Can Bankruptcy be a Greater Good

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After the Jan 1st they will start deducting twice the SS taxes to recover what people elected to not have withheld now.

We did not give any of the people we do payroll for the option to stop the SS withholding. Due to the general nature of people spending what they take home, we felt it would cause them financial hardship at the first part of next year.
 
After the Jan 1st they will start deducting twice the SS taxes to recover what people elected to not have withheld now.

Our tax refund might help with that. Thanks for sharing.

I am wondering if it would be smarter to put that in a savings account or simply add it to my withholdings and get it as a refund.
 
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Whatever works for you.

But you do understand where I am coming from for those who are unable or unwilling to save the extra now being hurt by having to pay it back after the first of the year.
 
farronwolf said:
But you do understand where I am coming from for those who are unable or unwilling to save the extra now being hurt by having to pay it back after the first of the year.
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Oh yeah. My wife brought up the same thing. She thinks it’s idiotic. She’s very wise.

If someone cannot afford their expenses where they need a SS subsidy now, how are they supposed to go back to a situation where they have to pay their SS taxes again and even worse have to pay it twice?
 
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As the owner of a business that extends credit to customers, my view of bankruptcy is skewed. I will keep those views to myself because they are admittedly harsh.
 
Just as the consumer has an obligation to pay their debts, creditors have obligations to make sound lending decisions.

I have little sympathy for lenders who take risk to maximize profits.
 
Businesses such as mine exist to make a profit. The implications of greed that you allude to are unfounded. You are entitled to your opinion on the subject no doubt, but sketchy lending decisions to maximize profit is ridiculous. It is those profits that allow businesses to pay their employees a fair wage, provide for their health and retirement, donate to churches and civic organizations to make the communities they exist in better for everyone, and put food in the table of the owners. When they get hit with a bankruptcy the effects are farther reaching than most people have thought about. Greed rarely enters into the picture.
 
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I have mixed feelings about current bankruptcy laws.

I feel consumers should be more careful about managing their own resources.
But I have also seen many lenders taking advantage of people because they can.
There is a fine line between getting a sound return on investment and usury. Many companies cross it.
 
In my opinion anyone using a credit card is agreeing to usury.
That includes me, because I use credit cards. But I avoid usury by paying them in full each month.
 
JimG said:
In my opinion anyone using a credit card is agreeing to usury.
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Would that everyone was educated in how that works.

I have seen people that ended up with penalties and interest that was higher than the initial loan amount.
Why would they sign up for such a raw deal?
They didn’t. The credit card company changed the terms based on some hidden legalese that no one but their own lawyers could fathom.

Perhaps what we need is mandatory economic lessons as a requirement for bankruptcy declaration.
 
JimG said:
In my opinion anyone using a credit card is agreeing to usury.
That includes me, because I use credit cards. But I avoid usury by paying them in full each month.
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They are only agreeing to usury if they let themselves be.

If everyone did as we do and pay off the credit card in full when the bill comes in, we can actually come out ahead. Many credit cards have perks, whether cash back, airline miles, discounts on certain purchases etc.

Unfortunately too many people are fairly ignorant when it comes to personal management and end up paying much more for things in the long run and end up in financial distress at times.
 
EricF said:
Greed rarely enters into the picture.
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Remember the financial problems in 2008 which caused the recession?

Subprime mortgages being bundled and sent down the line investors. Did you watch any of the hearings with the CEO’s of the big banks and housing lenders?

No financial institutions have ever been in the news with fines from unscrupulous practices of one form or another? I am not going to bother to look them up and post links, since if you are in the business you will be aware of many of them.

If those aren’t examples of greed entering the picture, well we will have to agree to disagree.
 
Greed does enter the picture, but I suspect there are many factors. If Bank X makes risky loans & packages them to investors due to greed, Bank Y may begin doing the same thing - not necessarily out of greed per se, but because they don’t want to fall behind and surrender that business to Bank X. I don’t think there’s really an easy way to know; just sort of thinking out loud.
 
