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The rules are changing. Once upon a time people could walk away from debt and start over if they got into trouble. It would be very unwise to assume this will be possible in the future.

Credit card debt is no longer unsecured debt. It is now secured by a 25% lien on all your future earnings. Protect yourself and your family accordingly.

http://knba.org/post/when-consumer-debts-go-unpaid-paychecks-can-take-big-hit (http://knba.org/post/when-consumer-debts-go-unpaid-paychecks-can-take-big-hit)

https://www.aclu.org/blog/tag/debtors-prisons
https://news.vice.com/article/debtors-prisons-are-taking-the-us-back-to-the-19th-century
http://www.npr.org/2014/05/21/313118629/supreme-court-ruling-not-enough-to-prevent-debtors-prisons

As it should be. Borrowing something and not giving it back isn't debt, it's theft.

You mean like every time they create a loan out of thin air and rob every USD holder world wide in the process? Also, why is this not the responsibility of the lender to assure that someone they loan to is not a risk to lend to? They are extracting a profit, any time this happens there is a corresponding risk or obligation. This is an immutable law of commerce.

Loans aren't created out of thin air. They are created out of deposits. Depositors are expected to know exactly what they're putting they're putting their money into. Whether that's a reasonable expectation is another matter entirely.

You have a strange idea about responsibility. A lender has no responsibility or obligation to the debtor other than to actually provide the loan itself. The lender will of course be annoyed if the loan is never repaid, which is why they don't make loans to those who are bad credit risks, but that's not the lender's responsibility. Repaying the loan is the sole responsibility and obligation of the debtor.

Technically 90% of the loans ARE created out of thin air. So for every dollar in deposit, they can loan out $9 more. You are woefully uninformed about he banking system.

"As we're going to see, money in our modern banking system has the ability to multiply through bank lending. Each time a loan is made, money is created. Out of where, you may ask? Out of thin air. Most people would attribute this feat only to the Federal Reserve, but in actuality, every bank does it with every loan they make."
http://www.financialsense.com/contributors/matthew-kerkhoff/fractional-reserve-banking-how-to-create-destroy-money


The banking system is RIFE with stories about banks giving loans to people with no credit, bad credit, hobos, even criminals during the housing market boom. There are even reports of bank employees FALSIFYING LOAN PAPERWORK without the knowledge of customers! The consequence is disconnected from the choice of who to lend to, because if a loan goes bad the TAX PAYERS, HOME OWNERS, and USD holders pay the price, not the loaning bank. If I pick up an random hobo off the street and pay him to remodel my house instead of a qualified bonded contractor, is it the hobos fault or my fault for making that investment when it goes wrong? It is the primary responsibility of the investing party to due due diligence upon the borrowing party.
It boils down to this...
If I file for a loan that I shouldn't be approved for, and my bank falsifies my paperwork and gets me the loan anyway, how is that even an enforceable contract let alone something one should be imprisoned for? Being poor should never mean a loss of your human rights. The bankers are playing a rigged game, now they want to get their pound of flesh after they have entrapped the nation with fraud.

I know how fractional reserve banking works. You clearly don't. For every dollar in reserve, they loan out $9 more, from a total of $10 in deposit.

It is your fault for making the investment, but the hobo's fault for it going wrong, and you can sue him for that. Of course, you likely won't get much, which, more than anything else, is what makes it a bad idea.

That responsibility is to the investor himself. He has a responsibility to make a profit, and that means not making loans that are likely to go bad and lose him money. The fate of the borrower is not his responsibility at all.

Because even if a contract is invalid, it is invalid for both parties. If the borrower was never supposed to receive the loan, then the lender was never supposed to give it, which means the money loaned is the lender's property and must be returned. Keeping property that doesn't belong to you is theft.

You cannot lose a right you never had in the first place. Nobody, poor or not, has a right to borrow money without paying it back.

Wrong wrong wrong it's not theft it is default. Most of the time these people intended to repay but later cannot.

