
'It's crazy': Chase forgiving all debt owed by its Canada credit card customers - electriclove
https://www.cbc.ca/news/business/chase-bank-amazon-visa-marriott-credit-card-debt-1.5239411
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al2o3cr
My guess: when Chase says "we felt it was a better decision for all parties"
they mean "we realized we broke some kind of law without anybody noticing, and
selling the debts to collections could turn up evidence of that in future
litigation"

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paxys
A more likely scenario is that the total outstanding debt was small enough
that the positive PR + tax write-offs were bigger than getting pennies from a
collections agency.

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gruez
Tax write-offs are profits that were never made in the first place. It's not
some sort of a tax credit. The reason you pay less taxes is because you didn't
make a (or made less) profit.

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paxys
You are talking about losses. Unpaid debts/invoices is its own category, and
can definitely be deducted (see
[https://www.irs.gov/publications/p535#idm140359415938416](https://www.irs.gov/publications/p535#idm140359415938416)).

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kgwgk
Because they are losses.

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freedomben
I don't know how Canada does it, but a lot of those smiles would change at
least a little bit in the US when they get a 1099-C in February and realize
the IRS counts debt forgiveness as taxable lump-sum income.

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nrdgrl
Yikes. Nope, I live in Canada and I had a few tens of thousands in debt
forgiven. Definitely didn't have to pay taxes on it. That would be absolutely
crazy and would have driven me to bankruptcy!

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iscrewyou
Not judging you at all, I promise. I found it ironically funny that forgiving
debt could lead someone into bankruptcy. Talk about a win-win situation.

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freedomben
Yep. In my case we were overjoyed having finally worked out a deal with the
bank, only to discover that now I was in debt to the IRS instead of the bank
:'(

It sure feels like your government is shitting on you during an already tough
situation.

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dmix
So the idea is the bank gave you a loan then forgave it, so it’s now income?
That’s a big leap in logic and sounds evil considering you never consider that
when getting a loan, you only expect the internet to accrue.

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briandear
It is income. Someone gave you money. Otherwise, why wouldn’t a company “loan”
you a higher salary and then just “forgive” the debt? Or, you could set up a
company to loan yourself money — the company deducts the “loss” and you don’t
pay taxes on the gain.

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Retric
The principal is presumably income, however the interest or fees should not
be. The IRS will even occasionally cancel debt that’s mostly fines and
interest without considering it income.

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setgree
If you wanted to design a system to reward addictive spending, it would look
like this -- random intermittent reinforcement of problematic behaviors.

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hurrdurr2
Came here to post this exact sentiment... I mean that one long haul trucker
was so ecstatic his almost 7k debt was forgiven and said something to the
effect of "I'm glad the number was up there." Really?

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grenoire
He's honest. If he had accumulated just _1k_ , then he would be annoyed that
he hadn't taken on more. To him it's just free money.

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dxf
I didn't see it in the article, but I wonder how much debt that was forgiven
was actual credit extended for purchases (which is money that Chase has "lost"
as they won't recover it) and how much debt was interest+fees on the credit
they extended.

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data_spy
Wow! That's one way to get out of the Canadian market. Wonder what the number
one cost was the get out of the market the normal way, legal fees?

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hermitdev
Assuming people are only making minimum payments, they could have had to
maintain operations for 20 years or so, even if they otherwise closed the
accounts and only accepted credits (to them) and no debits on the accounts.

I dont know what infrastructure amd employment levels they would have had to
maintain to service the accounts. I'm sure they probably ran the numbers,
compared what they'd receive to cost of operations and probably realized itd
either be a wash or a money losing proposition and decided to take the
cheaper/expedient way out.

Personally, I'd love this deal. My CC is closed, but still paying down a very
large sum. Got married, assumed my wife's debts and struggling to get our
heads above water. Should be clear in another 4 years _sigh_ , maybe sooner if
I can get a few good bonuses in the next few years.

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yurishimo
You got this! My wife and I have been married just over 5 years now and still
have $50k~ of debt left, most of it is her student loans.

Don't be afraid to shop around for jobs too. I'm about to transition to a new
company making 50% more after putting 5 years in at my current job. Luckily, I
liked the job so I had time to really search for another one that would be a
good fit culturally as well and that paid more.

Now we're going to be debt free hopefully by Christmas 2020 and making
$110k/yr and 26 y/o at that time. Not to mention bonuses and raises for both
of us in the next 18 months. My wife has only been out of school and working
for 2 years as an engineer, so she has plenty of room left to move up and I
can keep working for software companies with great work/life balance and
people that I like.

Win win! Rooting for you :)

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hermitdev
I'm not worried. We have the savings to cover the debt, problem is I have a
hard time touching it, since I work in Back office finance IT. I have access
to the entirety of the firms positions and trades. Id like to cash out,
because earning 3-4% interest, while paying out 20% interest on around 50k in
debt makes far less sense than paying no interesting and paying into a
matching 401k...

To be honest, this has probably been my single biggest stressor since getting
married, and my wife's apparent mental block that finances are tight (when
they shouldn't be) and she keeps buying non essential items.

A lot of this is self inflicted, then complicated with medical issues on
shitty insurance. I mean, the year before I got married, I was debt free, even
after been unemployed for 6 months (and I didnt file for benefits, stupidly).

