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Personal Debt and National Financial Collapse

16K views 22 replies 16 participants last post by  Bryan4916 
#1 ·
What will happen to our personal debts (mortgages, car loans, credit card debts, student loans) if there is a total and absolute economic collapse in this country? If it's all in shambles, how will it affect us on a personal level?
It may be a dumb question but I guess I just don't have a clear handle on it. :confused:
 
#2 ·
The banks will try to make sure you still owe them in "New dollars" the "Amero" or whatever so long as it is just a collapse of the dollar or our country. They have the money and power to make new laws and will try to ensure you still owe them. It will be interesting if the dollar is basically worthless and lets say 1 oz of gold buys you one million dollars, then you pay off you home or all debts with said dollars. It is speculation of how courts or new law will deal with such situations as the original debt was a contract for dollars and you would have essentially upheld your end of the contract, however the banks would be paid back in a virtually worthless assets. The fact that so many dollars are owed makes it hard for a total collapse to happen because there will still be alot of demand for dollars even if the value sinks for consumers to pay off debts at lower value like the gold example above.

However if the whole economic system of the world collapses there will be no banks.
 
#3 ·
The loans you have that are on collateral such as house and car will require payment or they will repossess/foreclose on them. Credit card loans under the new bankruptcy law could require repayment if you are earning a good salary, if you are destitute the credit card companies are SOL. Student loans are inescapable other than through some form of government forgiveness.

Expect none of that to change without a disaster that kills off the majority of mankind. Economical depression will simply suck worse for those with bills and no income.
 
#5 ·
There are many variables to consider. If by "absolute economic collapse", you imply that there is deflation of the US dollar (similar to what happened during the Great Depression) and that you can buy more with the dollars that you have (think about a hamburger for a nickle), then you will be paying back today's (inflated) debts with tomorrow's (deflated) dollars. In other words, you will effectively be paying more for the debt. You will work more to get the same dollars of income so that you can pay back the old debt. If you have a job. So, if you are working at 1960's level wages and you are paying back a 2000's level mortgage then you are ****ed.

If, however, you think that "absolute economic collapse" means that the dollar will become devalued because of inflation, then things will become more costly and you will need more money to buy the same items. Think about buying a hamburger with a bucket full of cash. Then, your old debts will be paid off quicker because you will be using devalued dollars to pay of the same dollar amount owed. This is why countries devalue their currency. That lets them pay back their old debts with money that is worth less.

That is a good start. Let me know if you need more info.
 
#7 ·
It really depends on what happens with the govt.

If the govt remains, the few remaining banks will buy up all the debts and assets of the failed banks for pennies on the dollar. The net effect is that sometime down the road, the banks will come after you to pay. So if your mortgage is with Wells Fargo, and they go bankrupt, another bank will buy their assets (read: your mortgage and a million like it), then demand that you pay them.

Complicating the game is that the govt can change the rules when they want. And in the middle of a financial crisis, no one in power will really oppose them.

Of course, if the govt goes belly up, then all bets are off.
 
#18 ·
And for this, you need to understand who runs government and to what ends. So I'd say it all depends on the multi-national corporations. Big oil, the military industrial complex, banksters, agriculture, Big Pharm.

I believe we are seeing changes in the transition of power from governments to corporations, a new sort of private global feudalism. Though most of this has existed for a few centuries, it's just going through some new changes. So governments will openly begin to answer more to the multi-national banksters, etc. in terms of how they run their societies and maximize return of labor to the global elite. So you'll still be paying taxes, interest, etc. but it'll be going to the multi-nationals, who run various governments to make sure it goes that way. For instance, even now a lot of countries probably get more "foreign aid" than many US states (whose citizens actually pay taxes). We're bailing out European banks, propping up people like Mubarek (I'm still holding my breath for the corporate media to tell us that his assets are being returned to the US), etc.

If the government collapses, expect private armies to take over directly, rather than using government as a proxy.

If the multi-nationals collapse, then that's a different matter. But so long as people need to buy things, I wouldn't really expect this.
 
#10 ·
I am in a different camp, i believe the economy/dollar will collapse, and since every country in the world holds dollars in backing of their own money, to the ave tune of around 60% of reserves. Then i would venture to say that it will result in a world wide collapse. Bankers are almost getting hung now, imagine when the golden horde runs out of government cheese.

Ain't no bankers going to be collecting your mortgage each month.
 
#12 ·
its simple math if you have $30 left and your choice is to buy 2 loaves of bread or pay citibank which do you choose?
Banks as is wont be open,they will be overrun,occupied and they will also be on the hook for their own misguided debts
mortgages about the same with the robosigning lawsuits it is really hard to tell,i have heard of many now who have gone 1.5 yrs so far without paying a mortgage,their lawyers advised them they have no clue who to pay the mortgage to because their original not can't be found
it will all be one big mess but in a utter collapse,credit to a financial institution may be the last thing you need to worry about
 
#13 ·
If all of the brick and mortar buildings that house any record of your notes all burn down, and if the internet and all the servers that hold that same information burn up, you might be in the clear. But I doubt it.
 