Default is a natural risk of lending. It's why lenders charge a huge interest rate especially for unsecured debt.
When did credit cards morph from unsecured debt to debt secured by every penny you will ever make in the future?

Why are you cheering the morphing of our government into the debt collection agency of big business?
If this trend continues all credit card companies need to do is make it just a little bit harder for people to file for bankruptcy and then give collage students tons of 0% interest credit cards.

 "Don't worry about that credit card debt college kid it's a great deal at 0%. We wont even require you to make payments until you are done with collage and get a job. What you missed your first payment sorry that 50k now has an interest rate of 26%. We get to take 25% of all your earnings forever. What you did not know what you were doing when you signed up for this at age 18? Sorry that's you problem after all not paying your debt is theft."

Is this the future you want a society of slaves? I know we are well on our way already but to cheer it on and is nauseating. Default is a natural risk of lending. Cheering for wage garnishments is cheering for corporate bailouts and big government.

You are just flat out incorrect about this and you lack a basic understanding about how the money supply works. I am willing to bet you didn't even bother to look at the documentation I provided, not that reality or facts are important to you.

So how is my improper choice of investment any different than a bank making a loan to an unfit party? Banks can sue debtors who default on their loans, why do banks get to imprison people as well ON TOP of the lawsuit?

Here you are contradicting yourself, as well as responding to a premise I did not make. I never said the borrowers FATE was the banks responsibility, I did however state that banks have knowingly, and on an industrialized scale made loans to VERY CLEARLY unfit borrowers, such as homeless and unemployed people. This is in the realm of negligence, theft, and fraud, especially when you consider they pay no costs if the loan is in default.

What should happen and what happens in reality are much different. You are correct in pointing out that it would be an invalid contract, but do you really think the bank cares? Do you think the average person in debt has the means to argue this in court against a multinational bank? If keeping property that doesn't belong to you is theft then the lending parties are guilty of theft from each and every USD holder, tax payer, and home owner in the US.

So putting someone in a cage is not loss of their rights? At what point did civil matters become criminal matters? You don't at all see the dangerous precedent this sets? Last time I checked companies and even individuals are legally allowed to be free regardless of gigantic civil settlements made against them. You are basically supporting a world where anyone can be sued for anything, and if you can afford it you can take anyone's freedom away via a civil suit process. This is moving away from rule of law (ie separation of criminal and civil law), and into fascism where the state is nothing but a tool for corporate entities.

The problem is he is going even a step further past wage garnishments, and saying it is right for people to be imprisoned for bad debt. As you mentioned there is a risk vs reward analysis for every act of commerce. Demanding that commerce some how be risk free for the lender is asinine and against the very fundamental principals of commerce.

And shoplifting is a natural risk of retail. It's why retailers put magnetic anti-theft devices on their merchandise. That doesn't mean they shouldn't use the full force of the law to punish shoplifters.

I'm not. I'm merely cheering debt collection. It hardly matters whether that's done by the government or a private company.

Ignorance is no defence.

I see you don't know the meaning of that word. A slave is someone who is forced to work against their will. But nothing about debt is against the debtor's will. When they signed they contract, they willingly agreed to repay the loan. They accepted the responsibility completely voluntarily.

---

I never said anything about imprisoning people.

With freedom comes responsibility. In particular, I expect any free person to be responsible enough to not harm or steal from other people. I see no problem with denying freedom to people who deny their responsibilities. Most civilised justice systems function on this concept. There are worse alternatives.

Not sure if rhetorical question, but if not, all actions against a person or property have both a civil and criminal component.

I support no such thing.

I made no such demand, either. It is, however, perfectly reasonable to demand that lenders can reduce the risk by suing or prosecuting those who don't pay their debts.

You didn't bother to address my point about fractional reserve lending. I take it you did further research and realized you were mistaken.

Really? So whats this below VVV

Default on debt is not equivalent to theft. I will provide a very simple example. If a person takes out a loan, then a few years later their house burns down and they lose their job, and as a result they are unable to pay their debt, is this an act of theft? There are many perfectly innocent reasons someone might default on a loan, even without intent of "theft".

