Why Settling Debt is Fair & Just In Today’s Economy
Some debtors have qualms about settling debts for a discount. Most people have grown up with an honest ethic of being responsible for every dollar of each debt incurred. Even though debt settlement
is not as drastic as bankruptcy, and the creditor still gets paid something, the idea of settlement still makes some folks feel guilty for avoiding debt.
Don’t feel bad about bargaining away some of your debt. It isn’t irresponsible or morally
questionable at all. Remember, when you agreed to terms and incurred your debt, dollars were abundant, and most asset values (homes, rental houses,
vacation houses and lots, stock portfolios, retirement funds, collectibles) were much higher, perhaps double or more what they are today. So each dollar was that much easier to earn, find or spend back then. You relied on the conditions of those happier, bygone times, when a certain amount of cash flow had been the norm for many years, and understandably took that for granted.
It was a surprise to almost everyone in the world, and certainly to most of us in Michigan, when the national economy collapsed, making dollars that much more scarce, and making debts two or three times as hard to service with payments, let alone to pay off in full. Your debt burden became that much heavier, as if someone deep inside the earth just doubled or tripled the force of gravity and all the debt you carried just got much heavier.
While banks continued to expect you to pay debts with the same ease, and at the same pace you did “before the crash”, they were busily marking down the value of your assets (your home, rental houses, land, stocks, retirement and collectibles) to half price or less.
That wasn’t fair to you, or to millions of us who had their debts denominated in heavy new dollars, while offsetting assets were being measured in terms of light, scarce dollars.
Debt settlement just evens the playing field. Now, just as your assets have lost half or more of their value in the national or global market,
with very few items immune from this deflation of values, it is only fair and just for your debts to be adjusted downward to match. At RISK FREE,
we believe that you should consider yourself morally entitled to cut your debts at least in half (or close to it), and in many cases, even more than half,
to balance the real economic effect of debts with deflated values of homes and other assets.
We remind lenders of these realities, as we negotiate to bring you the relief you deserve.
Keep these facts in mind as you struggle to justify debt settlement to that inner voice that makes you hesitate. The role models who instilled that voice may
have grown up with some hardships, but they never had to endure sudden global deflation as adults. Their parents, who were forced to lose everything in the last
depression, never had the benefit of the lessons that society learned from that time, about how punishing hardships needlessly ruined lives, destroyed democracies
and even sparked world war. Be glad you live in a time when wiser policies prevail,
and our institutions welcome sensible, creative programs to bring relief to you and the millions of others who were victims of a “crash”.