#14 ·
modern day credit cards were not fully utilized until the 1950s. In a collapse credit cards would more than likely not even be accepted and therefore useless,possibly,so i see no reason to maintain a credit score when credit will be no good for some years to come..
Cash would be expected by the majority of businesses,prepay cards maybe and of course bartering systems/items. Car notes and mortgages may need to be at least paid on to keep,if there is a way to get a payment to them...although i am not sure what they would foreclose on if the house is burnt down,bombed or otherwise rendered inhabitable...
 
#15 ·
Family History facts from the 20's-30's Depression..

Bank closed and my Great Great Aunt lost $10,000 (ya, she was one of the rich ones). Just poof, one day it was there, the next day gone. Bank closed never opened again ever. Thus, she became one of the poor ones.

Our ranch...local property taxes went up too fast. Before we could scratch together enough money we lost 110 acres out of the middle. It was a Sheriff's Sale. Basically the local elected Sheriff comes to your place, after a tiny post in the local paper (legality), they show up and a bunch of guy's bid on your land. We scrambled but were a week short of the payment. That square of 110 acres is still owned by another family, smack dab in the middle of our ranch, surrounded on all sides by us. It's not very good ground, has no real water supply, or water rights, but its still a thorn. They don't keep their fences up, they poach their way into their plot and out...Just sucks. They don't use it for anything, it just sits there and grows weeds that blow onto us. We've been trying to buy it back since we lost it in 1934. Its sad its really useless ground, that's why we used it to "loose" but still. Big bummer...but life has winners and loosers, and we lost. Course we are still a viable cattle operation before and after so we weathered darn good. I've wanted to buy it back since I was 8 years old and was told the story.

I would imagine any debt you have will cause your assets to be "auctioned" off by the local Sheriff to pay off your debt. That's what happened to us.-WW
 
#20 ·
The intermingling of government + corporation goes back centuries. The fur trade and whaling companies, privateers, etc. So it's hard to say how much we're becoming a global corporate feudalism, vs. how it's always been this way but we're just waking back up and seeing it for what it is. In the past, the private elite were unquestionably synonymous with government (Caesar, Pharaoh, the King, etc.). So a lot of the linguistic distinctions we entertain today may have drifted, even though that which they describe has not. We have a sort of cognitive dissonance as a result. We expect government to represent us, some democracy, though they obviously do not. That understanding is a painful process. When they start talking about a 32 or 24 hour work week and 6 weeks of vacation -- and deliver on it -- then I'll suggest otherwise. But so far they've managed a society in which the average worker has not only been DENIED all the benefits of globalism, automation, robotics, mass communications, etc. but he's actually earning LESS adjusted earnings. It takes powerful mojo to still provide the illusion of "by the people, for the people".

With globalism (not just regionalism), instant micro-trading, and certain other game-changers there are certainly some things that are different... But I would be willing to bet that the distinction between rich/poor, powerful/powerless, owner/debtor, landlord/renter will outlast anything except a TEOTWAWI scenario.
 
#23 ·
I think its more specific people manipulating conditions without fear of consequence or care of the damage done. This does not exclude using their corporations to that end. But this is just a symptom of a larger problem. The elected (servants of the people right?) officials, and unelected officials have been corrupted beyond a critical point. They no longer have fear of the people and the rule of law is evaporating. Some appear to have some screwy agenda while others are just power junkies. The debt and socialist activities have have weakened the US enough to make this disease a fatal condition. I wonder if some realize the situation and are throwing a hail marry. Few legitimate companies can operate well and offer good salaries under these conditions. I really hate to see us reaching levels of the Mexican government.

In the former soviet areas, property was devalued to near nothing since no one had money. Condos could be bought for the equivalent $1K. The same condo today is worth $100K. The ones who had transferred to USD had something to barter with. The others didn't. Keep in mind that they had 3 economic craters in a row.

In my point of view from being there for a year, the society is split between investors, workers, officials, and entrepreneurs. Most of the investors bought condos and such while things were bad. Even if it was all they had left. Workers share apartments with other families while getting $600/month (pre-tax). Ones with degrees might get an extra $100/month. Officials make much of their money through bribery and twisted laws. Some entrepreneurs have opened clubs and such and do OK as long as they skirt some of the taxes and keep the officials payed off.

I hope we get back to rewarding innovation and smart hard work instead of smart thugs and brainless parasites sooner than later. People run companies just as people shoot guns, not guns shoot people.
 
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