See now here you show your ignorance of the system of law as well. There is a VERY important distinction between civil and criminal law for a very good reason. Criminal law is part of the public process and is put into place only after publicly elected officials pass legislation and it is approved by the local, state, or federal governments. Plaintiffs also have a right to a TRIAL BY JURY as well as several other protections to ensure a fair hearing under criminal law. Civil law can be invoked by ANYONE for ANY REASON. While you can often sue someone who is also guilty of violations of criminal law, you CAN NOT prosecute people under criminal law for a debt that is NOT A CRIMINAL ACT. Your opinion on the matter is irrelevant. Criminal law does, and should have a much higher standard because it is not just a matter of property rights, it is a matter of human rights, and additionally there are no standards limiting who can sue whom in court and for what reason. What you are asking for as a result is a system where people can be judged against under civil law, and then have criminal penalties applied to them WITHOUT DUE PROCESS.

This is exactly what you support in effect, regardless of your ignorance on the matter.

Lawsuits are acceptable for property and contract disputes. Criminal law does not, and should not have the jurisdiction to prosecute civil cases. This is why DEBT COLLECTION COMPLETELY REMAINS IN THE JURISDICTION OF CIVIL LAW, at least in a society that has rule of law anyway. Obviously fascists such as your self would like to see that changed. Also before you accuse me of making a personal attack, those who advocate for the merger of the corporation and the state are by definition fascists.

Your statement above is grossly and provably false.

Finance Part I: Understanding the Parasite (https://bitcointalk.org/index.php?topic=529603.0)

This was never the case. All an "unsecured" debt is, something that is not secured by specific property that can be seized in the event of a default. A creditor can still get a judgement against someone and have the court seize any unencumbered assets in order to pay off what is owed to them.
This is also not a change. If you do not have enough assets to pay off your unsecured debt then the court can order that future payments to you be seized to pay off your debt overtime.

If you don't want to risk having your paycheck garnished in the future then I would suggest not be a deadbeat

There's nothing innocent about that, as there is a very simple solution: insurance. It is grossly negligent to get into debt without insuring your income and assets. If you can't afford insurance, you can't afford debt. It's that simple.

No, I'm not. Learn to read.

And learn the definition of fascism, while you're at it.

LMAO no just no.. nooo.  Fractional banking owns your argument.

fuk
seriously fuk fractional banking that screws us all.

Until recently this was limited almost exclusively to existing hard assets and typically reserved for gross abusers of the system ie a deadbeats who maxed out his credit cards but had lots of money in the bank and just did not want to pay.

What you are seeing today is an oppression of the middle class using the state to enforce unsecured debt to grab future earnings in perpetuity and this is very new. Here are a few things that have facilitated this change:

1) Chapter 7 bankruptcy is now much harder to file. These garnishments would have been rare in the past as it was much easier for people in trouble to file bankruptcy and start over.

2) Lenders are using sophisticated methods to track the employment and income of those in debt. Capital One and the like leave the debt in limbo accumulating high interest and don't engage in an aggressive attempts to collect until the debtor starts to get back on his feet. That is when they apply the thumbscrews.

3) Courts are shifting the entire cost of the debt collection to the debtor. These cost used to be born by the lender.

4) Courts are allowing high interest debts to continue to accumulate after a judgement is made. In the past courts would set a repayment plan the freeze or cap the interest on the debt.

Together these morph credit card debt from a high risk bet on the part of the bank to an almost guaranteed low risk proposition. Seizing all future earning in perpetuity is very problematic policy and essentially a form government sanctioned slavery. It should only be used in the most extreme situations if ever. Certainly not for unsecured debt.  

In ancient times they had similar rules. Fall behind on your debt and you were required to sell yourself into slavery to pay them. Some cultures justified this by requiring the slave owner to pay the slave a pitiful salary so the slave had some hypothetical method of freeing himself after several decades.

