Bankruptcy is usually a Copout!

As I was reading a March 29, 2006 post from the Half Sigma blog entitled: "The moral justification for bankruptcy" I became annoyed. The author of this post made the act of taking out bankruptcy seem like a trivial event, however, it is not! His argument that people have been paying a type of "insurance" premium in the form of interest rates from creditors, and thus have the right to take out bankruptcy is completely bogus! People shouldn't file for bankruptcy because they have had to pay interest charges, but rather have had to pay higher interest charges because of the mass of careless individuals and corporations that have gone bankrupt. Many who file for bankruptcy never pay their creditors, and essentially force their creditors to raise rates for all of society in an attempt to recover their losses. While I realize that there are genuine situations where filing for bankruptcy is necessary, such as insurmountable medical bills, etc, bankruptcy shouldn't be a copout to get out of paying creditors. That is stealing. It's too bad if individuals decide that they no longer want to finance their outlandish homes, boats, cars, and other toys. They made a contract, and should be bound to it. I am not living within my means so that I can help subsidize the excessive spending of irresponsible and materialistic borrowers. However, the message that the author of this post conveys seems to prove otherwise.


Billy said...

I agree with Blake. I don't think that there can be a moral justification for bankruptcy. Granted, it is needed for certain circumstances, but I think (like the title of this post)that bankruptcy is usually a copout. I think that people enter into very risky business ventures with the idea that if anything goes south, there's always the option to take out bankruptcy. I have a real problem with our society's fixation with getting something for nothing. Like Blake said, entering into bankruptcy without any intent of paying your creditors (the ones you legally can escape, that is)is stealing; it is a con. That's my $0.02.

bryce said...

I couldn't agree more with Blake. He hit it right on the nose. I am living with in my means, and I hate to think that when I go to buy a home part of the interest I will be paying will be to help pay for all the careless people in the world who didn't manage their finances properly.