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whichwaytogo47 said:
Because creditors are compensated for risk by being allowed to charge high interest.
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this is a misunderstanding of both risk and interest. Interest has nothing to do with risk. If interest was tied to risk then interest would only be applied to loans that have not been paid on time. Furthermore, high interest only increases the risk because it makes it more likely that a person will default.

Interest is purely 100% about making money. It is not about risk, it is not about inflation (otherwise interest rates would never go higher than the average rate of inflation), it is not about missed opportunity (no one can know the future) it is not about the difference between paper money and gold… it is purely and absolutely a scheme to make money.
 
When salaries and bonuses are tied to stock prices for top executives as opposed to actual business practices and stability there will tend to be issues in the long run.

Yes, they must remain competitive, and many factors come into play.

Usually the small locally owned banks, and credit unions tend to have everyone’s interest in mind than the larger institutions, at least that is my take on it.
 
JimG said:
In my opinion anyone using a credit card is agreeing to usury.
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According to the theologians, a person does not sin by accepting the terms of a usurious loan. However, it is always sinful to give out usurious loans, regardless of whether the borrower has agreed to it or not.
 
farronwolf said:
Usually the small locally owned banks, and credit unions tend to have everyone’s interest in mind than the larger institutions, at least that is my take on it.
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-Yes, I’d go along with that,strongly in fact. I have always found small local banks preferable for many reasons, especially if they are the unicorn that retains all mortgages they make. They are also much more responsive to customers IMHO, particularly ones with problems. Need a copy of your note? Or help with loan servicing? A mortgage check got misapplied? Good luck getting help from, say, Chase or Bank of America (and your note is allegedly in a vault like 900 miles away, or your servicer literally refuses to tell you who owns the note - I’ve known that to happen).
 
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Got to completely disagree with most all of your post.

Interest rates can be a direct reflection of risk. My wife and I’s credit score is usually between 820 and 830, we get the best interest rates available at all times. The lower your credit rating, the more interest you will end up paying. Check any financial institutions listed rates, and they will vary based on credit rating.

Financial institutions must make money. If you deposit money into a savings, cd, ira whatever you earn interest on that money. That costs the institution, they don’t make any money on deposits which is why they are recorded as liabilities.

They only make money by taking a portion of the deposits (they can’t use them all) and lending that money out at a higher rate than they are paying on deposits. The difference between what they earn on the loans and what they are paying on the deposits is what they have to pay their bills with. Salaries, utilities, building ect.

This is a pretty simplistic breakdown of it, but explains why they can’ just base interest on inflation.
 
I am not saying banks don’t pretend interest is about risk, I am saying that this is merely a polite fiction.

In truth, the reason why interest rates are higher for risky loans is because the banks are seeking a good excuse to steal the collateral. They intentionally make the loan riskier.

I do not put my money in any kind of savings account or retirement for the simple reason that I believe all interest to be usury and I refuse to benefit off of what I believe to be a sinful system.
 
Useless said:
In truth, the reason why interest rates are higher for risky loans is because the banks are seeking a good excuse to steal the collateral. They intentionally make the loan riskier
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–This is factually false. In fact, it’s so false I don’t know where to begin. “Steal the collateral?” Do you really believe when the bank lends you, say, $500k to buy a home, they do so intending to steal the home itself? The same one they gave you $500k for? Reality says you’re wrong - particularly since if they foreclose they often get a lot less back than they lend the borrower.

Going further, really, the chief “collateral” isn’t the house in my hypothetical; the collateral is your earning power to pay the loan back. If you were right, a bank would lend a million dollars to an unemployed person, or a guy with a $20k income, since they would just “steal the collateral” (the home!) anyway. really, the best “collateral” a borrower can offer is their income; the hard collateral is the backstop for the bank if the borrower loses his/her job or otherwise doesn’t pay the money back.

Banks are not in the business of owning real estate. You’ve made banks into both theives and real estate brokers. They are neither. They may by necessity have to occasionally own property, but invariably don’t want to.

I sometimes disagree with farron but here he’s 100% correct.
 
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