Nothing wrong with that policy right? After all not paying your debts is theft. Bring out the chains.

Way to completely avoid the point. There are lots of perfectly innocent reasons one might be left destitute regardless of you willful ignorance and deconstruction of an example rather than the premise itself.

Just because you don't understand the results of the policies you support, doesn't mean you don't support those results.


"Fascism should more appropriately be called Corporatism because it is a merger of State and corporate power."

-Benito Mussolini

You know the definition of fascism better than Mussolini?

Well, that's what bankruptcy's for.

Which policies would those be, again? I never said anything about applying criminal penalties for civil judgements. In fact, I explicitly stated that I don't support that, and will not repeat it again.

I know there's no citation for that quote earlier than 2002, 57 years after Mussolini's death, and that it is inconsistent with his actual ideology. Do you have any evidence that he actually said or believed that?

Bankruptcy is increasingly not an option for most people.


Again now you are using revisionist deconstruction of the example, rather than the premise.

Nobody was blind sided by the recession.  Boom and busts has been a characteristic of capitalism (mercantilism) since the 1640s.

Nobody except the majority of the home owning population, and most tax payers and USD holders. The over leveraged fractional reserve lending system had nothing more to spend to keep propping up this nearly endless money machine, so they created derivatives packages out of all the loans and mixed the bad ones with the good ones from paying customers so no one could even tell the difference any more. As a result most home owners took a huge loss on what is the largest investment most Americans will ever make. The majority of people had no idea that such a solid asset like a home could be deflated so heavily with what amounts to a very complicated system of fraud.

http://www.dailykos.com/story/2011/10/08/1024313/-What-Are-Derivatives-And-what-makes-some-of-them-Toxic
http://seekingalpha.com/article/301260-bank-of-america-dumps-75-trillion-in-derivatives-on-u-s-taxpayers-with-federal-approval
http://www.globalresearch.ca/freeze-the-1-5-quadrillion-derivatives-bubble-as-a-first-step-towards-world-economic-recovery/12947

So in other words people will be doomed to pay back their debts
Sort of a debt slavery system considering that money is just created in modern economics
That said it will be interesting to see what happens the next economic downturn and how many people complain about it when the economy stays down for a long duration of time.

  CEO of Capital One Financial in 2009, Richard D. Fairbank earned a total compensation of $6,076,805, which included no base salary, no cash bonus, $2,000,019 in stock awards, $4,000,001 in option awards, and $76,785 in other compensation.  In 2012, Fairbank's total compensation was $22.6 million.  Fairbank receives a base salary of $1.
    Yet..
http://www.consumeraffairs.com/credit_cards/capital_one.htm   
http://consumerist.com/2006/07/31/complain-mailing-address-for-capital-one-ceo-richard-fairbank/
http://www.ripoffreport.com/r/CapitalOne-360-Bank-Capital-One-Financial-Corporation-/McLean-Virginia-22102/CapitalOne-360-Bank-Capital-One-Financial-Corporation-Richard-Fairbank-CEO-Unreasonabl-1129056

Meanwhile at the office..
"The bureaucracy is far crazier than anything I've seen in any other company. It can be very difficult to get through the red tape and get things done. Half of the people who work here are there to prevent the other half from doing their jobs."
   
"There is a weak approach to expense management. As a result. Most of the office is traveling at any given time even though they don't need to be. People will habitually fly from Toronto to Richmond Virginia for a single short meeting. People go on trips simply because they are young and like to travel."

"management is ridiculous; managers are promoted without any training - they micromanage
-promotions are the motivator for everything; individuals are not committed to company or values"

  Well..  course there's this too..

"Directors of the Federal Reserve Bank of Richmond have reappointed Richard D. Fairbank, chairman and chief executive officer of Capital One Financial Corp. of McLean, Va., to a second term as the Fifth Federal Reserve District's representative on the Federal Advisory Council. The new term begins Jan. 1, 2011.

