# Libertaria and Bankruptcy Law **URL:** \ **Category:** Great Debates\ **Created:** [October 22, 2005, 3:41pm UTC](https://boards.straightdope.com/t/libertaria-and-bankruptcy-law/327428 "2005-10-22T15:41:40Z")\ **Posts on this page:** 10\ **Page:** 5
**Author:** ![Dewey\_Cheatem\_Undhow](https://avatars.discourse-cdn.com/v4/letter/d/13edae/32.png) [@Dewey\_Cheatem\_Undhow](https://boards.straightdope.com/u/Dewey_Cheatem_Undhow)\ **Post date:** [October 26, 2005, 7:47pm UTC](https://boards.straightdope.com/t/libertaria-and-bankruptcy-law/327428/81 "2005-10-26T19:47:59Z")
**Lib** , would you be so kind as to direct your attention to the questions regarding multiple creditors posed by myself and **Fear Itself**? ---
**Author:** ![Liberal](https://avatars.discourse-cdn.com/v4/letter/l/848f3c/32.png) [@Liberal](https://boards.straightdope.com/u/Liberal)\ **Post date:** [October 26, 2005, 8:22pm UTC](https://boards.straightdope.com/t/libertaria-and-bankruptcy-law/327428/82 "2005-10-26T20:22:05Z")
> [@Dewey Cheatem Undhow](#): > > **Lib** , would you be so kind as to direct your attention to the questions regarding multiple creditors posed by myself and **Fear Itself**? Would you mind terribly if I elected to do something more pleasant than converse with you — such as inflicting myself from head to toe with papercuts and dousing myself with gasoline? ---
**Author:** ![RickG](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rickg/32/5174_2.png) [@RickG](https://boards.straightdope.com/u/RickG)\ **Post date:** [October 26, 2005, 9:15pm UTC](https://boards.straightdope.com/t/libertaria-and-bankruptcy-law/327428/83 "2005-10-26T21:15:53Z")
> [@Liberal](#): > > I’m not sure whether it’s the case that we disagree, or whether we’re just thumping two different heads of the same drum set. I certainly agree with you that a person cannot control things beyond his control. I mean, by definition he cannot do that. And I also agree that terms of the contract will override other considerations. So I’m having trouble pinning down what point you’re making. Are you saying that all risk ought to be assumed by the lender? If so, that hardly seems fair. Why shouldn’t he charge interest rates of !00% if that’s the case, and demand collateral held in trust for every loan? Pardon me for interjecting into other people’s discussion, but don’t interest rates generally include a “risk premium” that accounts for the possibility of default? The risk premium is much lower for secured debt, which is why the interest rate on my mortgage is massively lower than the interest rate on my credit card. If all debt is secured (whether by collateral or under-penalty-of-law forced repayment), interest rates would be a lot lower, I imagine. On the other hand, it seems to me that entreprenurial borrowing would fall to nothing. Capital could still be raised by selling stock, but that seems like it would reduce the incentives for entrepreneurs, since their ownership stake in their start-up is correspondingly diluted. Would this mean the death of capitalism? Rick ---
**Author:** ![Liberal](https://avatars.discourse-cdn.com/v4/letter/l/848f3c/32.png) [@Liberal](https://boards.straightdope.com/u/Liberal)\ **Post date:** [October 26, 2005, 9:45pm UTC](https://boards.straightdope.com/t/libertaria-and-bankruptcy-law/327428/84 "2005-10-26T21:45:22Z")
I don’t think so. Entrepreneurs typically are risk takers by nature. I don’t think they would necessarily always opt for the safest loans. (Incidentally, I might have misunderstood what you meant, but for the record, I am not advocating that all debt be secured. Note my use of the subjunctive mood in my question to Treis.) ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [October 26, 2005, 10:00pm UTC](https://boards.straightdope.com/t/libertaria-and-bankruptcy-law/327428/85 "2005-10-26T22:00:00Z")
I’ve started [a thread](http://boards.straightdope.com/sdmb/showthread.php?t=341670) on another aspect of life in Libertaria. **Liberal** has already posted there (thank you) and anyone else is invited to share their perspectives if they like. Regards, Shodan ---
**Author:** ![Dewey\_Cheatem\_Undhow](https://avatars.discourse-cdn.com/v4/letter/d/13edae/32.png) [@Dewey\_Cheatem\_Undhow](https://boards.straightdope.com/u/Dewey_Cheatem_Undhow)\ **Post date:** [October 27, 2005, 1:29am UTC](https://boards.straightdope.com/t/libertaria-and-bankruptcy-law/327428/86 "2005-10-27T01:29:30Z")
> [@Liberal](#): > > Would you mind terribly if I elected to do something more pleasant than converse with you — such as inflicting myself from head to toe with papercuts and dousing myself with gasoline? I guess that’s a “no” then. ---
