Loans and the acceptance of DOX

[Lucky Cris]

First: This isn't a loan request - just an inquiry to satisfy my curiosity. Please feel free to move if necessary.

Some time ago I polled you all on whether you'd have more confidence in lending *if* the borrower could be identified. Needless to say, there wasn't much interest, but those who did respond said they'd only gain a little more trust to follow through with the transaction.

My question to you all is - Why isn't full disclosure of one's identity enough to secure a loan?

I've seen several people request loans offering their DOX only to get ragged on and collateral demanded. I don't disagree with collateral (please don't misconceive what I'm saying), I guess I don't quite understand why there's an issue with proof of identity. Yes, I know this community is full of scammers; I've been scammed (not here tho) and I've even called a few of them out. I also know that DOX can be faked. But is that the only reason for its non acceptance? I mean, if you know someone's identity (verified identity), couldn't you pursue criminal charges against them for breach of trust? Or make a small claims case against them? Wouldn't those judgements against a defaulted borrower have a more lasting effect?

Lets have a civilized discussion, please.

And for those who might be thinking I'm preparing to ask for a loan... shame on you. I'd starve first.

[Walking Glitch]

Because this is how it used to be done ~2.5 years ago, and it nearly led to the (what would have maybe only have been temporary, however, we will never know) ruin of the BTC economy, and would have, if some people didn't bail out thousands of BTC of default from their own pockets.


EDIT: This is the tldr version of the story.

[Lucky Cris]

Because this is how it used to be done ~2.5 years ago, and it nearly led to the (what would have maybe only have been temporary, however, we will never know) ruin of the BTC economy, and would have, if some people didn't bail out thousands of BTC of default from their own pockets.


EDIT: This is the tldr version of the story.

So why wasn't legal action taken? Or maybe perhaps point me to the story? I'd like to read it.

[Walking Glitch]

Because this is how it used to be done ~2.5 years ago, and it nearly led to the (what would have maybe only have been temporary, however, we will never know) ruin of the BTC economy, and would have, if some people didn't bail out thousands of BTC of default from their own pockets.


EDIT: This is the tldr version of the story.

So why wasn't legal action taken? Or maybe perhaps point me to the story? I'd like to read it.

Because more than one person was responsible for it, and it was too big of a mess, and involving legal action at that point would have damaged bitcoin's reputation, and plus people all over the world were involved, it simply was not feasible. Also, it's written in posts by people recounting the events, I don't know of any off-hand though, as I was there to witness it, so I didn't read it from an article somewhere.

[repairguy]

The problem that I can see is that even if someone positively identifies themselves, it is still a pain in the ass to collect, even more so if parties are in different states.  Also failing to repay a loan is not a crime, it is a civil matter,  it would be almost impossible to prove that the debtor defrauded someone or had no intent to repay the loan.

[GBattaglia]

The good news is if you have documents, you know where the person lives.  Not paying back a loan isn't worth losing a car windshield in most cases, ya know?

[Lucky Cris]

The problem that I can see is that even if someone positively identifies themselves, it is still a pain in the ass to collect, even more so if parties are in different states.  Also failing to repay a loan is not a crime, it is a civil matter,  it would be almost impossible to prove that the debtor defrauded someone or had no intent to repay the loan.

I can't imagine having a borrower's DOX would make it easier to collect, but it could be an incentive for the borrower to repay due to potential consequences. You're right, failing to repay a loan is a civil matter, which could result in a judgement against the borrower, forever. Will you get repaid, probably not, but that judgement will be with the defaulter until they resolve it. That hurts the real person sitting on the other side of the screen, in the real world. And depending on how the transaction was solicited, it may be possible to pursue criminal charges as well, less burden of proof.

[Lucky Cris]

The good news is if you have documents, you know where the person lives.  Not paying back a loan isn't worth losing a car windshield in most cases, ya know?

I suppose for those who like to take matters into their own hands. If anything, the fear you'd have to live with would kill you softly

[Lucky Cris]

Because this is how it used to be done ~2.5 years ago, and it nearly led to the (what would have maybe only have been temporary, however, we will never know) ruin of the BTC economy, and would have, if some people didn't bail out thousands of BTC of default from their own pockets.


EDIT: This is the tldr version of the story.

So why wasn't legal action taken? Or maybe perhaps point me to the story? I'd like to read it.

Because more than one person was responsible for it, and it was too big of a mess, and involving legal action at that point would have damaged bitcoin's reputation, and plus people all over the world were involved, it simply was not feasible. Also, it's written in posts by people recounting the events, I don't know of any off-hand though, as I was there to witness it, so I didn't read it from an article somewhere.

So this wasn't a P2P loan I gather. Interesting... The great BTC bailout of 2011 is one of the driving forces behind DOX non acceptance for loans.

[malevolent]

I can't imagine lending anyone more than a couple bitcents on dox collateral alone. It is just too easy to steal or buy someone else's ID, and even if someone used their real ID, why would I want to bother with the hassle of collection? Especially when it is very likely that the lendee lives in a different country.

[repairguy]

The problem that I can see is that even if someone positively identifies themselves, it is still a pain in the ass to collect, even more so if parties are in different states.  Also failing to repay a loan is not a crime, it is a civil matter,  it would be almost impossible to prove that the debtor defrauded someone or had no intent to repay the loan.

