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Credit when the SHTF?

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Credit when the SHTF?

Postby wolf36 » Sun Feb 24, 2013 2:05 pm

I hear everyone say they are trying to pay off their debts, but at what point could you anticipate the economy collapsing and just max out all your credit cards and buy as much preps as you can? Because you will never have to payback if the system fails right? Credit, cars, houses?
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Re: Credit when the SHTF?

Postby LackyPrepper1 » Sun Feb 24, 2013 2:32 pm

I dabble in the stock market. I have a good chunk of change in there, and I dare say I know a little more about it than the average person. Being able to guess when the economy will fall apart is a bit like calling the top or bottom of a stock. Those whose investments strategies rely on calling tops and bottoms almost always fail. Once in a while, they'll catch lightning in a bottle, but the odds are stacked against them.

If your prepping strategy relies on being able to predict the demise of the economy so that you can start loading yourself down with debt in the hopes it will be forgiven, then you're a fool. I understand that lots of us on this board are prepping for different scenarios, but I am of the opinion that we are not heading for a collapse so dramatic that debts and records of debts will be wiped out.

Also, I just thought I would mention that such a collapse would have to global for this to occur. When a lender goes out of business, their debt is often sold to other companies who will buy that debt. Debt is traded all the time in this manner, and it doesn't even require the bank to be in trouble. For example, my mortgage was sold to another bank within the first year that I owned my home. Hypothetically speaking, if the whole U.S. financial system were to collapse, your debt would be sold to some European or Chinese bank and they would start collecting from you. You'd have to live entirely off-grid and even have no mailing address in order to avoid collection on your debt.
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Re: Credit when the SHTF?

Postby write-stuff » Sun Feb 24, 2013 2:56 pm

Another viewpoint - if SHTF, it may not be permanent. Meanwhile, you've lost all your savings but the bank still expects you to pay your house note when the electricity comes back on. Minimizing debt is the extremely prudent prep.
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Re: Credit when the SHTF?

Postby panzerfahre » Sun Feb 24, 2013 3:17 pm

Also, if you are expecting a currency collapse or hyperinflation, paying fixed rate mortgages off with hyper-inflated money will be most satisfying.

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Re: Credit when the SHTF?

Postby anita » Sun Feb 24, 2013 3:45 pm

Yeah, but you have to be assuming that you are getting paid at a post-inflationary rate to make it satisfying. I don't know about you, but I am absolutely certain that my boss cannot raise rates for our service 300% or whatever, just because the currency is devalued.

And my husband's business is regulated by the state. How long will it take for them to raise rates to keep pace with inflation?

So, we might have a fixed rate mortgage at 3%. Yippee, if food/gas/heat/whatever is costing us 300% more and we are still bringing in about the same amount.

Having a fixed rate mortgage helps, but I think it is naive to think you'll be able to pay it off easily if we have rampant inflation.
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Re: Credit when the SHTF?

Postby Lynda » Sun Feb 24, 2013 4:20 pm

wolf36 wrote:I hear everyone say they are trying to pay off their debts, but at what point could you anticipate the economy collapsing and just max out all your credit cards and buy as much preps as you can? Because you will never have to payback if the system fails right? Credit, cars, houses?



Not something we can foresee as some of those followers of that cult who though the world was going to end in December and maxed out their cards. Not something I would do.
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Re: Credit when the SHTF?

Postby namwal » Sun Feb 24, 2013 4:23 pm

How bout just paying your debt because you gave your word that you would when you borrowed it!!!!!
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Re: Credit when the SHTF?

Postby Lynda » Sun Feb 24, 2013 4:28 pm

namwal wrote:How bout just paying your debt because you gave your word that you would when you borrowed it!!!!!



Yep.
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Re: Credit when the SHTF?

Postby contrarian » Sun Feb 24, 2013 4:28 pm

If you believe that hyperinflation will be a significant part of SHTF and IF you believe your work situation will allow you to exploit hyperinflation then getting fixed rate notes on a car might be something to consider. I would not recommend risking the home as during the Weimar republic hyperinflation many lost their homes and farms because of foreclosures. A car, maybe not such a big deal.

My problem is I don't think in MY case I'll be able to inflate my income to match my needs so I have limited by debt to a house and car. With some luck I'll keep both. With slightly bad luck I'll still keep the house.

Toward the end of the Weimar republic hyperinflation 90% of the household income went to only food. People with plenty of money (foreign currency) but living in the city often would only eat one meal a day because more was not available. Some, however, did manage to pay off their homes. They were craftsmen with the ability to deal in trade, not cash and didn't do too badly for themselves.
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Re: Credit when the SHTF?

Postby wolf36 » Sun Feb 24, 2013 4:52 pm

:D Thanks for the insight LACKY, I have very little credit card debt that I pay off monthly. Just wondered why people seem so sure the economy is about to collapse but are trying to pay off their debt before that?

Follow up questions, if the US economy did collapse, such as with hyperinflation, would government also collapse, what would happen to the rest of the world? Would they fall like dominos or only certain ones that are closely tied to the US? If hyperinflated prices make everything even 5X more expensive, how long would it be till your credit was maxed out?
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Re: Credit when the SHTF?

Postby write-stuff » Sun Feb 24, 2013 5:01 pm

namwal wrote:How bout just paying your debt because you gave your word that you would when you borrowed it!!!!!


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Re: Credit when the SHTF?

Postby Tom Bergstrand » Sun Feb 24, 2013 5:13 pm

One of my concerns would be property tax. If the money hypers and the tax goes to .. say about 20 times, many folks are looking at a tax bill that can't be paid. If there is no relief for a few years then they lose their house and all of a sudden they live in government housing. They will have to rent from the government the house that USED TO BE theirs.
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Re: Credit when the SHTF?

Postby Kim333 » Sun Feb 24, 2013 5:46 pm

Tom Bergstrand wrote:One of my concerns would be property tax. If the money hypers and the tax goes to .. say about 20 times, many folks are looking at a tax bill that can't be paid. If there is no relief for a few years then they lose their house and all of a sudden they live in government housing. They will have to rent from the government the house that USED TO BE theirs.


That is both a scary and sad thought.
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Re: Credit when the SHTF?

Postby SurvivIt » Sun Feb 24, 2013 6:05 pm

I'd think that most municipalities would vote new laws into their local books that would prohibit such extreme measures. The first few would be victimized, yes, but when the rest of the town elite saw what was happening, they would be sure to change it, pronto.

Assuming, of course, that the computerized tax rolls were still accessible.
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Re: Credit when the SHTF?

Postby IceFire » Sun Feb 24, 2013 6:08 pm

namwal wrote:How bout just paying your debt because you gave your word that you would when you borrowed it!!!!!


Absolutely! Not only is deliberately running up credit with the hopes of not hoping to have to pay it back if TSHTF stupid, it's downright dishonest!
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