Yeah, go ahead and "strike" all you want. Just be aware that the credit reporting agencies aren't going to care why you didn't pay.

The quickest way to redistribute some wealth is to default on debt and underwater mortgages. Debt is an asset to the lender, generally big backs and adds to their wealth while detracting from the debtor. Many if not most of the people who are underwater bought their homes recently. They should walk away and not only would they hit the banks with a loss, but they can probably rent a place for much cheaper than their inflated loan freeing up money each month for other things or saving.

Trying to keep everyone in their homes helps few but the banks. If you're underwater and paying more than rent you're just throwing good money after bad. What we should have done was make foreclosure quick and easy. Maybe even a have a ban on it impacting your credit if certain conditions are met.

The loan strike is a great idea in principal. But get ready for those garnishments to kick in.

@1 Bills and debt are not moral issues. The decision to pay them or not should be made on economics. A bank is not a friend who was helping you out. Its a business and part of what you get for paying interest or giving a security interest is the right to default.

Don't worry, Ken. The people who think it's not a moral issue can take comfort in the fact that the lawyers will have absolutely no moral issues about suing the shit out of them, either.

@7 No you made a promise to pay it back or accept the consequences of a default e.g. the loss of the security interest, a judgement against you, bad credit, etc. A bank is not lending you money based on your word, they are doing so because they feel the benefit you get via the money and paying it back is greater than the cost of default. It is a risk on their part and if that dynamic changes, or the bank was wrong, you are no more obligated to keep paying then you are to continue to subscribe to a service that is no longer what you want. This is especially true in the case of mortgages. There is no reason why the risk of declining home prices should fall on only one side of the contract.

Continuing to pay on debt when it is no longer economically efficient to you damages the economy as well as your own personal finances. That money you piss away paying an underwater mortgage could go toward actual goods and services that create jobs.

There is nothing wrong with using all the legal tools at your disposal to maximize your benefit. The banks sure as hell do it. The moral component is simply a smoke screen to get you to continue to act in an economically disadvantage way which benefits the lender.

I bought my son a winter jacket at Zumiez that looks like an untucked pinstripe shirt plus shoes, pants and t-shirts. It cost over $400. I used debit instead of credit so Zumiez paid no merchant fees. The boarders-slash-salespersons will now be fed.

Welcome to the Retailution.

To hell with the truth! As the history of the world proves, the truth has no bearing on anything. It's irrelevant and immaterial, as the lawyers say. The lie of a pipe dream is what gives life to the whole misbegotten mad lot of us, drunk or sober.

Eugene O'Neill, The Iceman Cometh

Came here to say what giffy is saying. Nailed it.

So is it OK to walk away from a mortgage from your friendly local credit union, too? Certainly they would be hurt by this.

Or does this only apply to the big bad banks?

@15 nah, since the credit unions are local, they know where you drink and can arrange to make sure you have an "accident" while you're stumbling home late at night.

giffy++

@15, in short, yes.

It's crucial that lenders bear risk on loans, otherwise something disastrous happens: the banks start issuing massive amounts of loans to people who can't pay them. If the risk falls on the consumer only, the banks make their money (plus fees!) anyway and the consumer gets to live in debt servitude.

Whoa-Hey! That's what happened, right? Between the creation of dubious new "financial instruments" and the assurance of a taxpayer funded bailout, risk to the lender dropped; bad things happened.

@12 And the more money that people spend on debt service the less business say the local pub gets making it harder for them to stay open. It's all a trade off. I am not talking about defaulting for the hell of it, defaulting entails pretty significant costs, but there is a point where those costs are less than the amount the debt is costing you and that is the time to defualt.

But really banks should not be lending to people where it is more economically advantageous for the debtor to breach. The fact that our system makes it in their interest via various means like swaps and collateralization is part of what got us into this mess in the first place.

@15 It would be. Though credit unions were a bit more judicious in their lending and have fewer upside down mortgages.

And does this go for small businesses too? If my business tanks because of the economy, and I have a small-business loan of $50k, can I just walk away and say, screw you, friendly local bank?

@19, yes.

You know about bankruptcy, right? There are legal mechanisms for this sort of thing. It happens all the time.

@19 Sure. But you're going to damage your credit and depending on the terms of the loan the bank may have various recourses it can take such as levying against your property. If those risks are less costly to you than your debt payments then yah, walk away. The bank made a bad deal and their risk did not pan out. There is no reason for you to put yourself in an economically disadvantageous position for their benefit. They are lending you money at interest. Their aim is too make money, not do you a favor. Morally you owe them nothing.

By the way, companies do this all the time. Business are always defaulting and renegotiating debt.

Now if that loan was from your friendly Aunt May who always believed in you and loaned you her retirement money, then yeah, you owe her big and should do whatever you can to pay her back. That's a moral obligation.

A loan strike is the "Sea Kittens" of the Occupy movement.

@22 sea kittens was a silly idea to support a silly ends in a silly way. i'm not sure the same applies here.

@23 - In the sense that it's an idea connected to a movement with an admirable underlying message (in between completely idiot press stunts, PETA lawyers have actually done some good work in prosecuting animal abuse cases and promoting legislation), it's an eye-roller and paints Occupiers exactly as detractors already see them.