But we don't live in decent times. In many cases today, the most socially responsible way to deal with debt is to refuse to pay. It is as honorable as a slave throwing off the chains. Please allow me to explain.
Usury, the charging of interest on a loan, has long been recognized as a method of exploitation. Laws have been passed to prevent such behavior. In ancient Israel, Jews were forbidden to charge interest on a loan to a fellow Jew. Even today, devout Jews will not charge interest on a loan to a family member.
Most of the world's legal systems, developed under Christian Europe, defined usury as the crime of charging exorbitant interest. To allow banks to make a profit and remain open, they permitted some interest, usually capped at about 3% per year. Though bankers sometimes grumbled or hedged by compounding more frequently, for the most part this system worked.
Only Islam has succeeded in completely banning usury. Sharia law prohibits any interest charge on a loan. There are more than 300 Islamic banks in 51 nations, with over $400 billion in assets. This concept has been growing in spite of being targeted for destruction by some very powerful forces. A country with functional Islamic banks seems to be at higher risk of invasion by the USA.
If you go to an Islamic bank for a loan, the banker will want to know how you intend to use the money. They don't ever pay for antisocial or unhealthful behavior that is banned by Sharia. No Islamic ATMs will be found in casinos. In place of a consumer loan, you might end up with a lease agreement, where the bank buys what you want and sells it to you at a profit, with payments over time guaranteed by the collateral of the item purchased.
If you want a business loan, the banker will want to study your business plan, because if it is good, the bank may become your partner, sharing both risks and benefits. This is similar to the way locally owned banks used to function everywhere, before the big corporations bought them up or ran them out. When a community bank gives you a loan, you become a trusted member of the community, which shares in your losses or successes. We're all in it together.
I remember when loan sharks were organized criminals, just like protection racketeers. Attorney General Robert Kennedy prosecuted lots of these criminals for usury, fraud, and bribery. Some speculate that it cost him his life. Today those criminal behaviors have not just become legal, but Congress awards special favors to the worst practitioners.
In 1984, when I was nominated for WA State Representative, I became aware of a lobbying effort that was happening in every state, starting with Delaware. The banking lobby urged each state to become more "business friendly" by eliminating usury prohibitions and other corporate regulations. They threatened legislators that refusing these changes would lead to centrally owned banks closing their operations. In fact, many big corporations are based in Delaware to this day. It worked.
I remember when it was illegal to charge more than 10% interest per year anywhere in the USA. Now the sky is the limit. Banks are barely regulated. They charge hidden fees, jack rates without warning, and compound whenever they choose, especially if they get any indication that you are poor or struggling. Even well trained lawyers can't interpret the fine print of a credit contract. Debt is a yoke around your neck with which they drag you down.
The whole story is bigger than that, involving fiat currency, fractional lending, and global dominance by a few, very powerful people. I encourage you to research it, if only by reading other posts in this blog. But for now, all you really need to know is that the gig is up. Rather than be dragged around by their noses, people are standing up and rebelling.
Look at Greece. They're rioting in the streets because of debt manipulation. They are not alone. So I urge you to join in. Refuse to pay any unsecured debt to big corporate lenders. They really can't do anything but send threatening messages. Plan to default on your secured loans as well, by studying bankruptcy codes, demanding to see the documents (most banks have repackaged and traded debts so much, they can't prove who owns the debt), and organizing to resist foreclosures.
The police and courts don't have to be our enemies in this matter. Talk with them reasonably. They are our neighbors. The bankers that are causing all this pain are not. Use that advantage.