I'm Joe 6-pack: Can I just kick my fiscal responsibilities (the "can") down the road like the federal gov't. does

bmcpool strikes back wrote:

I think its perfectly reasonable for individuals to carry a manageable amount of debt throughout their lifetime (though I'm not really sure what happens with debts after someone dies).

They are paid out of the estate. If the estate lacks sufficient assets then either the heirs will pay, or if they renounce their inheritance then the creditors are SOL.

True, but not in most cases where bankruptcy is declared. The vast majority of those cases are due to people making poor financial decisions.

Concerned Citizen wrote:

Flagpole wrote:

Yeah. I agree with that. Sorry Concerned Citizen, but just because there's a law that allows for bankruptcy doesn't mean everyone or even most will respect you if you declare, ESPECIALLY if it's due to purposeful decisions and actions on your part. Sometimes the stars align so that nothing but bad things happen to a person even though they made good decisions, but this isn't normally the case for people who declare bankruptcy.

I go with loserdom until I find out otherwise.

We'll have to agree to disagree, then, Flagpole. Bad things happen to good people all the time.

You sir are...wait for it...CORRECT. Nice job.

asdfe wrote:

Concerned Citizen wrote:

We'll have to agree to disagree, then, Flagpole. Bad things happen to good people all the time.

It sounds like you agree. Flagpole explicitly stated that he believes this when it's due to purposeful decisions and actions. He admitted that sometimes the starts align and bad luck hits a person, which is acknowledging the times that bad things happen to good people.

I agree General Motors is a BIG Fing LOSER FOR GOING BANKRUPT (while in bed with the fed gov't) and stiffing THOUSANDS of small businesses all over the counntry out of money and causing some of their longtime dealers to not only go bankrupt, but at least one to commit suicide because of it.

Flagpole wrote:

8899 wrote:

Thanks.

Of course you can. People do that all the time. Go into debt. Declare bankruptcy, carry debt with you until you die for they can't collect beyond what you own after that.

What do you lose if you behave this way?

1) Integrity.

2) Financial Freedom.

I'm glad you pointed out that doing the things America is doing causes loss of integrity. America has lost its integrity.

Flagpole wrote:

True, but not in most cases where bankruptcy is declared. The vast majority of those cases are due to people making poor financial decisions.

Wrong, the number one thing in common in bankruptcy is medical disability and high medical bills.

Concerned Citizen wrote:

They are paid out of the estate. If the estate lacks sufficient assets then either the heirs will pay, or if they renounce their inheritance then the creditors are SOL.

This is wrong. Heirs are in no way, shape, or form responsible for the bills of somebody who has died. If the estate does not have enough assets, well, the creditors are SOL at that point. It doesn't take any additional action on the part of the heirs, as they are not party to any contract that makes them responsible for the unpaid debt (absent some situations such as joint accounts, etc but that is independent of status as heirs.)

Mr. Obvious is correct. What you OWN stands for what your OWE when you die...family members (not married to the person) are NOT responsible for the debt. If a person dies with $100,000 in debt but an estate that brings $200,000, then the creditors get $100,000 of that and then $100,000 is left to the heirs.If a person dies with $100,000 in debt but ZERO money in an estate, then the creditors are SOL. If a person dies with $100,000 in debt and an estate worth $100,000, then the creditors get all of that and the heirs get nothing.Sometimes creditors WILL try to go after the family and use guilt trips or intimidation to try to collect, but family members are NOT legally required to pay for the debts of a deceased person, and in my opinion, not morally obligated to either.

Mr. Obvious wrote:

Concerned Citizen wrote:

They are paid out of the estate. If the estate lacks sufficient assets then either the heirs will pay, or if they renounce their inheritance then the creditors are SOL.

This is wrong. Heirs are in no way, shape, or form responsible for the bills of somebody who has died. If the estate does not have enough assets, well, the creditors are SOL at that point. It doesn't take any additional action on the part of the heirs, as they are not party to any contract that makes them responsible for the unpaid debt (absent some situations such as joint accounts, etc but that is independent of status as heirs.)

If you look ONLY at the reasons people give for bankruptcy, BUT, 22% of filers who report medical bills as the reason had NO health insurance. That's not responsible. I realize that it is expensive and that it's hard for some people to pay, but it is a necessity in today's world. A good portion of the others didn't have appropriate insurance.The main reason that medical bills put people over the edge is that they didn't plan appropriately. Yes, it happens that the person who has appropriate insurance and invested for their future and lived a debt free life has a medical emergency that sinks them, but that person is rare in the group that claims that medical bills did them in.

Mr. Obvious wrote:

Flagpole wrote:

True, but not in most cases where bankruptcy is declared. The vast majority of those cases are due to people making poor financial decisions.

Wrong, the number one thing in common in bankruptcy is medical disability and high medical bills.

P.Whelan wrote:

You do lose integrity, declaring bankruptcy, among other things will exclude you from being able to get a government security clearance for the rest of your life (just as a measuring stick)

This is not true.

Section 525 of the Bankruptcy Code:

"A governmental unit may not deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under the Bankruptcy Code… solely because such bankruptcy or debtor is or has been a debtor under the Bankruptcy Code."

The question of clearance, like the question of integrity, has a lot more to do with the circumstances than the filing itself. A person who has large debts that aren't past due could be more of a security risk than a person who resolves them through bankruptcy.

By the way, the leading Republican Presidential candidate for a brief time (The Donald) has four bankruptcies on his resume. Not that he has any integrity, but we're not talking about a black mark that people can't recover from.

Let's be real. If someone declares bankruptcy, many of us (not all, of course), think less of that person. It may not be right or fair, but that's the way it is.

