Is It Ethical to Stop Paying Your Debts and Settle Them?

I know what so many of our prospective clients think. Sure, they would like nothing more than to be out of debt -- Debt Free! --  or at least a very long way towards that ultimate goal. But something holds them back. The truth is, what holds many people back is a sense of moral obligation. They feel a solemn obligation to pay back what they've borrowed.

But while there's certainly no fault in having such feelings, are we really talking about solemn obligations? You know, like when you borrowed money from a parent or other relative and promised to repay it in a way tantamount to staking your life an reputation on it?

...And, it's very convenient for the credit card companies, mortgage companies and even Uncle Sam to have you feeling that way. Don't they kinda spin it with a tinge of moral guilt when the subject comes up? Perhaps not without reason. Over the decades, we in America have become a nation of debtors, by and large. In the simplest sense, taking on debt is essentially selling your future labor. There's nothing inherently wrong in that, just when it gets out of hand and one day you wake up to realize that you've sold your next 20-30 years of productive life right now. Worse, you may have already spent it and have nothing much to show for it except to sack yourself with a much higher moving bill once that time comes.

Yes, indeed it's true. We've come to the place that if everyone stopped paying, all at the same time, it would be like a run on the banks and everything would collapse. And yet, if you feel your own money in the bank is in jeopardy, are you going to let it sit there so that other depositors not as contentious as you get their money back?

Ah, so you don't have an obligation to let your money sit in a failing bank? You're simply exercising your contractual rights as a depositor: to make a withdrawal? Well how about a credit contract? Does it really say in any of your credit card agreements (I know: you've never read them and either have I; and this should be a clue) that you 'solemnly promise to repay, no matter what,' or anything of the kind?

Of course not. A credit contract, just as mortgage contract, assigns certain obligations to each party and correspondingly, rights to each party in the event of default. Although...I'll bet you'll find that if you do actually read your credit card contract that you have most of the obligations while they have most of the rights.

Well, that's fair, as they are the ones taking the first risk.

Ah, so they're taking a risk? Like in business? Like, businesses take calculated risks and they price their products and services accordingly, so that they can weather the risks and losses and still make a profit? Maybe that's why you get the introductory interest rate and after a while, notice you're paying15, 20, 30 percent and more...(we have seen as high as 35% rates at Provanta). ...I'm not even going to go into the charges & fees.

The mortgage contract is the best way to illustrate what's going on. It's a pretty simple contract, at base. You agree to take on the obligation to pay interest, some principal (normally; amortized over some period), property taxes and insurance while they take on the obligation to treat you as the actual owner right now (not like a rental or lease); and if you default, they have the right to undertake a legal procedure that culminates in them getting the property back. And in most States, they have no recourse against you no matter what happens.

But credit cards are unsecured. They can't come and take your entertainment system, bedroom set, or anything else, so it's just you against them.

That's why you paid the higher interest rates and that's why they'll deal. And they do deal.

Before I close, I'll reiterate the original point but restate it in other terms: it's just business. The credit card companies, as did every lender you ever had, was looking to make a profit on providing services to you. They stringently calculated, they wrote up long and complex contacts to protect their interests, and they have their legal rights, which they know backwards & forwards.

But I know. You feel as though it's you suffering and not them if you decide to undergo the relative gauntlet that is a debt-settlement program. Frankly, it's a tough row to hoe for some, piece of cake for others, and how that's going to go is really unpredictable. In settling tens of thousands of accounts for hundreds of millions of dollars for small businesses and ordinary folks over nearly two decades, I have yet to come up with any formula that gives me any confidence in uttering any prediction in any individual case. Sometimes, they're aggressive, often not. The job can almost always get done; it's the level of difficulty that's unpredictable.

I won't lie to you, but most Debt Settlement companies do, at least in their advertising. It could be easy. It could be very hard, but what do you see typically in the advertising? The honest truth is that it's up in the air. Which means: the banks are conducting their affairs as the businesspeople they are, adhering to a contract they wrote, you agreed to...and there's nothing moral or ethical involved.

It's just business.

You really can get out of debt and we at Provanta can help. We can do it all for you. We've been doing it for thousands of clients for just shy of two decades. I hope it's a walk in the park for you but until I get a crystal ball, I simply can't assure you of that. What I can assure is that every client who has followed our instructions as best they can, consistently, has ended up 2-4 years later debt free, and including our fees...far less than they signed up with, and that's discounting even the continuing interest, late fees, and other charges.

Figure out what you owe today, total. Take 60% of that, give or take 10%, divide that into monthly payments over 24-48 months, and if you can make that payment, my bet is you'll be debt free. How easy, stressful, or un-stressful it is in your individual case is simply up for grabs and there's no getting around that. I would love to whisper sweet nothings in your ear if just to comfort you that it'll be alright, but I can't. I don't know your tolerance and I don't know the bank's resolve in your particular caee. What I can do it put my professionals to work on your behalf and we will absolutely do our best. That, I can solemnly promise.

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