Dead Man's Debts
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11-07-2016, 06:45 PM
RE: Dead Man's Debts
(10-07-2016 01:27 PM)Full Circle Wrote:  The question I pose to you is, why only excuse this one person’s loan? Why not 10, or 10,000, or 1,000,000? Do other borrowers not have hardships as well? Should they not recieve the same lenient treatment? Where do you draw the line?

Oh no, not a slippery slope. We don't live with those every day of our lives.

Death of the primary debtor. In this instance that has the effect of destroying the primary debtor, destroying the product that the loan paid for and placing the guarantor in a position of profound personal loss. If the number of people who qualify for debt forgiveness under this rule is large enough to signifcantly impact your bottom line then you have bigger problems than financing your student loan program.

Quote:Her story is heartbreaking to be sure, in the end however, she freely cosigned for the loan. Crying foul because the lender wants the loan repaid is nonsensical.

How about crying foul because most lenders don't behave this way? Is it foul that the state will not forgive a loan that many banks will?

Quote:But if you and I formed a partnership, PeleoCircle LLC, and pooled our investments along with other people’s money to make loans it would not be right for one of us to fail to perform our duties in collecting a loan because it affects others as well. We have a fiduciary responsibility to the other folks who invested with us to carry out our duties. In this case the State is doing just that.

We also have a responsibility not to be bastardly about it. That's a tightrope walk for any lender because they typically aren't well liked so the smart ones take care to maintain their social license. For example, if PaleoCircle LLC reposesses the homes of widows and orphans of the first responders killed in the WTC 9/11 attacks then we won't be well liked, to put it mildly. We have the legal right and we may well have the legal obligation to our backers, but only a half-wit would do it. PaleoCirlce LLC would rapidly find itself without anybody willing to invest in it or anybody silly enough to take out a loan. Sure that's a caricature of an extreme case, but as you say above, if we start forgiving these loans then where on the slippery slope does it end?

In order to maintain their social license most lending agencies have insurance and policies that state the conditions under which they won't collect or will defer collection.

(11-07-2016 07:09 AM)Vosur Wrote:  Well, the choice is not to take out a loan. There are plenty of people who managed to get through college without one by spending much more time on their degrees (e.g. 6 years instead of 4 so they can work on the side).

I'm not sure about "plenty of people" and given the cost of education in the US I doubt this is an option in this case. The debts in question were in the ~100k range, which would take a while to earn at your typical undergrad minimum wage job. The usual options, for the US, are:

- A life of low-level customer service jobs because you lack a college degree.
- Be lucky enough to have wealthy parents.
- Join the army.
- Take out a loan.

(11-07-2016 07:23 AM)Full Circle Wrote:  Good point. This is exactly how I paid for my college degree. It took me until I was 25 yo before I finished my four year degree because I worked either full time or part time to pay for it.

You must have had an unusual combination of low-cost degree and good-paying job. It took me 3 years to work off my loan afterward and that's exceptionally fast. 5-10 years is more typical and that's with a job that pays reasonably well. And this is in Canada where our tuition rates are sane.

Also this is post hoc rationalization. It think that we can all agree that the death of the primary debtor was not an event that was reasonably forseen by any of the parties involved.

In addition, had they considered it, the mother and son may well have started borrowing under different repayment conditions. As Girly notes, there was a rather drastic change in default suits between 2010 and 2016. Given the length of your typical degree, NJ may have had a typical 'Don't collect from grieving mothers' policy when the loans began.

It's always perplexed me that every student loan, credit card and phone plan contract (just to name a few) that I've ever had starts "The terms of this contract may be changed at any time by ReallyBigCorp..." Seriously? You can write a "contract" that way?!? Consider

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11-07-2016, 07:55 PM
RE: Dead Man's Debts
(11-07-2016 06:45 PM)Paleophyte Wrote:  Death of the primary debtor. In this instance that has the effect of destroying the primary debtor, destroying the product that the loan paid for and placing the guarantor in a position of profound personal loss.

No doubt a horrible situation. And yet the fact remains that the parent co-signed the loan agreeing to repay it if the primary did not or could not. This contract was entered into by the borrowers so that the institution would provide a service which they did.

(11-07-2016 06:45 PM)‘Paleophyte Wrote:  If the number of people who qualify for debt forgiveness under this rule is large enough to signifcantly impact your bottom line then you have bigger problems than financing your student loan program.

But I think this sidesteps the issue. It’s not whether the lender can remain solvent, the question remains do they not have an expectation of having the contracted party (the borrower) fulfill their financial obligation?

(11-07-2016 06:45 PM)‘Paleophyte Wrote:  How about crying foul because most lenders don't behave this way? Is it foul that the state will not forgive a loan that many banks will?

What another lender does or does not do is not really relevant. Every lender has a different policy on managing uncollectables.