I can't imagine having a borrower's DOX would make it easier to collect, but it could be an incentive for the borrower to repay due to potential consequences. You're right, failing to repay a loan is a civil matter, which could result in a judgement against the borrower, forever. Will you get repaid, probably not, but that judgement will be with the defaulter until they resolve it. That hurts the real person sitting on the other side of the screen, in the real world. And depending on how the transaction was solicited, it may be possible to pursue criminal charges as well, less burden of proof.

Not forever, A creditor has only so much time to file suit and only so much time to collect after suit is filed.  It depends on the state how long each of these are.

[Lucky Cris]

Not forever, A creditor has only so much time to file suit and only so much time to collect after suit is filed.  It depends on the state how long each of these are.

You said right, a creditor. If you default on a loan, they can charge it off, resulting in a bad mark on your credit report; that's not a judgement, it's a collection. Judgements are public records and remain part of your credit file until paid. Most creditors don't actually file a suit, it's more profitable for them to sell your account to a collection agency. Not the route a p2p loan would take in the event of default.

[repairguy]

Not forever, A creditor has only so much time to file suit and only so much time to collect after suit is filed.  It depends on the state how long each of these are.

You said right, a creditor. If you default on a loan, they can charge it off, resulting in a bad mark on your credit report; that's not a judgement, it's a collection. Judgements are public records and remain part of your credit file until paid. Most creditors don't actually file a suit, it's more profitable for them to sell your account to a collection agency. Not the route a p2p loan would take in the event of default.

A creditor is anyone you owe money to, the bank, a person or collection agency. Chargeoffs do not last forever on a credit report(even if unpaid) most states are 6 years,  Judgements do not last forever on a credit report (even if unpaid) most states are 10 years, some states do allow for renewal on the 10 years for another 10.

I agree most p2p loans would not go the collection agency route/loan resale route.  The people I have worked with in the past will buy the debt for 5% or work for free but take 30% if (big if) they can get the money.

[Lucky Cris]

I can't imagine lending anyone more than a couple bitcents on dox collateral alone. It is just too easy to steal or buy someone else's ID, and even if someone used their real ID, why would I want to bother with the hassle of collection? Especially when it is very likely that the lendee lives in a different country.

Concur, International transactions do pose a problem with verification and litigation. Personally I would stray away from these types of transactions; find a native to deal. I guess the way I look at it... Yes, it may be a hassle until we find a shortcut, but the trend may have the potential to change the bitcoin lending scene. Scammers would think twice. At least that's part of my rationale.

[Lucky Cris]

A creditor is anyone you owe money to, the bank, a person or collection agency. Chargeoffs do not last forever on a credit report(even if unpaid) most states are 6 years,  Judgements do not last forever on a credit report (even if unpaid) most states are 10 years, some states do allow for renewal on the 10 years for another 10.

I agree most p2p loans would not go the collection agency route/loan resale route.  The people I have worked with in the past will buy the debt for 5% or work for free but take 30% if (big if) they can get the money.

Yes, you're right on the definition of a creditor. I specifically used it only to identify businesses in the lending industry in this context. Yes I know charge offs are temporary, but judgements I thought were permanent. I guess only certain types. But even so, 10 years is a long time in a world where your credit report is the most valuable real estate you own!

[repairguy]

But even so, 10 years is a long time in a world where your credit report is the most valuable real estate you own!

You and I can agree on this, however alot of people exist who really don't care.  I understand some people come upon hard times and I feel bad for them, but some people just plain don't care.

[Lucky Cris]

But even so, 10 years is a long time in a world where your credit report is the most valuable real estate you own!

You and I can agree on this, however alot of people exist who really don't care.  I understand some people come upon hard times and I feel bad for them, but some people just plain don't care.

Do you really think it's a matter of not caring? Or are they just following the leader? For example, having a requirement of what a borrower is going to use the loan for... does it really matter in the big scheme of things? No. It's not a factor in getting repaid, but why is this listed as a requirement for 99% of the loan? Because somebody started it and everybody else is following, I assume. Of course a business venture is a different ballgame. 

[Lucky Cris]

Interesting observation....

Can I get feedback from lenders in the community? I'm not asking for you to justify your position on lending, just want to hear your take on the subject matter, is all. No judgement whatsoever.

Silence has the potential to be louder than spoken written words.

[KWH]

With the expense of hiring a lawyer, filing fees, court costs and wasted time.......is it really worth it to collect .07BTC? Look through the loan section, most of the requests are well below 1BTC. After reading for a bit you wouldn't ask this question.
This is why many ask for collateral greater than the value of the loan request.

[Lucky Cris]

With the expense of hiring a lawyer, filing fees, court costs and wasted time.......is it really worth it to collect .07BTC? Look through the loan section, most of the requests are well below 1BTC. After reading for a bit you wouldn't ask this question.
This is why many ask for collateral greater than the value of the loan request.

An attorney for a small claims, really? I'm curious if there are stats out there, a lot of small claim courts in the states don't allow them, so that actually skews the number anyways. The fees... yeah there's definitely that cost. Where I am it's about 30 bucks which isn't too far from the average, but of course can be more depending on the amount. Chances are you're not going to get paid anyways, if it got to this point, but why not add those fees in your claim.

I've read many of requests and it's exactly why I'm posing the question actually. I'm not against this practice at all. But there is that bigger picture I talked about earlier. Do you think req DOX might discourage scammers in the least little way? I would imagine the number of scams would decrease, among other things.  the overall goal would be to change the current lending scene... eventually.

Thanks for your input, keep em' coming! Oh, can you elaborate a little more on why collateral is greater than the loan request?