com/r/changemyview/comments/2yo9nm/cmv_governments_should_enact_a_true_jubilee_for/cpbegcx)). 3. You want banks to go beyond their normal due diligence, and make sure that the people they're loaning to can pay back their loans, AND it won't be too much for them to handle considering their other life decisions (as said in [this comment](http://www.reddit.com/r/changemyview/comments/2yo9nm/cmv_governments_should_enact_a_true_jubilee_for/cpbfv74)). 4. You DO want people to be able to opt out of loans they take out, on the grounds that it depresses them to keep their loans ("No one should feel worried that due to debts they have that they will lose their family, home, car, stuff like that."). 5. If people opt out of the loans that they've taken out, you DON'T think they should lose their home/car/possessions ("No one should feel worried that due to debts they have that they will lose their family, home, car, stuff like that."). Can you please clarify the points I've misrepresented? I understand that what I'm saying is not directly what you've stated, but I'm hoping you'll see what your view leads to. Moral hazard is quite well studied in economics. If you tell people that they'll keep their homes/cars/whatevers, even if they can't pay off the loan, you will be incentivizing them to take out way, way more risky loans, since they know they aren't bearing the full costs of their actions. If the people taking the loans out aren't taking the losses, who is? Either the banks (which means they'll just stop the practice altogether) or the government (higher taxes/less money around for welfare programs/something else?).

[Nepene]

1. I am fine with them being run for profit, but I wouldn't say I DO want it. Maybe they could be run as public utilities, with a limited profit or such, but I'm not sure exactly what I want them to do. 2. I guess. I'd prefer if the government ran it. 3. Due diligence would be good. 4. No, if they can't afford their debts then they should be reduced. If they can afford their debts then they can't opt out. 5. Yes, though for secured loans I'd be fine with banks retaining a stake in the money from selling the possessions. This would only affect people who couldn't afford their loans. [STA-CITE]>If you tell people that they'll keep their homes/cars/whatevers, even if they can't pay off the loan, you will be incentivizing them to take out way, way more risky loans, since they know they aren't bearing the full costs of their actions. [END-CITE]Do you have a study that shows this would happen, and isn't currently happening? [STA-CITE]>If the people taking the loans out aren't taking the losses, who is? Either the banks (which means they'll just stop the practice altogether) or the government (higher taxes/less money around for welfare programs/something else?). [END-CITE]I'd still be fine with them making loans to people who could actually afford to pay their debts.

[irondeepbicycle]

[STA-CITE]> Do you have a study that shows this would happen, and isn't currently happening? [END-CITE]It's hard to cite a specific example, because this is a very basic principle of economics, which has been known for literally centuries. If you aren't familiar with it, I'd suggest [this Wiki article](https://en.wikipedia.org/wiki/Moral_hazard). Something similar to what you're talking about was one of the causes of the 2008-09 recession. Banks lent a lot of subprime mortgages (i.e. mortgages to people who can't afford them) because they knew they wouldn't be bearing the costs if/when they defaulted. That was predatory behavior, definitely. It's also been largely outlawed already. But your solution would lump in a lot of good debt with all the bad debt, by simply making debt optional. I know "making debt optional" isn't how you'd put it, but it is an accurate description of your view. If people knew they weren't going to lose their possessions if they didn't pay off their debt, this is what the result would be.

[Nepene]

I mean an actual citation that people reduce their spending because they are aware they may lose their homes, and that this is a major factor in what they do.