(11-07-2016 06:45 PM)‘Paleophyte Wrote:  We also have a responsibility not to be bastardly about it. That's a tightrope walk for any lender because they typically aren't well liked so the smart ones take care to maintain their social license. For example, if PaleoCircle LLC reposesses the homes of widows and orphans of the first responders killed in the WTC 9/11 attacks then we won't be well liked, to put it mildly. We have the legal right and we may well have the legal obligation to our backers, but only a half-wit would do it. PaleoCirlce LLC would rapidly find itself without anybody willing to invest in it or anybody silly enough to take out a loan. Sure that’s a caricature of an extreme case, but as you say above, if we start forgiving these loans then where on the slippery slope does it end?

I agree that it my not be the best business decision but regardless of whether it is or isn’t the lender, in this case the State, retains the right to be paid. I think we are diverging on the issue at hand here Paleo. The one I argue for is that a financial contractural obligation cannot be unilaterally dissolved by the borrower because of a change in their personal situation. You are looking at it from a public image point of view and a moral point of view, I’m looking at it from a strictly contractural point of view.

(11-07-2016 06:45 PM)‘Paleophyte’ Wrote:  In order to maintain their social license most lending agencies have insurance and policies that state the conditions under which they won’t collect or will defer collection.

I’m not familiar with this.

(11-07-2016 06:45 PM)‘Paleophyte Wrote:  Also this is post hoc rationalization. It think that we can all agree that the death of the primary debtor was not an event that was reasonably forseen by any of the parties involved.

But isn’t your argument doing the same? Rationalizing not paying the loan back becasue the primary debtor wasn’t expected to die? No one expects to die young yet it happens all the time. Are you saying that death negates all contracts?

Sure it would be a nice gesture for the State to forgive the debt but it shouldn’t be expected nor should they be demonized for not doing so.

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
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12-07-2016, 04:27 PM
RE: Dead Man's Debts
(11-07-2016 07:55 PM)Full Circle Wrote:  I think we are diverging on the issue at hand here Paleo. The one I argue for is that a financial contractural obligation cannot be unilaterally dissolved by the borrower because of a change in their personal situation. You are looking at it from a public image point of view and a moral point of view, I’m looking at it from a strictly contractural point of view.

Well from a strictly contractural POV I have to concede your point. That said, if the "simple" legal aspects were all that mattered then we could let computers run the world. You know, assuming they don't already.

I'm suggesting that a wise lender needs to consider the social implications of demanding repayment in exceptional circumstances because failing to do so can get your social license yanked. This may explain in part why Governor Chris Christie has such dismal approval ratings.

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12-07-2016, 07:33 PM
RE: Dead Man's Debts
(12-07-2016 04:27 PM)Paleophyte Wrote:  
(11-07-2016 07:55 PM)Full Circle Wrote:  I think we are diverging on the issue at hand here Paleo. The one I argue for is that a financial contractural obligation cannot be unilaterally dissolved by the borrower because of a change in their personal situation. You are looking at it from a public image point of view and a moral point of view, I’m looking at it from a strictly contractural point of view.

Well from a strictly contractural POV I have to concede your point. That said, if the "simple" legal aspects were all that mattered then we could let computers run the world. You know, assuming they don't already.

I'm suggesting that a wise lender needs to consider the social implications of demanding repayment in exceptional circumstances because failing to do so can get your social license yanked. This may explain in part why Governor Chris Christie has such dismal approval ratings.

I enjoyed our exchange of ideas. Thumbsup

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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13-07-2016, 06:06 PM
RE: Dead Man's Debts
(12-07-2016 07:33 PM)Full Circle Wrote:  
(12-07-2016 04:27 PM)Paleophyte Wrote:  Well from a strictly contractural POV I have to concede your point. That said, if the "simple" legal aspects were all that mattered then we could let computers run the world. You know, assuming they don't already.

I'm suggesting that a wise lender needs to consider the social implications of demanding repayment in exceptional circumstances because failing to do so can get your social license yanked. This may explain in part why Governor Chris Christie has such dismal approval ratings.

I enjoyed our exchange of ideas. Thumbsup

Same here. It's good to get out of my echo chamber.

I have to say that "PaleoCircle LLC" sounds peculiar. The sort of business I'd expect to find erecting trilithons.

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13-07-2016, 06:38 PM
RE: Dead Man's Debts
(13-07-2016 06:06 PM)Paleophyte Wrote:  
(12-07-2016 07:33 PM)Full Circle Wrote:  I enjoyed our exchange of ideas. Thumbsup

Same here. It's good to get out of my echo chamber.

I have to say that "PaleoCircle LLC" sounds peculiar. The sort of business I'd expect to find erecting trilithons.

I even think I’ve found our avatar!

[Image: Neanderthal-CaveMan-With-Spanner-Circle-...1448650800]

or this

[Image: 10-Goseck-Circle.jpg]

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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13-07-2016, 07:14 PM
RE: Dead Man's Debts
That second one is more than a bit phallic.

I think that the name has to go for PR reasons. While it doesn't make us out to be the villains of the corporate world it puts us firmly amongst the hengemen.

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