Should creditors be allowed to bundle and sell debts?

[Syrinx]

I say no. I may be wrong, but I think this issue was at the center of the mortgage/foreclosure crisis, as well as the general financial and economic meltdown.

And speaking personally, a while back, I took out a rather small loan. At first, I was able to make the agreed upon payments, but my personal situation hit a few road-blocks, and I had less and less money. I continued to make regular payments, but of lesser amounts. I knew it was going to cost me more in the long run, because of more interest piling up, but I just couldn't afford to keep paying the larger payments, and otherwise exist (paying for food, gas, electricity, etc.).

I was informed that my debt had been sold to another company. That's when I decided I no longer would try to pay back the debt. Before that happened, I had never heard of this third-party corporation. And I certainly had never dealt with the in any manner at all. The corporation that I had borrowed the money from was no longer interested in pursuing my payments, and they got back most, probably all, of the money I had originally borrowed from them. Having had no prior relationship with the third-party, I feel no moral obligation to pay them a cent, even though it will probably wreck my credit rating.

Am I wrong?

[SoCalDem]

1. It's done all the time, and it stinks.

The sad thing is that the loaner, at some point says.."I'll sell you this 1500 outstanding debt for $700", so the second party stands to make $800 plus all the extra charges.

Meanwhile party A was apparently ready to settle that debt for $700, so why not just contact the borrower and settle directly with them? They get the same amount in the end..

Party A writes-down the loss of the $800 in either case.

[Syrinx]

4. in other words, it's premeditated theft

Am I right? :shrug:

[SoCalDem]

5. Not really. In a perfect world

the $1500.00 debt would be paid off, on time, and everyone goes home happy. but if there's a problem repaying the loan, decent thing would be for the loaner to at least offer the same "deal" to the debtor, that he is willing to give to a third party.

There are many people who could have stayed in the homes that were foreclosed on, if the lenders could have been "found" and would have bargained with in good faith.

Around here it's not hard to see homes that last sold for $300K & up, being sold as vandalized foreclosure homes ...for less that 100K sometimes.

Almost all of them could have been maintained and taxes paid on them, just by re-negotiating with people who were in the,...even if it was a rental deal..

[Yupster]

11. I think so

You know you owe the money. You should pay it back if you can. Otherwise it's premeditated theft.

[LARED]

2. Morally you should repay your debt. No matter if it was sold

as long as the contract remains intact. Also I'm sure when you signed the obligation you agreed to continue paying if the debt sold to another party.

[Syrinx]

3. sounds like a valid legal point

But if the banks don't have to obey the law, I want a bailout too.

[Greyhound]

6. No, you are not.

One of the richest men I know got that way by borrowing a ton of money, using it to buy real assets, transfer or otherwise hide the assets so they were out of reach, go bankrupt, and repeat in seven years.

This idea of a moral obligation in regard to money is simply a construct of the powerful to dissuade the suckers from playing the games the way they play it.

My only criticism of what you're doing is that I'll bet you didn't borrow nearly enough.

[Travis_0004]

7. You realize your loan doccuments you signed allow them to sell the debt

I have an auto loan right now, and I could care less who I have to repay. If the debt was sold, I log onto internet bill pay, change the address, and continue making the payment. Who cares who ultimately owns the debt. Fannie Mae was established in 1938, to create a system to buy and sell mortgages, so this has been going on for quite a while. (I know we are not talking about mortgages.)

All I can say is don't complain to me when your credit sucks, and you have to pay a higher interest rate, or get denied for a loan for the next 7 years.

[Billy Burnett]

8. Watch this informative video explanation

Money as Debt
http://video.google.com/videoplay?docid=-2550156453790090544#

[closeupready]

9. If you can pay them back, you should.

But if you can't due to circumstances beyond your control, right/wrong doesn't enter into the equation, in my humble opinion.

I'm not sure I understand your question "Am I wrong?"

Are you asking us if defaulting reflects poorly on your character?

[shimmergal]

10. Legally you're wrong.

Morally you're right. Not unless the debtor is equally empowered to transfer his/her debt to someone of his/her choice without the lender's permission.

Unfortunately I don't expect this situation to change.

[Romulox]

12. Your obligation to repay is entirely independent of who owns the note.

You have an obligation to repay the money because you took out a loan and agreed to repay. One of the reasons that the money was available to you, and at the rates that it was, was that there is a secondary market for debt (and "bad" debt) in particular. If that didn't exist, the cost of borrowing would inevitably increase, and the amount of money available for loans would inevitably decrease.