[topherkeey]

Based on perusing your various replies on this thread, it seems to me that your CMV boils down to two things: #1. Total Debt Should be Limited by Salary You want all debt over someone's capacity to pay (i.e. salary) to be forgiven. Your contention is that removing the stress of having to pay off loans would free up the lower class to move upward. On the surface, this seems like a good thing. Removing stress from people's lives is generally a good thing. But I think the claim that this will help the lower classes is poorly founded. In practice, this approach to debt forgiveness would limit the amount of money a poor person could loan. If I'm a bank and a poor person comes in to ask for money, I'd of course run a credit check on them. If I see that they already have the "cap" (based on their salary) loaned out, why would I loan them any more money? Anything over their cap would be forgiven, so if I give them anything over that cap, it'd be forgiven. I have no clue if interest rates would change at all, but I can claim (with a good amount of certainty), that banks would just deny people loans more often. From a financial institution's perspective, it wouldn't make sense to give anyone a loan when they already have their cap loaned out. This means if I'm living in poverty (i.e. annual income of [**less than $19k**](http://aspe.hhs.gov/poverty/14poverty.cfm) for a family of 3), the most I could get as a loan would be fairly low. #2. Debt collection should be through wage garnishing Your contention is that wage garnishing is less stressful than having debt collectors call or having repo agencies seize your car. I won't deny the fact that collection agencies cause stress and repo agencies don't care about your personal situation. They're there to do their job (i.e. collect what's technically not yours). What you're ignoring is the fact that if someone has borrowed a substantial amount of money (as compared to their income), they're in a situation where they need disposable income. If they cannot pay off these loans, you argue that the best way to collect these loans would be by garnishing their wages. You're essentially reducing the amount of money they take home, when they're already in a situation where they cannot support their lifestyle based on their income. I don't know your financial situation, but when I only have $2 in my bank account, I'm under a lot more stress than if I were to have $300 in my bank account with $600 in debt (and yes, I've been in both of those situations in my lifetime). Yes, by having the $2, I wouldn't be in debt, but I also wouldn't be able to buy groceries, gas, etc. You could say that these people could just get another loan to get the spending money they need. The issue is that no bank would give them a loan if they are already at the wage garnishing stage (remember the caps from stage 1). So they're now in a situation where they are completely stuck: any salary they get would be garnished down to unlivable conditions, and no banks would give them loans since the bank is guaranteed to have that debt forgiven. **How is this a better system than what we have now?**

[Nepene]

[STA-CITE]>From a financial institution's perspective, it wouldn't make sense to give anyone a loan when they already have their cap loaned out. This means if I'm living in poverty (i.e. annual income of less than $19k for a family of 3), the most I could get as a loan would be fairly low. [END-CITE]Sounds good to me, you shouldn't give people loans they can't afford. [STA-CITE]>What you're ignoring is the fact that if someone has borrowed a substantial amount of money (as compared to their income), they're in a situation where they need disposable income. If they cannot pay off these loans, you argue that the best way to collect these loans would be by garnishing their wages. You're essentially reducing the amount of money they take home, when they're already in a situation where they cannot support their lifestyle based on their income. [END-CITE]People currently pay off their debts, I'm not entirely sure what your argument is but it's clearly incorrect. What I imagine in my ideal world would happen is that if someone was spending beyond their means then at some point their debt would get too high and either through automatic detection things or them asking they'd speak to a judge and some of their debts would be cancelled or reduced since they shouldn't have been approved. [STA-CITE]>I don't know your financial situation, but when I only have $2 in my bank account, I'm under a lot more stress than if I were to have $300 in my bank account with $600 in debt (and yes, I've been in both of those situations in my lifetime). Yes, by having the $2, I wouldn't be in debt, but I also wouldn't be able to buy groceries, gas, etc. [END-CITE]As I noted, I would strongly support the government getting involved more in lending. Payday lender's make a lot, I imagine a less profit seeking government agency could loan to people in a less predatory manner and make a profit. [STA-CITE]>So they're now in a situation where they are completely stuck: any salary they get would be garnished down to unlivable conditions, and no banks would give them loans since the bank is guaranteed to have that debt forgiven. [END-CITE]Nay, as I said, they should only be made to pay what they can afford to pay. If they can't pay their debts then their wages wouldn't be garnished under my system and their debts would be cancelled. You'd have to earn above a certain amount to have debts of a certain amount. Anyway, I doubt I am going to be convinced by an argument that assumes I support garnishing wages to impossible levels.

