[KyleJ61782]

Agreed. This feels a lot like the home lending crisis leading up to 2009. People taking out loans for far more than they could afford with interest only loans, ARMs, etc., or taking out large home equity loans for consumer purchases. What it speaks to is a huge lack of financial literacy.

I do feel for people in this situation, particularly those who are driven to the home equity loans due to unfortunate events, like cancer, in their personal lives. But I feel that it needs to be said that there's a not insignificant number of people who are caught in these situations precisely because they failed to plan and have contingency money set aside, instead spending to keep up with the Joneses.

[bilbo0s]

>there's a not insignificant number of people who are caught in these situations precisely because they failed to plan and have contingency money set aside...

and

>due to unfortunate events, like cancer, in their personal lives...

I think it's a bit idealistic to think most Americans can save up to take care of a potential bout with cancer. Particularly if they are unfortunate enough to get certain varieties of cancer.

It's like a Manhattan penthouse. We can save for as long and as hard as we like, but for most Americans that purchase is just going to be out of reach. That's just life here in the US when it comes to cancer. The treatments are expensive and out of reach for most of us. Insurance can make it a bit better, but at the mean, we'll still have some pretty serious problems paying for the treatment.

[KyleJ61782]

Perhaps it's not abundantly clear, but I'm trying to draw a distinction there. I get that there are things like cancer that cannot be sufficiently financially prepared for. However, for things like needing a new roof, car tires need replacing, etc., that is precisely what contingency money is for. If you cannot save sufficiently for said expenses, it's time to consider a downgrade on that particular item until you can, or curtail other non-essential expenses for a while.

[aetherson]

I mean, specifically the Duncans didn't take on more than they could afford. They were just defrauded.

[KyleJ61782]

They were definitely defrauded, but they weren't particularly shrewd here. Pumping the brakes a bit and taking a bit of time to consider all of the legal documentation almost certainly would have saved them. When a deal seems to good to be true, it almost certainly is. Never sign a document unless you fully understand what it is: what rights you're giving up and what legal declarations you're making.

[entee]

This isn't quite the same in that the people in question actually repaid far more than they owed. The "loans" were structured in such a way that they don't seem to end in practice, and that when you give in you have to give up your entire financial life.