If you haven’t heard the news buzzing around about auctioning off debt on eBay, allow me to fill you in. A woman in Erie, PA tried to auction off her debt, totaling $103,245.11. She listed out what her debts were and offered the winning bidder the choice of keeping her house and car. She even went so far as to inform the bidders that they could turn around and sell her possessions to get a return on their money. Very thoughtful of her, wasn’t it?

I give this woman points for creativity, but I have to say, I find it incredibly irresponsible of her to attempt an auction of her debts. Number one, what is that telling her children? While she likely didn’t intend for it to impart a negative lesson, the whole ordeal does suggest that it’s ok to run up your debt until you can no longer afford it because other people will take care of it for you. Number two, this was her debt and she’s trying to give it to someone else. I guess she missed the statistic that America is $900+ billion dollars in debt with the average American family contributing well over $8000 to that debt. Other people have their own problems to worry about.

But, this got me to thinking about debt and how we handle it in general. So, I called up my grandparents and asked what they thought. My grandmother snorted and said that in her day you didn’t talk about your debts with other people. You saved and penny-pinched until you could pay it off. You made arrangements with your debtors and you stuck to the agreement, plain and simple. My grandfather put his two cents in, as well. He said that he believed it to be a difference of generations. His generation didn’t really run up a lot of credit because they usually just paid cash for everything. On the off chance that there was quite a bit of debt built up, most people took a second job or did odd jobs until they paid it off. In today’s society, people just get bankruptcies.

And that brings me to my next issue with people and their debts. Bankruptcies!

It is my firm belief that there are VERY limited situations in which a bankruptcy is appropriate. A single mother working three jobs with medical bills stacking up I would say is a legitimate reason to have a bankruptcy. However, a friend of mine, also in the banking industry, has a couple that she’s worked with on various things for over 15 years. Since my friend has known this couple they have filed two bankruptcies. She got curious one day and asked them why they had filed twice when they seemed to be making enough money to cover their bills. They told her they had filed every 7 years since they were 30 because they were working the system.

Every 7 years this couple got rid of their debt and never had to pay it back (mind you, this was before the new bankruptcy laws) and they’d get new credit within five years; completely free to run it up in two years time only to file and start the process all over again. That’s just irresponsible and somewhat greedy, if you want to know the truth. There’s no good reason to file a bankruptcy if you don’t have to. And this couple could have been fairly well off. The husband was an engineer and the wife was an RN at a major hospital. Frankly, I rather like the new bankruptcy laws. If responsible individuals have to pay back their debts, so should everyone else. I’m ok with some sort of structured settlement to reduce fees and the like. Everyone needs a break sometimes. I’m not ok with people working the system to run up tens of thousands of dollars in debt and then just get to start all over again every 7 years, never paying anything back and keeping everything they’ve bought.

Call me old-fashioned but I believe people should be held accountable for their debts. I believe they should have to struggle and learn because only then do they grow as individuals. People who struggle through the hard times have a better understanding and appreciation for the things they have in life. Offering these easy-out solutions to their financial problems doesn’t help anyone in the long run.

Ok, stepping down from the soapbox, now.

Tell us what you think. Are these solutions an appropriate way to handle your debts?

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