[topherkeey]

[STA-CITE]> People currently pay off their debts, I'm not entirely sure what your argument is but it's clearly incorrect. [END-CITE]If people are paying off their debt (like you claim they are), then your original argument is null and void. People won't be going to collections, debts wouldn't need to be forgiven, and no one would be feeling excess stress. More importantly, can you cite examples/studies that claim that people currently pay of their debts? Even with a cursory Google search, I was able to find [**this article**](http://www.usatoday.com/story/money/personalfinance/2014/07/29/america-debt-loads/13152651/) (from July 2014) pointing out that 35% of Americans are in collections for debt. [STA-CITE]>What I imagine in my ideal world would happen is that if someone was spending beyond their means then at some point their debt would get too high and either through automatic detection things or them asking they'd speak to a judge and some of their debts would be cancelled or reduced since they **shouldn't have been approved.** [END-CITE]This is essentially my point: financial institutions (including the government in your scenario), would have no incentive to approve loans for the poor. Why would any agency, government or private, give money to people when there is no guarantee that they'd get any back. In fact, **the whole system would be rigged** so that they wouldn't be getting all of their money back. Since you're giving people an "easy out" to reprieve their debt, what would stop them from abusing that system? If I can spend beyond my means and just have my debt wiped clean in a courthouse, what is limiting me from spending beyond my means? Your answer is that the government won't give them any loans. That's fine, but what's the difference between someone truly spending beyond their means and someone who fell upon hard times? [STA-CITE]> As I noted, I would strongly support the government getting involved more in lending. [END-CITE]You're only looking at this from the angle of the person receiving the loan. What I said about financial institutions having no incentive to give out loans still stands for the government. Instead of putting the financial burden on financial institutions, you're putting it on the government, an institution that is not exactly known for it's efficiency or cost-savings. You state that the government would be able to make a profit on these loans without stating how they'd recover from the staggering amounts of debt that they'd be forgiving each year. You reference the staggering amounts of profits of pay-day lenders, but then you're also significantly limiting the way they can do business (namely, collecting on outstanding debt). If you can explain how this system would be income-positive in the long-run, I'd love to hear your reasoning behind it. [STA-CITE]> Anyway, I doubt I am going to be convinced by an argument... [END-CITE]You seem to enjoy saying this. From my experience in CMV, I can tell you that many times, a changed view happens through actually walking down doors opened by commenters. By dismissing an argument in such a way, you're limiting your ability to change your view, as well as any arguments that could be made by looking into things a bit more closely. I strongly encourage that you don't dismiss arguments in such a cavalier manner. [STA-CITE]>...that assumes I support garnishing wages to impossible levels. [END-CITE]I never said that you support this. I said that it's likely that if someone is in a position where they are defaulting on their loans, then **any** amount of wage garnishing would likely be "impossible levels." Your argument is that wage garnishing would only be used in cases where people are able to pay off their loans, but won't. That's fair, but what is the marker that someone is able to pay off their loans? Income alone is not a good indication of ability to pay off loans. Cost of living is staggeringly different across the country, hell, even so within any given city.

[Nepene]

