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Liz Pulliam Weston – Debt: And you think you’ve got it bad?
By JLP | November 3, 2009
Interesting article by Liz Pulliam Weston over on MoneyCentral titled, Debt: And you think you’ve got it bad? The article compares the United States’ bankruptcy system to other systems around the world. People in the U.S. have it made in comparison. For instance, check out the Islamic system:
You also can get loans in Muslim countries, although they work differently. People who want to buy a car without paying cash go to a bank and write a series of postdated checks, to be cashed once a month until the debt is fully paid. A similar system is employed for apartment rentals.
In Dubai, if you don’t have enough cash in your account to cover the check in any given month, watch out: The bank can get a warrant for your arrest, and you can be jailed, Rhode said. Those in default also can have their passports seized, preventing them from leaving the country.
Something I thought about during the homeowner bailouts was that we should require some sort of community service from those who are receiving taxpayer help. There is a lot of trash to pick up and graffiti that needs to be painted over. There are also lots of neighborhoods that need cleaning up. Radical? Yes. I’m sure my thoughts will bother some people.
Topics: Miscellaneous | 16 Comments »
November 3rd, 2009 at 1:04 pm
This doesn’t sound too harsh, by some standards. It’s just a way to encourage a ‘guaranteed’ repayment. Honestly, I think people should be held more accountable for their debts than what is currently being done in this country.
November 3rd, 2009 at 1:38 pm
Your community service idea will only seem harsh to those who would have to perform it. Certainly not to those who are paying for it.
November 3rd, 2009 at 1:50 pm
I like the idea of bankruptcy including a community service component. (I’m usually one of the people who objects to your ideas, so I’m not sure if this means it’s a good one or not!)
November 3rd, 2009 at 2:33 pm
I personally don’t see any problems with the bankruptcy laws in the US, so I don’t see why it should be changed.
As for the “community service”, great idea for people who are collecting welfare (and are not working), but I don’t want to make someone who actually has a job to stop doing that to perform “community service”.
And those nuts in Dubai: how exactly are you supposed to pay your debts off in jail? Or is this some kind of extortion to have family members pay off the debt?
November 3rd, 2009 at 3:07 pm
A little humiliation could go a long way.
I think its ridiculous that food stamps come on a debit card now. It makes people feel like a normal American just swiping a card for some free food. I think all their food should come from a special aisle in a bright orange box. The people who really need food will still be thankful. And the moochers will at the least get a little public motivation while going through check out.
November 3rd, 2009 at 4:52 pm
Gee, Kevin, they are still normal Americans. I have friends down on their luck. I hate that I have more than one who needs something like foodstamps but when you lose a job or a spouse and have kids the last thing you want to do is feel more humiliated. Just because you see perpetual users of the system doesn’t mean there are regular people out there who can’t use a little compassion while they work things out. Hope you never need to receive assistance. It can be humiliating enough just to ask for it.
November 3rd, 2009 at 5:42 pm
“I like the idea of bankruptcy including a community service component. ”
It doesn’t really help the creditors. Now, if the person claiming bankruptcy were to perform some service for the creditors in exchange for money or if they had to repay the debt should their fortune change. Otherwise it doesn’t seem right – the debts are forgiven and even if someone’s fortune turns, he or she still don’t have to return the money.
I think we should look at it from creditor’s perspective: what would you want if somebody owed you money – a community service, a service to you, or a debt repaid at some later date maybe at some kind of schedule? Also, how would you feel if someone who owes you money claims bankruptcy but then wins a million in a lottery. I’d say – either have the guy work for the creditor or have bankruptcy judge mediate with the creditor to agree on some kind of a repayment schedule.
“And those nuts in Dubai: how exactly are you supposed to pay your debts off in jail?”
Exactly. Remember “Little Dorritt”? This has already been tried in England and this was the main problem – if someone is in jail, someone cannot pay off the debt.