The Federal Advisory Council, composed of a representative from each of the 12 Federal Reserve Districts, confers periodically with the Board of Governors of the Federal Reserve System on business conditions and issues related to the banking industry. It also makes recommendations regarding System policies. Representatives are selected annually by the boards of directors of each Reserve Bank."

..  and who's the federal reserve again??..  oh right..  shadow shareholders..

   Guess the Boston tea party didn't work after all...   

  And for every moron.. that says...  pay back your debt! It's as simple as that..  we'll don't worry.  They're coming for everything you own too.. oh and also everything your entire bloodline to come owns too..

   Oh yeh..  that microchip implant payment system is getting close.. and will make it much easier to manage all of that personal debt the corporate elite need to fly to their tea parties...

 Great vid for kiddies that don't like to read. Could be wrong, but I think there's some illiteracy in this thread..
The Biggest Scam In The History Of Mankind - Hidd…: http://youtu.be/iFDe5kUUyT0

Agreed and this is just the beginning. In most states if you lose your home or car and the mortgage the lender can go after you for any remaining outstanding debt. We are sure to see wage garnishments in this area too. Garnishing the wages of someone who just lost their home is no different really.  

It completely baffles me how otherwise intelligent conservative people cheer for this this gutting of the working Joe. Where are all these newly destitute formerly middle class folks going to turn? They will of course turn to whomever promises to raise taxes on the "rich" and help them. This economic impoverishment drives the growth of socialism and government like like fuel for a wildfire.

Finance Part III: Divide, Conquer, Enslave (https://bitcointalk.org/index.php?topic=586125.0)



Impressive summary on Capital One. I had no idea their CEO was so deeply enmeshed in the FED.

People will be doomed to be forced to pay back their debts? In this community anyone who borrows money and does not repay (regardless of the reason) will be labeled a scammer. Why should traditional fiat based lending be any different?

I have made a good number of P2P based loans on prosper, and a good number of them have defaulted (and/or declared bankruptcy) after making >3 payments. I personally consider this activity to be criminal and deserving to be put in jail

ScryptAsic you are confusing fraud with bankruptcy

Fraud is the intentional use of deceit a trick or some dishonest means to deprive another of his or her money.
It absolutely sounds like you were the victim of fraud with some of your prosper loans. You problem in proving that is that prosper loans are more or less high risk by definition. It is primarily used by people who have been cut off from the regular banking industry due to bad credit high debt. This makes fraud hard to prove but I understand why you are rightfully pissed.

You said such individuals should be labeled scammers. This is the appropriate response to such behavior.
This used to happen when someone declared bankruptcy. Once upon a time when people declared bankruptcy their debts were wiped clean, their hard assets seized, and their credit was ruined. This is the proper response. Label them a scammer/deadbeat and cut them off from future debt and the ability to default on others. The only role for the state should be gross criminal fraud and the bar for intervention must and should be very high.

What many fail to realized is that our entire economic system is fraudulent. You worked very hard for your money and are justifiably very angry when someone walks away with it after making only three payments. But this is small time fraud. Any financial entity can essentially create the same money you worked so hard to collect and fund that same prosper loan. However, instead of having to work for it like you did they can essentially just create it almost for free. Each time they do so they are stealing from me you and everyone else. This theft is no different from the theft of the deadbeat prosper lender who takes out a loan with the intent of defaulting right away.

Fractional reserve allows financial interest to load us up with student debts, credit card debts, car loans, prosper loans. There is no limit to the amount of debt they can create. Each created debt steals a little more from the productive members of society who actually produce and earn their living.

The only risk such finance faces is default. If a mistake is made and money is lent to someone without enough assets to seize finance could face a loss. This is why we are seeing and will continue to see a gradual tightening of the noose around the indebted masses.