**Author:** ![tomndebb](https://avatars.discourse-cdn.com/v4/letter/t/b9e5f3/32.png) [@tomndebb](https://boards.straightdope.com/u/tomndebb)\ **Post date:** [October 27, 2005, 4:06am UTC](https://boards.straightdope.com/t/libertaria-and-bankruptcy-law/327428/87 "2005-10-27T04:06:09Z")
> [@Wake up call](#): > > Now, what makes you think that anyone would want to exchange “ideas” with someone who is admittedly “morally weak”. How about you start working on your “weaknesses” before calling others silly and myopic. What makes you think other people are interested in hearing you bouncing off your own silly, myopic and morally weak ideas? **Wake up call** , you have the choices of refusing to engage another poster or declining to participate in the thread. I see no reason why you need to post _ad hominem_s that are (just barely) inside the bounds of this Forum for no better reason than to claim that you are going to not participate. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [October 27, 2005, 4:48am UTC](https://boards.straightdope.com/t/libertaria-and-bankruptcy-law/327428/88 "2005-10-27T04:48:05Z")
> [@](#): > > Another repeatedly answered question, and frankly an unbelievable one. How can you enter the agreement in good faith if you signed it in bad faith? Your signature indicates your consent to the terms. If you do not complete them, then you misrepresented your consent. That’s deception. Mistrepresentation is deception. Like others, I’m having a hard time with this statement. Not all loan defaults are due to misrepresentation. Consider a guy who own five bars in New Orleans - all are successful businesses. He goes to the lender, points out his proven track record as a successful businessman, and borrows $100,000 to open a sixth bar. He has every intent of paying back the loan on schedule, the same way he has done five previous times. But six months later Hurricane Katrina hits. His new bar is underwater. His other five bars are underwater. His house is underwater. He cannot pay the balance of his loan. He has no income and even if he sold all his property its current value is less than the amount he owes. Are you saying this guy was misrepresenting himself at the time he borrowed the money? ---
**Author:** ![Liberal](https://avatars.discourse-cdn.com/v4/letter/l/848f3c/32.png) [@Liberal](https://boards.straightdope.com/u/Liberal)\ **Post date:** [October 27, 2005, 8:01am UTC](https://boards.straightdope.com/t/libertaria-and-bankruptcy-law/327428/89 "2005-10-27T08:01:13Z")
> [@Little Nemo](#): > > Like others, I’m having a hard time with this statement. Not all loan defaults are due to misrepresentation. Consider a guy who own five bars in New Orleans - all are successful businesses. He goes to the lender, points out his proven track record as a successful businessman, and borrows $100,000 to open a sixth bar. He has every intent of paying back the loan on schedule, the same way he has done five previous times. > > But six months later Hurricane Katrina hits. His new bar is underwater. His other five bars are underwater. His house is underwater. He cannot pay the balance of his loan. He has no income and even if he sold all his property its current value is less than the amount he owes. > > Are you saying this guy was misrepresenting himself at the time he borrowed the money? Please see Ambrosio Spinola’s excellent arguments, and my responses to him. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [October 27, 2005, 5:39pm UTC](https://boards.straightdope.com/t/libertaria-and-bankruptcy-law/327428/90 "2005-10-27T17:39:35Z")
Ambrosio Spinola did make an excellent point. But I’d expand on what he said; by agreeing to the loan, the lender is effectively agreeing that his money has passed on from his control and, under certain unforeseen circumstances, might not return. If the borrower is agreeing that foreclosure by the lender is not a form of illegal theft or fraud, then the lender is agreeing that a genuine bankruptcy of the borrower is also not a form of illegal theft or fraud. [Previous page](https://boards.straightdope.com/t/libertaria-and-bankruptcy-law/327428.md?page=4)