Debt Relief

Debt Relief is the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations . Historically, debt was responsible for the creation of indentured servants. Even today debt is responsible for individuals being sold into sweat shops and sex slavery in certain parts of the world.

Debt Relief Historically

Debt Relief is mentioned in the Book of Leviticus, in which God councils Moses to forgive debts in certain cases every Jubilee year. Islam forbids lending with interest even today, while the Catholic church only allowed it from 1822 onwards, and the Torah states that all debts should be erased every 7 years and every 50 years. Debt Relief as a religious concept was therefore associated with the prevention of slavery.

Debt Relief in Modern Context

Debt Relief is embraced in a modern country through the legal mechanism of Bankruptcy. As debt will increase through time if it is not repaid faster than the interest accrues and individual may find themselves in a situation were they will never be able to repay a debt. This would prevent the individual from covering their own cost of living and may lead to multi-generational debt, essentially this would create indentured servitude. The benefit for a society to engage in Debt Relief though the legal mechanism of Bankruptcy is that it actually decreases the burden on the state as the individual is able to support themselves. As long as some form of bankruptcy debt relief exists within law it places the responsibility on the creditor to ensure that they lend to those who can repay the debt.

Other debt relief options available include Debt Agreements. Debt Agreements don’t relieve all of the debt but prevent interest from accruing and will generally result in a proportion of the debt being forgiven. This allows for the debt to be repaid in proportion to an individuals capacity to repay.

Debt Relief Arguments Against

It may amaze you that there are actually opponents of debt relief/bankruptcy who argue against it. The argue that it is essentially like giving people a blank cheque. Essentially they ague that debt relief will encourage irresponsible spending practices. Only when people are accountable for their actions, will they decide to change their behavior.

For further information of Debt Relief options available for individuals in Australia please refer to the Debt Agreement and the Bankruptcy sections.

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