middleagedgamer
DP Veteran
- Joined
- Jan 22, 2008
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WARNING
LONG POST AHEAD
Historically, the law initially treated creditor-debtor relationships with entirely pro-creditor bias. In fact, back in Ancient Greece, Plato actually stated "The debtor is slave to the creditor," but back in Ancient Greece, that statement was literal, because if you went bankrupt back then, your personal freedom was considered an asset to be liquidated. You, your family, and your servants were sold into slavery until the creditors got their money back from the fruits of your labor, and even then, the only thing you got back was the "feedom" (notice the quotes) of you and your family, but that "freedom" was more like how the slaves in America were immediately after the Civil War (in the sense that they were free in name only, but went from slave labor to sharecropping). This is how a lot of beggars were made.
Fast forward a few thousand years to Mideivil Europe, and debtors were treated a little bit more humanely, but it was kind of like going from the electric chair to lethal injection. If you couldn't pay your debts, you weren't sold into slavery, per se, but you were thrown in prison, forcing your family to work like mules to pay off the debt so that you would be released. If they couldn't pay the debt before you died in prison, the remaining debt would be passed on to your eldest son, or eldest daughter if you had no son. Only if you and your wife both died without baring children would the creditors be out their money.
Fast forward a few hundred years, to the early United States, and if you went bankrupt, you weren't sold into slavery; heck, you weren't even thrown in prison, but the creditors did take everything you owned, stripping you naked and leaving you for dead by the side of the highway. This is how a lot of people at the time became the proverbial hobo, with only a trash-can scavaged change of clothes and a plastic cup that they asked you to drop change in. This is still a fate worse than death if you ask me.
However, in the past century or so, bankruptcy has started to favor debtors more than creditors. Now, debtors even have some exempt assets to soften the blow of bankruptcy. In fact, you even get a $925 "wild card" exemption that you can use to keep just about anything, like your new Nintendo Wii that you bought with your recently-bankrupted credit card. This has actually inadvertantly lead to an unofficial concept called "judgment proof," which, in Laymen's terms, means that you can go ahead and sue me, and you'll even win, but I'm so damn broke that I'm physically incapable of paying the lawsuit. For the creditors, this is actually the equivalent of Chapter 7 bankruptcy, in the sense that they're completely SOL, but for the judgment proof debtor, when you're applying for future credit, and it asks "Have you ever declared bankruptcy," you get to answer no! This isn't just for loan debts, either. If I'm judgment proof, then I can walk up to you and punch you right in the nose, and you can't sue me. You can have me put in jail, and you can punch me back in retaliation, but you can't sue me. Trust me, from a first-hand experience standpoint, it is a REALLY good feeling when you find out that you're judgment proof.
Anyway, the history lesson was to show you that debtor-creditor law has slowly become more and more pro-debtor (including Obama's new credit card holder's Bill of Rights), so why should we stop there? See, I've got some debts (everybody does), only the terms of the loan contracts are absolutely one-sided, almost to the point where, if I didn't know any better, I'd ask the court to void the contract due to insufficient consideration. Wrap your brain around these common practices for a minute:
1. When they check your credit to see if you qualify, win, loose, or draw, you get a bad notch on your credit. What sense does that make?
2. If your identity is stolen as a child, despite the fact that all your contracts are voidable, you're still considered bankrupt when you apply for student loans and whatnot. This requires you to spend tens of thousands of dollars in legal fees (if your parents did not get you ID theft insurance) on repairing your credit, and even then, you're still out the legal fees. WTF?
3. Once they've approved you, if you can make the payments on time, they don't do jack squat with the credit bureaus. Only if you become delinquent on the loan is when they report the delinquency to the credit bureaus. If you play blackjack, this is the equivalent to your odds being "You can't win; you can only loose and draw."
Well, these problems seem rather easy to fix.
1. Anyone you give permission to can check your credit, and it doesn't show up at all on your credit report. This means that no one except the potential creditor that checked your credit will ever know that they've checked it. No bad notches.
2. Voidable means just that: There are no negative consequences for ANY of your contract breaches. The only ones who have to answer for it are your adult cosigners, which people often demand anyway (I'm sure you've seen disclaimers that say "You must be at least 18 years old to enroll/enlist/do whatever, or 17 with parental consent").
3. Reporting good credit is a pre-requisite to being allowed to report bad credit, which, in turn, is a pre-requisit to checking your credit as a quid pro quo condition for offering you any kind of loan at all. It's only fair. Why should the debtor be given a "no win, only loose and tie" situation? If that's too much of a change for most people at one time, then let's make all three of them co-requisites, meaning that those no-credit-check loan offers had better have collateral to go with them.
I believe this to be a modest and reasonable request to creditor-debtor law. Historically, things like this have happened, so it is a proven process and should be subject to stare decisis, just like everything else. What do you think?
