Right here is the problem with the US. Why should all your creditors need to pound sand for your financial mismanagement? I'm okay with deferred payments, restructuring, and other types of payment plans but why do we allow people to wipe their slates clean?
It's legalized theft.
Another way to look at it is sometimes either through bad choice or unfortunate circumstance people get into financial trouble. Not everyone has wealthy parents or a network they can fall back on. By not allowing people to reset you are creating an indentured class. What of those unable to pay? Should we send them to prison? Perhaps garnish their wages in perpetuity? What if they become pregnant or sick after falling into debt? By not allowing a way out you are creating a slippery slope towards forced labor.
Not allowing bankruptcy also closes the door on entrepreneurship for anyone in a low income bracket or without rich parents. They cannot take a business loan as the risk of failure means they are forever indebted.
All roads lead to the rich getting richer and the poor getting poorer.
Note: If its legal it cannot be theft by definition.
"Oh legalized theft". So, cash advance abusive loans aren't? Overdraft fees (and the ways bank forces an overdraft)? Wage theft? Patent trolling? ATM fees?
Even more naive than that is thinking the bank is losing money at the end. Sure, they might lose money on one lending operation. But they know how many people are going to pay back or not. If they don't they have multiple ways of losing much less than the nominal value.
All businesses have a risk and I guarantee the bank knows that better than people who defend them.
It comes down to how much you are hurt. You can cripple me financially for life with a $150k loan I can’t pay back because I can’t get the kind of job that pays enough.
Option a: I pay most of my income for life and end up only paying interest, never make headway. My life is ruined, the bank doesn’t care.
Option b: the bank has to eat its small investment. Nobody is fucked, maybe one guy is fired if he does this repeatedly.
Massive difference in outcomes for society.