Life led Elizabeth Hadzic and Kim Coles to bankruptcy court.
Hadzic, 50, a psychotherapist in Maryland, doesn’t make enough to support herself and her adult son, whose health struggles set her back thousands of dollars. Coles, an accountant in Oregon in her late 60s, was laid off last year.
Both have tens of thousands of dollars in student loan debt. Although they have been making payments on those loans for years, they no longer can. And both, in the absence of an alternative, have resorted to taking the costly, typically unsuccessful route of trying to get their loans discharged in bankruptcy court.
That’s where things diverge.
For Hadzic, bankruptcy is proving to be the answer to her financial woes. After months of litigation, she’s on track for a full discharge. In Coles’ case, the government is putting up a fight − though she is of retirement age − against discharging the balance of a loan she’s been paying down for more than a decade.
“I always paid my student loans,” Coles said in an interview. “I was never late.”
The disparity in how the government is treating their cases is indicative of the intractability of one of the country’s most extreme and inaccessible forms of student debt relief, as the Biden administration grapples with finding alternatives to the kind of sweeping student loan forgiveness option that the Supreme Court struck down in June.
Don’t loan what they can’t afford to repay. Easy. Not everyone was stupid enough to offer debt up to people’s eyeballs, and many weren’t “fortunate” enough to even try.
Stupid games cause stupid prizes, for everyone involved. Bankruptcy exists for a reason and it was foolish to ever allow any debt to bypass it. Humans always have and always will act in their immediate best interests with a hopeful view of the future, and the best way to accommodate normal behaviour is to balance discouraging it (by encouraging the specialists in debt to refuse bad debt by punishing them with unrepaid loans) and ensuring the people caught in the system can still be functional in society since that is better for them, society, and everyone except the idiots who loaned them money they were never paying back.
If someone is deemed by society too stupid to make life choices we assign them a care giver and they become a ward. If your excuse to taking out mountains of debt is no reason and want to get it all expunged with no penalty, then you should be divested of your finances and have someone appointed to take care of all your financial choices.
Otherwise some societies have debtor prisons where you exchange time of your life for the value you stole from others. The US only has debtors prison for federal taxes even though they don’t call it that anymore.
Bankruptcy not allowing certain types of debt is very stupid and obviously because of lobbies. Bankruptcy should be eliminated. The very few people that use it individually are nothing compared to the corporations that use it to hide billions of dollars. Go “bankrupt”. Stores stay open. Management continues getting paid. Employees lose their pension and stock benefits. All the creditors like the small supplier shops get no money for the items they sold to the store. Store can continue to sell items and never pay for them at ridiculous prices because the cost is zero.
Trying to control the lives of millions of people because they were too stupid with their finances is a very inefficient solution to the problem (also unpalatable). I think the far simpler option is to simply stop protecting anyone giving bad debt. The government has less work to do, people learn to be smart in what debt they offer, because if they start offering people the moon for punishing but distant costs, they’ll get nothing.
Your solution relies on every human being smart. Mine doesn’t care how smart people are, it ensures the problem is self correcting. Much neater, much less societal harm. Who actually cares about “punishing stupid debtors” when you can instead just not have any stupid debtors.
Just to add, I think the reason bankruptcy needs to exist is to ensure there is no burden on the government enforcing inefficient debt collection. It’s not about fairness or second chances, those are just happy side effects. But if someone’s business model relies on government enforced punishment to function it’s a wasteful model from the governments perspective. Allowing people to go bankrupt means nobody will benefit from this model of debt collection, and thus saves the courts and government to focus on more beneficial contract law involving large amounts of wealth, rather than millions of pittances that cost the government more than they earn the loan sharks.
Pretty sure scratchee and TechNerdWizard42 are the same person.
I assure you we’re not, and we seem to disagree pretty fundamentally, possibly you’re confused by the fact I replied to my own comment, but I assure you that was just because I was a bit drunk and couldn’t find the edit button
There was a bit where you both seemed to have pasted identical responses. The other comment seems to have been deleted.
Please give us a scientific definition of ‘stupid.’