Before 1976 all debt could be discharged when you were bankrupt. First non profit student loans were exempt from protection in 1976. Then in 1986 private student loans were exempt from bankruptcy. In 2005 chapter 7 bankruptcy protection was denied for anyone earning over the median income in their state regardless of how much debt they were in. Now in 2014 case law is gradually being created allowing 25% automatic wage garnishments for all debts. The rules are being rewritten and the masses are gradually being led into slave pens built using money that was stolen from us all.  

The future trend is obvious. Gradual and continued tightening of debt slavery. Options and the ability to free yourself will become more and more limited. When the masses go through periodic mini revolts the financial interest will shift gears for a few years and back their "people" in the other party. Then we can expect cycles of higher taxes government bailouts and asset seizures from the "rich people" who can afford to fund prosper loans and are not paying their "fair share". Back and forth it will go with ever higher taxes ever higher debt and growing debt slavery until the system either collapses or maybe just maybe we evolve into something better.

Think about this for a little bit. If you are a student and take out a student loan, what assets do you have?....Generally you will have on assets other then your future earnings potential that results from your college degree. Any person acting rationally would declare bankruptcy as soon as they received their college degree if they took out student loans as the consequences of filing bankruptcy are much less then the benefits. This would result in lenders loosing all the money lent and students getting a free education.
This is not true. There are more strict requirements to filing bankruptcy as a result of the 2005 bankruptcy reform, but you can still file chapter 7 bankruptcy under certain circumstances. Your comment about 'regardless of how much debt someone is in' just shows how people abuse bankruptcy by taking on excess amounts of debt in order to only have it discharged later in time.
Also not true. Creditors have long been able to garnish a debtor's income in assets (usually to the tune of 25%) if they receive a judgment against them. This is what gives a borrower an incentive to pay, as if the creditor was not able to force repayment by a borrower then the borrower would have no reason to repay, other then the fact that they would have difficulty borrowing additional money in the future, which would not matter because they would have just received "free money"

You also need to remember that any time someone borrows money they must "promise to repay" the amount borrowed plus interest; the creditor relies on this promise when they give the loan. If someone were to borrow money with no intention of repaying (as evidenced by them not repaying) then they are committing fraud as they made a promise they did not wish to keep

If your theory was correct we would expect to see a massive drop off in personal bankruptcies after 1976. All of those college students getting a free ride and bailing out on their student loans right?

http://www.stlouisfed.org/publications/br/2006/a/images/bankruptcy_graph.gif

If student loans could be discharged in bankruptcy as they absolutely should be then lenders would be much more careful about giving them out. Strong students at good schools would still be able to get loans. Week students at fly by night for profit diploma mills not so much. Some students would have to work a little to finish school. Schools would not be able to ramp up tuition as much as they wanted without losing enrollment. College in general would be much much cheaper then it is today. Lets look at what happened to the cost of college after this change.

http://www.washingtonmonthly.com/college_guide/college_guide/images/ChartTuition1.jpg

The cost of college has increased by more then 12 fold since 1976 grossly exceeding inflation. What allowed this to happen? Those nonchargeable government guaranteed student loans.


I stand corrected. If after paying your fiat overlords and buying groceries you have less then $117 dollars left
the state will generously allow you to file chapter 7 bankruptcy. Click here (http://bankruptcylawyerpa.com/blog/the-bankruptcy-means-test-an-attorneys-explanation/) if you want to read exactly how this is calculated. If you have $118 dollars, however, off to the slave pens you go.

Coming soon: Lenders work with the IRS. Generously reduce loan payments! Struggling borrowers now given deferred payment options to ensure they have at least $120 dollars in disposable income each month. Adoring masses cheer.

Why would a good student at a good college pose a lower credit risk if student loans could be discharged in bankruptcy? I would say it would be the opposite, as the better informed student would be more likely to declare bankruptcy, as they know the consequences and affects of bankruptcy, and a good student is more likely going to be well informed.

You previously mentioned that bankruptcy will take away a debitor's assets, however students do not have any assets and do not use student loans to purchase additional assets; student loans are used to pay for an education and for living expenses while a student is in school.

