[sgift]

You somehow seem to equate debt with guilt. That is not what debt is, although lenders love it when you believe that. You also seem to think that the main reason people cannot pay of their debt is that they "smoked pot all day" - the notion of debt as guilt shines through here again. Debt is debt. Nothing else. It is not some moral failing if you cannot pay it back, it can have many reasons. And the idea that just because you thought it would be the right thing to do to put yourself in for an early grave by working so hard that your body breaks down everyone who didn't do that is a slacker, not "committed" enough or whatever is very sad.

[paulhauggis]

So here is another example. If I start a Kickstarter campaign and raise $100,000 from multiple backers and never deliver on the product but keep the money. Should I feel guilty? After all, it's just debt..right? Or does this only apply to "evil" bankers?

If everyone had this thinking, nobody except the rich would get loans. As a bank, why would I ever loan someone money if they felt like they were entitled to it and never had any intention of paying me back?

Wiping away debt is just a bad idea. My cousin declared bankruptcy around 10 years ago. She had accumulated $100,000 in credit card debt with nothing to really show for it. This wasn't even school loans, just big name electronics and a multitude of other things she really didn't need.

After her debt was wiped clean, she promptly got right back into debt again and had to declare bankruptcy a second time this past August. The over-spending continued (and still continues to this day).

If someone knows they can spend all they want with no consequences, they will treat it like free money. The only people that will hurt are the rest of us that will suffer with an increased difficulty in getting a loan and increased interest rates and fees.

We shouldn't reward irresponsibility.

[cturner]

I share your instincts, but need to defend the policies. It's important to have a bankruptcy mechanism. Otherwise it's a back-door mechanism to create slavery. By having a predictable bankruptcy regime, lenders can price in the probability of bankruptcy.

Limited liability is a similar issue. It would be convenient if we didn't have corporations and everybody conducted business as themselves. But the experience has been that the trade-off of limited-liability is worth it. You get more growth in a country with it than one without it.

[sgift]

I have the feeling that your cousins experience clouds your judgement here. From all that I've read the count of people who file bankruptcy multiple times is very low as is the count of people who file because of irresponsibility. There are usually very valid reasons (loose your job, get sick, good luck!)

For your example: That is exactly the reason that Kickstarter is not a preorder service, but project funding. There is always a risk that you won't get anything for the money you've invested and you are expected to consider these risks. That's also part of the reasons that professional lenders expect a certain rate of interest (another part of the interest rate is obviously for the fact that the lender could do something else with his money if he didn't lend it). If you have a higher risk, you pay more. So, if you fault multiple times you won't find anyone who will give you money anymore in the future or they will want more interest or they will want some securities .. and so on. I don't see how that somehow makes debt guilt. It is debt. Are you expected to pay it back? Yes. What if you cannot pay it back and you would be crushed under the weight of it? Don't pay it, go bankrupt and your lenders will have to pay the price of their risk-taking.

My point stands that there's a reason we've abolished debtors' prisons: Debt is not guilt.