What I am saying is that you should repay what you borrowed, whether or not you declare bankruptcy. I've never been as deep in debt as you are, so I don't know the best way to get out again, but I bet there are people on this forum who can make extremely practical suggetions on how it could be done ...
The logical reason to do this is that when you borrowed the money, you promised to pay it back. If repaying improves your credit score, that's frosting on the cake.
But I have the legal ability to not pay it back (and even after bankruptcy, I can choose to pay them back), so I am trying to understand an objective reason for actually paying them back. And since it would not be paying back a debt that I owe, instead it would be making a donation. Sure, there could be ethical and moral reasons for paying the debt back, but that is true in any aspect of life.
When I borrowed the money, I made a promise that subject to the bankruptcy law, that I would pay back the debt. Well, by going bankrupt, I will have kept my promise, since bankruptcy allows a debtor to legally change the promise.
YES. Nobody forced you to borrow the money. The fact that you disagree with the use your creditors plan to make of the profits isn't a valid reason not to repay them.
The creditors made a business decision to offer me an unsecured loan. They calculated that they could make a net profit from me. They looked at my credit score and history and figured that I had perhaps a 2% chance of defaulting, and figured with the myriad schemes of low interest balance transfers, fees, etc., and with super low interest rate money (probably coming from China), that they would come out ahead. Indeed, it was a strange mixture of disaster, recession and anti-American worker laws that lead to my situation. Had any of of those happenings not come to fruition, I would not be in my current financial state. Hey, you win some and you lose some - I am just in a position to offload my loss.
I'm not a Hindu, so I don't know whether it's better karma or not, and it may be a moot point anyway. If I understand what you've written earlier in the thread, you will be living at near poverty level so as to be eligible for state medical coverage. At that income, you won't be in a position to help anyone out of their squalor.
Concerning the helping of others out of their squalor, I was speaking hypothetically as if I were to have a high income again. Of course, my plan is to earn a high income again, but I am beginning to wonder if I will ever have a decent income ever again.
And as for getting state medical coverage, I have figured out a way to game the system - just make sure that I am instantaneously unemployed when I am applying for benefits. During the year time frame that I would be using the benefits, I would increase my income - but since it does not matter if one's income is higher in the middle, but only at the beginning, I would not lose my benefits. I learned how to do this as a response of my COBRA insurance company denying me from continuation (past the mandated 18 months) of health insurance when I had cancer.
You see, I tried to do things the right way - actually buying my own insurance rather than becoming a leach on society. But the system is so bad, that the only way I could get what I needed was to be (instantaneously) poor. In hindsight, this was actually a very good thing for me, as I probably have saved about $40-50K in health insurance and deductibles over the last 12 years.
What you've written sounds to me as if you have already decided not to repay. If you will excuse me for saying so, I think that would be cutting off your nose to spite your own face. It sounds as if you are willing to live near the poverty level for the rest of your life, to avoid paying off these debts, when the same or even a lesser degree of deprivation would enable you to pay them off in much less time.
I only need to stay poor and unemployed until I file bankruptcy. Of course, as it was the prior 18 months of unemployment that put me in my current position, it is not too much of stretch to presume that I would be unemployed for these extra 3 months as well. Like I said, I am hoping that after I file for bankruptcy, that like GM, I can reemerge with a better after debt income. I do have the fallback of a humbly poor ER if that were not to happen for a while.
That ten years I mentioned in my previous comment wasn't just a number I pulled out of a hat—I did a rough estimate earlier today of what it would take to pay off $120K. I make a bit less than the $40 an hour you mentioned earlier in the thread as a threshold at which you would feel able to repay. Like you, I'm single, so let's assume our basic expenses—food, utilities, transportation, etc—are similar. If I had somewhere to live with neither mortgage nor rent, I could redirect the principal and interest I'm currently paying on my mortgage toward debt reduction. At present, I'm making the maximum contribution (including over-50 catchup) to my tax-deferred retirement plan at work, and I could also use that money. Altogether, that's about $2385 a month that could go toward paying down debt, and at 10% interest, that monthly payment would get rid of a $120,000 debt in under six years. Unless the interest rate is over 21%, the $120K could be paid back in less than ten years. You could also, during that time, be putting $500 a month into a Roth IRA (I do). I tithe to my local church, but if you don't, you could put that money into your retirement account.
Or I could put that $2385/mo towards my retirement instead of to the creditors. Like I said, I see no objective reason to pay back my creditors.
In ten years or less, you could be debt free, you'd have a nest egg that's much more likely to support you during a lengthy retirement than the one you have now, you would no longer be facing a future of enforced quasi-poverty, and you'd still only be 54, which is early retirement in anyone's book.
That presumes I could find work. But by not having to pay the $2385/mo, I could probably move up my retirement by 5-8 years. I guess what I am saying is that I would rather stiff my creditors and have the earlier retirement than donate the money to them (again, since in bankruptcy I will have erased my legal obligation to paying them back, actually paying them back would be a donation.) I never said that my choice was completely ethical or moral, but rather - just like a health insurance company denies a treatment for someone such that the person dies - a cool hard business decision.
I encourage you as strongly as I can to stop trying to think of reasons not to repay, and instead start thinking of ways that you can.
Sorry, your encouragement is falling on deaf ears.