November 3rd, 2009 at 5:54 pm
I don’t like the idea of encouraging working people to do volunteer work. Working people don’t have time to live their own lives.
There is no debtor’s prison in the USA, and bankruptcy is accepted. That simply means that debts don’t have to be paid. That is just the way it is. I am not a proponent for debtor’s prison, but credit and debt are the ways of this country – and the American Dream of paying on a loan for 30 years while claiming to own the property is the basis of it.
November 3rd, 2009 at 10:27 pm
“and the American Dream of paying on a loan for 30 years while claiming to own the property is the basis of it.”
This is a strange statement, and I don’t see what the ability to take a mortgage has to do with bankruptcy laws. You are saying like you are entitled to a house. Nobody prevents you from paying cash for home, taking a loan for 5 years only or buying a smaller property e.g. a one bedroom for two people or a two bedroom for a family with a child. In Europe, by the way, people on average have a lot smaller living space and they save for many years to buy it. Oh, and for the record – I was born in a communal apartment in St Petersburg, Russia where me, my parents and maternal grandparents shared one room in an apartment with 3 more families with one kitchen and no bathroom (had to go to public bath house). When I was four my grandfather managed to get us a whole apartment to ourselves – a tiny two bedrooms (the whole of which would fit in a living room in a normal US house) for 5 people. So be grateful for an opportunity to buy a home of your own.
Plus, if you don’t pay for your own home for 30 years, you pay rent. In normal circumstances this amount is equivalent to what one pays on a similar property if not right away than in a couple of years. If it is considerably more expensive to buy then maybe you aren’t looking at equivalent properties or real estate is overvalued in a particular time and one should wait and rent.
Regardless, I don’t see what it has to do with bankruptcy laws. Plus, right now it’s not just people with some serious emergencies like medical issues who are claiming bankruptcy but people who have simply lived beyond their means.
By the way – how would you like it if an acquintance you lend your money to doesn’t return it?
November 3rd, 2009 at 11:22 pm
I would hope you also mean Wall Street and Bank executives who peddled the money to the debt addicts. Your post sounds typical of management types it is never a bailout for a bank’s management team but somehow it is only a bailout for the homeowner.
November 3rd, 2009 at 11:27 pm
Hogan,
I have always been critical of ALL THE BAILOUTS!
November 4th, 2009 at 8:32 am
Wow, a bit harsh, but I’m sure it does encourage prompt repayment! Talk about incentive not try and live on credit.
November 4th, 2009 at 11:17 pm
@ Kevin – theft was a big motivator in the switch to debit cards. Mail theft was a huge problem in the delivery of any type of fiscal assistance. It made it more dangerous for those who carried the mail and those who received the mail. That was one of the main reasons for the switch to the debt card system. I agree whole-heatedly with you that its not a good delivery method – not because it shames the recipient to use something akin to a coupon, but because using the debit card is too much like using a credit card, which could be one reason this person has financial problems. But when you consider the safety of mail carriers and recipients and that the criminals were the ones benefiting from theft of food stamps or welfare checks I’m glad they’ve switched to this system.
November 5th, 2009 at 10:55 am
I wouldn’t have a problem with it as long as corporations have their employees out there doing it as well. I’ve never heard a Republican politician yet who didn’t love corporate bankruptcy and believe it is vital to the success of the United States.
November 6th, 2009 at 2:35 am
Bankruptcy (both for corporates and individuals) is a useful process and preferrable to to debtors prison, work houses etc. It’s also preferrable to bail outs, whether at a corporate level (AIG etc) or at an individual level (mortgage relief etc).
I agree with comments that community service is a bad idea if it takes people away from paid employment. This does not mean it cannot be performed on weekends.
November 6th, 2009 at 6:11 pm
It isn’t the people that can’t pay their mortgage that need to be punished for the bailout. It’s the heads of the soul-sucking corporations that tricked them into loans they couldn’t afford, and profited off it.