If student debt could be discharged in bankruptcy then any rational student would declare bankruptcy as soon as they are sure they are finished with school (they do not want to get any additional advanced degrees). Since the student would have no assets, and would have a lot of debt, the student would lose nothing because there would be nothing to lose, but would gain the fact that s/he no longer needs to repay the amount s/he promised to pay their lender

The situation you are describing a good student deliberately defaulting on loans can be handled in much better ways then the government enforced debt slavery we have now.

If this became genuine problem, and that is a big if as we seemed to do just fine before 1976 a much better solution is name and shame. If people who have the ability to repay start defaulting on student loans just extend the period of time such a default stays on your credit report for as long as it takes to minimize the problem.

If you had a good job and good income prospects would you default on your student loans if it meant being cut off from the credit markets for 15, 20 or even 30 years. Most of these individuals would see the wisdom of maintaining access to the credit markets.
Poor suckers who go to fly by night diploma mills and have no hope of paying off their loans would have an out.  

Costs of tuition and the size of these loans would also drop dramatically if we get rid of the government guarantees and government enforced debt slavery. That alone would drastically mitigate the problem.

 

It was until recently that declaring bankruptcy would be a big social stigma. Prior to recently declaring bankruptcy is something that many people would be ashamed of. Now, today, people tend to be proud of declaring bankruptcy. People are no longer ashamed of not following through with their promise to pay their debts as agreed.

The thing is that as of the day a student graduates college they will almost never have a job (they may have one lined up, but will have not started work yet). This would mean that students would likely not qualify for your "penalty". Also to say that someone has a "good job" or "good income prospects" is very subjective and would likely be found to be unconstitutionally vague and unenforceable.

Once upon a time when money was not fiat defaulting on a loan meant you had lost someone else's hard earned capital.
That was regarded as shameful and rightly so.

Personally I would never in a million years default on a peer to peer loan like a prosper loan regardless of my financial circumstances. Defaulting on such a loan is stealing from someone who worked and earned their money and is trying to earn a return lending it out.

It would not bother me at all, however, to default on a home mortgage. That money is in no way someones hard earned savings. The bank simply created it from nothing. In effect they are lending me stolen money and I have no problem defaulting on thieves.

People are proud to declare bankruptcy because they feel that they are screwing over a bunch of crooks. Truth be told they are largely correct in this judgement.

Regarding student loans the policy would have to be applied to all student loans for it to be effective.
 

You are contradicting yourself here. In order for something to be stolen, someone would first have to own it. However if something is created out of thin air then no one could have previously owned it.

There is also the fact that fractional reserve banking does not create money out of thin air. When a bank lends out money, they still owe the same amount of money to their depositors. If fractional reserve banking is able to create money out of thin air then why do we need the FDIC? Also why would a bank ever fail? Couldn't the bank just create additional money out of thin air whenever they run into trouble?
I would disagree. I would say that people are 'proud' to declare bankruptcy because of the lower moral standards that our country has.

Just because the theft is a minuscule theft spread across millions of victims does not make it any less of a theft.
What is stolen is purchasing power aka value. The value of all of the other money in the economy drops whenever new money is created by banks.

A banks does not need deposits to make a loan. If a bank with no extra deposits wanted to give out a million dollar loan they just do it. Its not completely cost free. They are required to keep 10% of loans on reserve with the FED. However, if they are short the $100,000 they can simply get that money from the FED itself where it is lent to them at the Federal Funds Rate (currently 0.25). That done they simply credit the borrowers electronic account with a million dollars. Simultaneously all other existing money is diluted in value.

Finance Part I: Understanding the Parasite (https://bitcointalk.org/index.php?topic=529603.0)
Finance Part II: The Parasitic Cycle (https://bitcointalk.org/index.php?topic=564088.0)
Finance Part III: Divide, Conquer, Enslave (https://bitcointalk.org/index.php?topic=586125.0)


In an economic system that is systemically rotten yet sanctioned by law as good and normal a population with a declining moral standard should not come as a surprise.