We spent too much on our rings, but not on the wedding (we did a JOP wedding
and a nice dinner afterward with just my wife, 2 step kids and myself). But,
we had to move out of my 1 bed + den apartment into a 3 bed, 3.5 bath
townhouse. More than doubled rent, but was necessary.

I mean, I make good money, but on my salary, we're struggling, living paycheck
to paycheck, in large part of debt I assumed from marriage and medical issues.
Kicker is I _have_ the savings to cover it, but cannot get to due to
compliance issues.

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hprotagonist
Jubilee is pretty fun.

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Scoundreller
I wonder how this gets reported to the credit bureaus.

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breakingcups
Oh man, I'm predicting a new wave of scam emails in the coming months.

Legitimate news articles like this are irresistible to the 419 scammers.

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faissaloo
Better not to own a credit card in the first place, with so many people in so
much debt you really should be questioning the notion that there's a
'responsible' way to use a credit card.

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mruts
Liquidity and debt help societies and people. It’s just important that you pay
off the card before the 18% rates kick in. But there are smart ways of
avoiding these rates for a long time. For example you can roll over your debt
into new cards before the interest rates kick. This could allow you to keep
debt for months without paying any interest at all.

The problem with debt is when you use it purely for consumption instead of
investment or increased efficiency of your consumption. But in general, debt
and leverage are a very powerful thing and essential to an efficient market.

~~~
faissaloo
>Liquidity and debt help societies and people

Interest helps a small portion of people, while harming the majority.

>It’s just important that you pay off the card before the 18% rates kick in.

If enough people did that banks wouldn't bother.

>The problem with debt is when you use it purely for consumption instead of
investment or increased efficiency of your consumption

No, it merely mitigates the risks, if your business venture goes sour you will
not be in a good place. There's also the question of 'what counts as an
investment' although this is a minute issue compared to the aforementioned.

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mruts
> Interest helps a small portion of people, while harming the majority.

Would you rather that no one could get access loans? If you truly believe that
position, it would very much undermines the autonomy and choice of the people
without capital: businesses, individuals, start-ups, whatever.

If you think that interest is a bad thing, what is the alternative? Sharia
finance? You wanna go back to times of usury laws? Or that Christians can't
loan to other Christians?

What about government? You think there should only be negative interest rate
bonds? What about the federal funds rate, LIBOR, T-note yields, etc? Do you
have a coherent system that could replace these financial instruments?

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faissaloo
>Would you rather that no one could get access loans?

If they had interest then yes.

>If you truly believe that position, it would very much undermines the
autonomy and choice of the people without capital: businesses, individuals,
start-ups, whatever.

Without interest the amount of capital those groups would need would
significantly decrease. I'm willing to sacrifice a reasonable amount of
autonomy in order to stop people burning themselves and devaluing the earnings
of others.

>If you think that interest is a bad thing, what is the alternative? Sharia
finance?

The alternative is a number of things working together, sharia finance yes,
the end of fiat currency, guaranteed minimum income to get those without
capital to a point where they can contribute to society and a restoration of
trust based society so that those with close bonds will be more likely to loan
to each other interest free and out of good will (this is probably the most
difficult of the three but I have some ideas).

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mruts
Okay, how about you give me $1000 and I'll pay you back when I die. I'm good
for it, I promise.

If so, I'll give you my bitcoin address.

The time value of money is so fundamental, and so obvious, that you must be
being deliberately obtuse to not understand it. Money today is worth more than
money tomorrow.

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faissaloo
>Okay, how about you give me $1000 and I'll pay you back when I die. I'm good
for it, I promise.

I have no reason to trust you.

>The time value of money is so fundamental, and so obvious, that you must be
being deliberately obtuse to not understand it

No one's saying time doesn't have monetary value, it's a variable many
businesses depend on, but that shouldn't mean you simply get to do the direct
conversion and sidestep creating meaningful longterm value and make it more
difficult for those without money to get anywhere without being under your
thumb.

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algaeontoast
Are we sure this actually occurred? If anything this is going to make it
easier for american banks to exploit students and side-step legislation that
would actually fix the root of the student debt bubble in America.

By this I mean people will now just point to Canada and demand a bailout
without really committing effort to passing laws that will prevent
exploitative interest rates and pricing schemes by private universities.

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lstamour
Yes, I can confirm it happened. A relative of mine was quite happy when this
happened. Myself, I migrated off their cards years ago.

That said, I don’t think it will lead to bailout. Debt forgiveness is a rare
but standard practice in trying to rebuild credit scores, is my understanding,
and a way of getting some return rather than the zilch you’d get from a
personal bankruptcy. It’s just that bankruptcy doesn’t affect student loans in
the US, so folks are absolutely stuck there...

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derefr
> It’s just that bankruptcy doesn’t affect student loans in the US, so folks
> are absolutely stuck there...

I mean, _in theory_ (wink), you could always pay off your student loan debt
using other forms of debt, and _then_ go bankrupt.

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flaviu1
Courts aren't stupid, I don't think they'd look kindly upon you if they see
you've done this.

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lonelappde
Why would courts care? Student loans are not dischargable, because the student
loan creditor lobbied to make sure they get laid. The replacement creditor has
not.

Of course, there is no lender who is going to give a an unsecured loan the
size of your substantial student debt to someone with said loans and no other
assets, for obvious reasons.

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ceejayoz
> Why would courts care?

Because it's fraud. Taking on big debts you never intend to pay right before a
bankruptcy will get you in a lot of trouble.

