Delightful Debt and Fun Foreclosures


deficit-moneyBy S. Friedman,

The comedian Jackie Mason (no endorsement of him) once famously described credit cards as follows: “You spend money you don’t have, to buy things you don’t need, to impress people you don’t like.”  Putting aside the issues of Ba’al Tashchis and Ahavas Habriyos, there seems to be an increasingly cavalier attitude towards spending money we don’t have. 

The mere word “debt” used to conjure up visions of clouds of doom, accompanied by the feeling of the figurative noose slowly tightening around one’s neck.  Now, going into debt is viewed by many as an opportunity.  Not being able to pay the bills used to be a shameful reality, something to be embarrassed of.  Enter the new age where someone comes into shul to collect his congratulatory wishes that he just settled his debt for fifteen cents on the dollar.  Not celebrating a reprieve of an unfortunate circumstance, rather reaching the climax of a deliberate and complex plan that had been orchestrated in advance.

With the advent of debt settlement companies and the brazenness with which people will walk away from their obligations and declare bankruptcy, banks and credit card companies are more willing than ever to settle.  Many are enticed by the “opportunity” this presents.  Why pay the mortgage on an investment property when you can keep the rent as net profit (often off the books) while the bank pushes off foreclosure ad nauseam?  Living frugally is not as attractive a lifestyle as passing the buck on indefinitely.

The obvious consequence of destroying one’s credit rating doesn’t seem to deter a lot of people.  They can always take out a loan in someone else’s name.  But what if there is a dire need of a loan and “someone else” can no longer help?  Furthermore, the lack of accountability and ehrlichkeit is difficult to isolate to financial matters.  It is a character trait that can infiltrate all aspects of life.  A responsible person is responsible always; not just when it’s convenient.

Short term solutions usually lead to greater problems down the line.  People may think that they are “milking the system” when they shirk their monetary obligations, but by failing to address and change their dangerous fiscal habits in the long term, they are being reckless to themselves and to their families.  What do they plan to do in the future when it is time to buy a house, marry off kids, support married children etc…?

The reaction to this article may be, “who are you to tell people how to live their lives?”  People can make their own choices; I am merely trying to help inform people (and their influential relatives and friends) that they may be possibly engaging in self destructive behavior.  There is no such thing as a free lunch.

I don’t know of an easy answer to people’s financial problems.  But one thing is for sure, it can’t be as easy as the phenomenon of simply refusing to pay for the various costs of our lives.  Negotiating a credit card debt settlement may seem like a victory of sorts, but when irresponsibility, falsehood, and abuse of a system are the cause for a windfall, how savory of a “victory” can this be?

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  1. How true. People purposely don’t pay and then tell the credit cards (through the settlement companies) that they “can’t pay.”
    It’s bad middos (stealing?) and NISHT EMES!

  2. it is important to tighten your belt now before you get used to living it up and have so much debt, because once you are stuck i.e. if the credit card companies will not give you credit anymore, where will you borrow from then?

  3. I am someone who is in this position. However, is it due to recklessness or just the normal cost of “yiddishe” living? Tuition is a given. the question is how much of one’s income should go to tuition. The first thing the yeshiva asks for is your credit card number. The fact that the the yeshivos (i deal with six) want a combined tuition that represents (after hanachos) of 50% of my gross salary, means that you have to come on to credit cards. If i could get off 1 year without paying tuition i would be able to pay down 1/3 of my short time debt and not add ant new debt at the same time. Unfortunately, no yeshiva has agreed with that proposal; instead they offered to increase my tuition.

  4. I disagree with your POV. Thought I have never walked away from a debt, consider the brazenness of the banking industry. With the lending rate to banks in the low single digits, credit card companies then turn around and charge in the area of twenty percent at a time when the world is suffering from the banking industry’s greediness. That means they make over fifteen percent of most consumer purchases. Which in turn means the make billions for doing very little work. To me, working for this money means keeping the markets stable.

    If my house would become worth less than the mortgage upon it without hope of it ever being addressed, I would consider walking away from my debt.

    Secondly, debt is a financial tool, as banks well know. Individuals are more sophisticated today than they were in times past, and should be able to make use of debt they way businesses used to before the meltdown. The blame for the lack of stability of the financial markets can be laid right on the bankers’ doorsteps.

    I think this article is way out of line. People’s lives have been destroyed by greedy bankers, some within our very communities.

  5. I have had to deal with a woman crying on the phone to me that her house was being taken away because it is in someone else’s name and that person declared bankruptcy. Putting assets in someone else’s name is risky, even if you resolve the inherent issues of Gneivas Daas and perhaps outright Gezel.

  6. The altest fad of debt settlemnt companies is very dishartening. Lo zo haderech. This is not the Jewsish way of doing things . I doubt any posek will say no problem go ahead….

  7. Everyone in Boro Park and Flatbush lives within their means. This debt problem only exists in the five towns and monsey.

  8. Let me ask you, what does the person do who has huge debt that he has no idea how to get out of it? The intentions up front were good but he has hit hard times and is desperate. So what should he do? I agree that making a Lchaim or getting a Mazal Tov for making a deal on your debt is not appropriate but the rest of your article is not so strong.

    People were not walking into banks taking out loans in the hundreds of thousands without any intention of paying it. When they took the mortgage or the line of credit they had a plan but now things have changed. You need to deal with the now and get out of debt and then work on repairing your credit.

  9. I learned quickly that what is even better than settling credit card debts is ignoring them altogether! Once your account has been sold to a 3rd party you do not need to pay! Chase sold my credit card debt, I sent a dispute letter and that’s the end of it. Citibank did in fact sue me but I answered the lawsuit with a pre-printed form on the wen and that was the end of that. Its not worth citibanks time to fight a real lawsuit where the guy might file for bankruptcy. But you must never ignore anything. Dispute in writing every debt and lawswuit

  10. Now in the summer, we are hopefully saying Pirkei Avos: “haloveh v’eino meshaleim…”
    Bankruptcy and debt settlement may give an illusion that one can get away with not being accountable for one’s debts, but it is only temporary. There ALWAYS is final accountability, even if it take 120 years…

  11. It’s a nebach if things change. But I know what the author is talking about. People take mortgages and PLAN to not pay from the get go. It’s terrible

  12. The answer to the question is that one must learn to live BELOW his means. The Mishna Derura (242:4) states that a person should limit his spending (besides for expenses of Shabbos, etc.) because by spending all that he has at the time he may be using up his allocation from Rosh Hashana. He continues in the Shaar Hazion (ibid:13) that unfortunately today people don’t cut back on expenses and come to stealing and chilul Hashem.

    Everybody just look up the Mishna Brurua and you will see the answer to the question.

    There alwasy was, is and will be somebody else to blame if the person does not act responsibly. That, however, is no excuse.