54454545 wrote:

Let's be real. If someone declares bankruptcy, many of us (not all, of course), think less of that person. It may not be right or fair, but that's the way it is.

This is true, but has little to do with a person's actual integrity -- and nothing at all to do with security clearance.

As far as integrity goes, one other thing I might consider:

Joe Six earns 25K/year, and clears just enough to pay modest expenses and health insurance with a $500 deductible and a 20% copay on hospitalization. He has a bike accident that lands him in the hospital for two days and leaves him with a $5000 bill on his credit card. It could take him years to pay that off. His credit card company has various strategies for tripping up clients so that they will pay late and trigger obscene penalties and interest rate increases (e.g., changing the payment due date each month and refusing to send the payoff balance to banks to include in e-bill notifications). As a result, he is paying 24% interest on the balance.

Within a few years he has already paid Capital One/Visa more than the $5000 he originally owed, and the balance continues to expand. He didn't read his 32-page credit card agreement carefully enough to know that this could happen. The 2.8% advertised rate was an intentional effort to obscure it, but Joe still takes responsibility for that.

Finally, to clean the slate and get a fresh start, Joe declares bankruptcy. He gets rid of his credit cards and never has debt problems again. Captial One/Visa, of course, understands that this law exists and considers it a business risk that is more than offset by its own arsenal of legal options to get good customers to pay far more than they expect to pay.

This is not an uncommon scenario.

Who lacks integrity, Joe or Capital One/Visa?

Mr. Obvious wrote:

Concerned Citizen wrote:

They are paid out of the estate. If the estate lacks sufficient assets then either the heirs will pay, or if they renounce their inheritance then the creditors are SOL.

This is wrong. Heirs are in no way, shape, or form responsible for the bills of somebody who has died. If the estate does not have enough assets, well, the creditors are SOL at that point. It doesn't take any additional action on the part of the heirs, as they are not party to any contract that makes them responsible for the unpaid debt (absent some situations such as joint accounts, etc but that is independent of status as heirs.)

Forgive me, it was late - I was thinking of something like inheriting a house that had a mortgage on it, not something like inheriting a credit card debt. I suppose even the mortgage thing wouldn't be exactly inheriting a debt, so much as inheriting property subject to a debt.

Flagpole, from what I have read, medical problems, divorce and job loss are the most common causes of bankruptcy. Sure, some bankrupts are losers, but I tend to think that someone ran into some bad luck first, and only later think of them as a loser if I learn something to make me think that.

I'll give you an example of a whole group of loser bankrupts - K-Mart. My cousin retired from there a few years back. Shortly after his retirement, they declared bankruptcy and one of the debts they discharged was a huge part of my cousin's pension. He would have been doing fine, but now just scrapes by. Shortly after emerging from bankruptcy, K-Mart managed to scrounge up enough money to buy Sears. Enough money to buy Sears, but not to honor your obligations to my cousin? What a bunch of losers!

Concerned Citizen wrote:

Forgive me, it was late - I was thinking of something like inheriting a house that had a mortgage on it, not something like inheriting a credit card debt. I suppose even the mortgage thing wouldn't be exactly inheriting a debt, so much as inheriting property subject to a debt.

Yes, this is a little more complicated but many of the same principles apply. The estate is responsible for paying the mortgage. The heirs are not. If the mortgage is not repaid, the lender can reposess the asset. Not all state laws are the same as to what happens when the asset is distributed to heirs and there are a lot of different scenarios.

Mr. Obvious wrote:

Concerned Citizen wrote:

Forgive me, it was late - I was thinking of something like inheriting a house that had a mortgage on it, not something like inheriting a credit card debt. I suppose even the mortgage thing wouldn't be exactly inheriting a debt, so much as inheriting property subject to a debt.

Yes, this is a little more complicated but many of the same principles apply. The estate is responsible for paying the mortgage. The heirs are not. If the mortgage is not repaid, the lender can reposess the asset. Not all state laws are the same as to what happens when the asset is distributed to heirs and there are a lot of different scenarios.

In my state, the heirs take the property subject to the mortgage. The administrator/executor could pay, but it wouldn't increase the heir's share(I suppose they would have to pay back the estate or the other heirs or something). The only way they could get the estate to pay off the mortgage, keep the house and owe nothing would be if there was a specific bequest in the will. Of course they can always renounce the property. I think - I'm not an estate planning guy, thank goodness!

1) I explained the medical thing already.2) Yes, people list divorce as a reason why they went bankrupt. Really think about that. My wife has JUST RECENTLY started working part time again after having been a stay at home mom for almost 15 years. If we got divorced tomorrow, neither of us would have to file for bankruptcy. Why not? Because we have no debts other than our house which we would sell (or actually maybe one of us would keep it). She would work. I would work. We would pay our bills and invest for our retirements and that would be that. People who file bankruptcy as a result of divorce do so because THEY DID NOT PLAN APPROPRIATELY. Yes there are some occasions where one spouse secretly racks up serious debt, but then it's not the divorce that made them bankrupt, it was the bad decisions of the person.3) Job loss causes bankruptcy? Yes...again, IF a person wasn't properly planning. Did they get an amazing job with a salary that they could NEVER get again if they lost that job? Well, good for them...they should spend as if they made MUCH less. Did they live debt free and have an emergency fund of up to 6 months in place? Can't mention student loan debt, because that's not bankruptable, so what the hell was it that they got themselves into that proper planning couldn't have headed off? Nothing.People blame medical issues and job loss and divorce as reasons for going bankrupt, but in the VAST MAJORITY of those cases, the real reason was that they didn't plan properly. It is a rare event where someone who did all the right things gets swept up in a situation they can't get out of except for bankruptcy.