[STA-CITE]> If people are paying off their debt (like you claim they are), then your original argument is null and void. People won't be going to collections, debts wouldn't need to be forgiven, and no one would be feeling excess stress. [END-CITE]I meant that some people can pay their debts and they should be the ones who get loans, not people who are unable to pay debts, since I thought you were suggesting no one could ever pay for their debts. [STA-CITE]>Why would any agency, government or private, give money to people when there is no guarantee that they'd get any back. In fact, the whole system would be rigged so that they wouldn't be getting all of their money back. [END-CITE]There's already no guarantee that you'll get all your money back. I'd hope that most banking profit comes from stable individuals who can pay their fees, not from those who are unable to pay and have to have their things repossessed and wages garnished and such. [STA-CITE]>If I can spend beyond my means and just have my debt wiped clean in a courthouse, what is limiting me from spending beyond my means? [END-CITE]Your credit rating generally. People normally have to build up a credit rating over time by acting a reliable and consistent manner with debt to get loaned more money. Plus, as I've noted elsewhere, you could only get your debt wiped if you didn't have enough income to pay whatever, so if you liked having extra nice things and a good job you'd have to pay. [STA-CITE]>That's fine, but what's the difference between someone truly spending beyond their means and someone who fell upon hard times? [END-CITE]Lenders often find these things out by asking questions e.g. do you gamble, do you save etc. I'm not suggesting we ban them from asking people questions. [STA-CITE]>You seem to enjoy saying this. From my experience in CMV, I can tell you that many times, a changed view happens through actually walking down doors opened by commenters. [END-CITE]Some doors are productive to walk down, some aren't. Obviously arguments which assume I believe things I don't are less productive doors. [STA-CITE]>That's fair, but what is the marker that someone is able to pay off their loans? Income alone is not a good indication of ability to pay off loans. Cost of living is staggeringly different across the country, hell, even so within any given city. [END-CITE]Actual professionals should decide the exact details. Something based on cost of living in the area and income probably.

[natha105]

You can't do this. Full stop. There are a huge number of reasons but lets start with the first things to happen: 1. Credit to the poor. If there is any question that lending to a person might be a problem that loan will not be made. Credit cards for the poor and lower middle income people would immediately be revoked because suddenly we can't count on bankruptcy and asset liquidation as backstopping their debts. 2. Loan structures. We would still be able to borrow the same amount of money providing it could be structured correctly. Instead of a bank lending you the money to buy a house (a mortgage) the bank would buy the house and rent it to you with a promise to sell it to you under certain terms. The big difference? You don't have any equity in the house. Whatever your nominal equity is now completely held hostage by the bank as a guarantee on your future performance of your contract. If you have one year left on your "mortgage" and hit financial troubles you can't borrow against your equity because you don't have any. Instead you will have to pay come hell or high water or risk the bank keeping the house even though you paid them 99% of what you "owe" them. 3. Loan sharks. You know who doesn't need collection agencies or to worry about the niceties of laws? criminals. Their security is breaking your legs if you don't pay them. When people need money and can't borrow it they turn to loan sharks. 4. Punishes savers. What would happen if today a chunk of debt was written off? Say 10% of outstanding debt is outside your arbitrary line. Currently consumer debt is 12 trillion dollars in the US. If we wipe 1.2 trillion off of that who is left holding the bag? I have no idea: do you? Could it be your parent's retirement account that takes a hit? Probably. Could it be you who lent $100 to a friend that you need back to make your rent this month? Maybe. Sure JP Morgan Chase would be hit but we would be punching a lot of people in the face to kick the big banks in the balls. So, after the dust settles what would be the long term changes? The rich would stay rich. The middle class who least need your protections would have less access to credit (which hurts the economy without helping them). The poor would get their legs broken instead of a call from a collection agency.

[Nepene]

[STA-CITE]>Credit to the poor. If there is any question that lending to a person might be a problem that loan will not be made. Credit cards for the poor and lower middle income people would immediately be revoked because suddenly we can't count on bankruptcy and asset liquidation as backstopping their debts. [END-CITE]Do you have evidence that without bankruptcy and asset liquidation banks would no longer be profitable? Perhaps a breakdown of their profits on various customers? [STA-CITE]>Instead of a bank lending you the money to buy a house (a mortgage) the bank would buy the house and rent it to you with a promise to sell it to you under certain terms. [END-CITE]If banks make new, predatory loans, I am fine with the government stepping in. [STA-CITE]>Loan sharks. You know who doesn't need collection agencies or to worry about the niceties of laws? criminals. Their security is breaking your legs if you don't pay them. When people need money and can't borrow it they turn to loan sharks. [END-CITE]http://www.theguardian.com/commentisfree/2011/feb/03/legal-loan-sharks-regulating Feels to me like this is the current situation. I'd really prefer government loans to the poor. Wiping out the (legal) debts of these loan sharks is part of why I support this. [STA-CITE]>Punishes savers. [END-CITE]As I noted, my priority isn't protecting the rich who have large savings. Also my family wouldn't be affected, my parents and me only make ethical investments into companies which avoid success through slave labour, debt imprisonment and things like that. Since I view the things debters do with minimal love I don't have much sympathy for those who invested their savings into debt.