LONG POST AHEAD
Historically, the law initially treated creditor-debtor relationships with entirely pro-creditor bias. In fact, back in Ancient Greece, Plato actually stated "The debtor is slave to the creditor," but back in Ancient Greece, that statement was literal, because if you went bankrupt back then, your personal freedom was considered an asset to be liquidated. You, your family, and your servants were sold into slavery until the creditors got their money back from the fruits of your labor, and even then, the only thing you got back was the "feedom" (notice the quotes) of you and your family, but that "freedom" was more like how the slaves in America were immediately after the Civil War (in the sense that they were free in name only, but went from slave labor to sharecropping). This is how a lot of beggars were made.
Fast forward a few thousand years to Mideivil Europe, and debtors were treated a little bit more humanely, but it was kind of like going from the electric chair to lethal injection. If you couldn't pay your debts, you weren't sold into slavery, per se, but you were thrown in prison, forcing your family to work like mules to pay off the debt so that you would be released. If they couldn't pay the debt before you died in prison, the remaining debt would be passed on to your eldest son, or eldest daughter if you had no son. Only if you and your wife both died without baring children would the creditors be out their money.
Fast forward a few hundred years, to the early United States, and if you went bankrupt, you weren't sold into slavery; heck, you weren't even thrown in prison, but the creditors did take everything you owned, stripping you naked and leaving you for dead by the side of the highway. This is how a lot of people at the time became the proverbial hobo, with only a trash-can scavaged change of clothes and a plastic cup that they asked you to drop change in. This is still a fate worse than death if you ask me.
However, in the past century or so, bankruptcy has started to favor debtors more than creditors. Now, debtors even have some exempt assets to soften the blow of bankruptcy. In fact, you even get a $925 "wild card" exemption that you can use to keep just about anything, like your new Nintendo Wii that you bought with your recently-bankrupted credit card. This has actually inadvertantly lead to an unofficial concept called "judgment proof," which, in Laymen's terms, means that you can go ahead and sue me, and you'll even win, but I'm so damn broke that I'm physically incapable of paying the lawsuit. For the creditors, this is actually the equivalent of Chapter 7 bankruptcy, in the sense that they're completely SOL, but for the judgment proof debtor, when you're applying for future credit, and it asks "Have you ever declared bankruptcy," you get to answer no! This isn't just for loan debts, either. If I'm judgment proof, then I can walk up to you and punch you right in the nose, and you can't sue me. You can have me put in jail, and you can punch me back in retaliation, but you can't sue me. Trust me, from a first-hand experience standpoint, it is a REALLY good feeling when you find out that you're judgment proof.
Anyway, the history lesson was to show you that debtor-creditor law has slowly become more and more pro-debtor (including Obama's new credit card holder's Bill of Rights), so why should we stop there? See, I've got some debts (everybody does), only the terms of the loan contracts are absolutely one-sided, almost to the point where, if I didn't know any better, I'd ask the court to void the contract due to insufficient consideration. Wrap your brain around these common practices for a minute:
1. When they check your credit to see if you qualify, win, loose, or draw, you get a bad notch on your credit. What sense does that make?
2. If your identity is stolen as a child, despite the fact that all your contracts are voidable, you're still considered bankrupt when you apply for student loans and whatnot. This requires you to spend tens of thousands of dollars in legal fees (if your parents did not get you ID theft insurance) on repairing your credit, and even then, you're still out the legal fees. WTF?
3. Once they've approved you, if you can make the payments on time, they don't do jack squat with the credit bureaus. Only if you become delinquent on the loan is when they report the delinquency to the credit bureaus. If you play blackjack, this is the equivalent to your odds being "You can't win; you can only loose and draw."
Well, these problems seem rather easy to fix.
1. Anyone you give permission to can check your credit, and it doesn't show up at all on your credit report. This means that no one except the potential creditor that checked your credit will ever know that they've checked it. No bad notches.
2. Voidable means just that: There are no negative consequences for ANY of your contract breaches. The only ones who have to answer for it are your adult cosigners, which people often demand anyway (I'm sure you've seen disclaimers that say "You must be at least 18 years old to enroll/enlist/do whatever, or 17 with parental consent").
3. Reporting good credit is a pre-requisite to being allowed to report bad credit, which, in turn, is a pre-requisit to checking your credit as a quid pro quo condition for offering you any kind of loan at all. It's only fair. Why should the debtor be given a "no win, only loose and tie" situation? If that's too much of a change for most people at one time, then let's make all three of them co-requisites, meaning that those no-credit-check loan offers had better have collateral to go with them.
I believe this to be a modest and reasonable request to creditor-debtor law. Historically, things like this have happened, so it is a proven process and should be subject to stare decisis, just like everything else. What do you think?