[natha105]

The first point isn't that they couldn't be profitable, it is that there would be an unknown risk and so they wouldn't lend anymore. There would be a short term credit shock and, likely, revolving lines of credit would die for lower class workers who are not CLEARLY far away from being able to cancel their debts. I am saying they won't make loans at all. The bank will own it outright and you will just rent it from them. Seriously unless you just want to outlaw any kind of financial institution the banks will find creative ways around any regulation you want to pass. How would you draft a law to avoid the bank buying the house and then renting it to the "borrower"? I'm not talking about the "loan sharks" (who i hate btw) of payday and other subprime lenders. I am talking about literal loan sharks who will literally murder you if you don't pay whatever they say you owe them. "Unfortunately Mr. Shark the law is clear my debt to you has been expunged." Loan shark smiles, pulls out a knife, and stabs the guy in the leg "I'm sorry I didn't hear you. You were saying something about you paying me back tomorrow." It is an invitation to organized crime, corruption, and brutality in the same way prohibition was. People want to borrow money, if we try and stop them they will find ways around it that are much worse than the current ways. Take a look at Sharia compliant lending. Im not saying you are trying to protect the rich. I am saying you are trying to help the poor but you would really, really, hurt them.

[Nepene]

[STA-CITE]>The first point isn't that they couldn't be profitable, it is that there would be an unknown risk and so they wouldn't lend anymore. [END-CITE]Do you have evidence this is true? [STA-CITE]>How would you draft a law to avoid the bank buying the house and then renting it to the "borrower"? [END-CITE]A mix of private pressure on them to do stuff and laws crafted by lawmakers. [STA-CITE]>Loan shark smiles, pulls out a knife, and stabs the guy in the leg "I'm sorry I didn't hear you. You were saying something about you paying me back tomorrow." [END-CITE]http://www.cesi.org.uk/publications/taking-money-lenders-lessons-japan From what I've seen from studies, increased consumer protection for debt is actually correlated with less loan sharks.

[natha105]

What you are proposing isn't more consumer protection, it is capping the maximum amount of credit a person can access. If anything private pressure would be for them to innovate around the law. Seriously look at Sharia compliant lending. All the religious pressure in the world not to lend yet the demands of finance win and "loans" are made. And no I don't have any evidence as to what would happen in a hypothetical situation other than asking you to consider how banks would respond to an unknown, and potentially huge, risk.

[Nepene]

I thought about this post further. While most of my view isn't changed, thinking about structured loans I can't see a really good way to handle those in a Jubilee, and they're pretty beneficial to the poor- as you note, if this was done banks would likely be less compliant with getting people into homes. ∆ So in this hypothetical plan, while new rules might be made on secured loans to reduce the likelihood of homelessness, I think now it would be inappropriate to fully forgive them. Perhaps you could encourage interest rates on them to lower by saying they were the most secure investment to store your money, securing them for banks and people.

[DeltaBot]

Confirmed: 1 delta awarded to /u/natha105. [^natha105's ^delta ^history](/r/ChangeMyView/wiki/user/natha105) ^| [^delta ^system ^explained](/r/ChangeMyView/wiki/DeltaBot)

[natha105]

Thanks for the delta!

[Nepene]

You're welcome. Thanks for changing my view.