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Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review July 17, 2006 / 21 Tamuz, 5766

Settling Up

By Rabbi Dr. Asher Meir


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Seeking credit card debt settlement


http://www.JewishWorldReview.com | Q: I fell behind in my credit card debt and accumulated a lot of fines. I want to pay what I can, but I can't afford the whole amount. Is it ethical to seek a settlement involving partial payment?


A: You're certainly not alone. Statistics show that Americans are holding a record amount of credit card debt. Most people are able to bit the bullet and pay off all their debt. But a significant and growing minority find that due to excessive credit use, or to unexpected employment or health setbacks (actually most cases involve a little of each), they just can't afford to pay everything. A settlement is the best they have to offer, short of bankruptcy.


Out of court settlements have an honored and even privileged status in Jewish law. Judges are encouraged to offer the litigants a settlement at the beginning of proceedings: "It is a mitzvah [fulfillment of a commandment] to say to the litigants at the beginning of proceedings, 'Do you want a ruling or a settlement?'" (1)


What commandment is fulfilled? The admonishment of the prophet Zechariah (8:16), who urges: "Truth and judgment of peace judge in your gates." Seemingly there is a tension between truth, which will vindicate one party and incriminate the other, and peace, which implies harmony among the litigants. The Talmud tells us that "judgment of peace" is a negotiated settlement. It is judgment because it is guided by legal principles, but it is peaceful because it takes into account considerations not strictly admissible in court, and is not forcefully imposed on the parties.(2)


However, settlement is only favored when it is needed to take into account the legitimate claims of each side. Sometimes the strict letter of the law cannot fully take account of important equitable considerations. Settlement is frowned upon as a way of dragging out proceedings and pressuring the other side to waive legitimate rights. The same chapter of the Code of Jewish Law (Shulchan Aruch) warns: "It is forbidden to seek excuses to avoid payment, in order that the other side should agree to a compromise and forgo the rest." A compromise thus reached is not considered to be a true waiver, and the person is still religiously obligated to pay. (3)


So the question here is if you have any legitimate basis for reducing your debt, or if you are merely using your power of refusal as a delaying tactic to compel the credit company to moderate their terms.


While this obviously depends on your individual circumstances, I think that in general if you are in difficult financial straits and not hiding information from your creditors, you may do your best to persuade the other side to accept a settlement. In general, this is not taking unfair advantage of them.


The main consideration here is that you are not the only customer of the lender, and their charges are designed to ensure their overall profitability. This includes making a reasonable profit on the average borrower who is paying a rate close to the market rate, making large profits on people who unwittingly accumulate large charges in fines and specially high interest, and occasionally having to give up on part of the interest or even principal for borrowers with hardships, like those you describe.


A related consideration is that these lenders are not pussycats. They are more like tigers. The Shulchan Aruch refers a common situation where an ordinary individual or business is trying to recover a debt, and is bullied by the delaying tactics of the debtor until they are really coerced into a settlement. This is not the situation of the credit companies, who are well able to display fortitude vis-a-vis the debtor when this is required. Naturally, this doesn't give the owner carte blanche to run up debts and fines and then ignore them. And if you hide information you are obligated to provide then you are taking advantage of a leniency which doesn't really apply to your situation. But if you are open about your situation and you feel that it would be in the interest of the lender to reach a settlement with you, pursuing this avenue is a legitimate course of action.


Your letter states that for you, the alternative to settlement is bankruptcy. I have expressed my opinion in the past that bankruptcy can be a necessary and ethical course of action, again if the debtor is acting openly and in good faith. It follows that the "threat" of bankruptcy is a legitimate one, and is not just a bullying or delaying tactic.


The legitimacy of seeking a settlement extends to compromising on the principal, not only on interest and penalties. Even so, I do think that you should make every effort to pay back the principal. The question of the legal and ethical applicability of the Biblical interest prohibition in the modern economy is a complex one which is beyond the scope of my column. But I think that a payment plan which involves eventual payment of the entire principal is an ethical watershed which will give you a genuine and well-deserved feeling of independence and fairness in the unpleasant negotiations you are compelled to engage in now.


Stubbornly creating obstacles to fulfilling legal obligations, in order to create pressure to settle, is an inappropriate tactic, and any settlement agreed to in this way is not considered a truly voluntary agreement. But genuine financial hardship, reached by an unfortunate debtor who has acted in good faith, is not a delaying tactic. This is a legitimate basis for seeking a compromise settlement with a credit company, certainly for the interest and penalties and in case of need for the principal as well.


SOURCES: (1) Shulchan Aruch, Choshen Mishpat 12:2 (2) Babylonian Talmud, Sanhedrin 6b. (3) Shulchan Aruch, Choshen Mishpat 12:6

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JWR contributor Rabbi Dr. Asher Meir, formerly of the Council of Economic Advisers in the Reagan administration, is Research Director of the Business Ethics Center of Jerusalem, Jerusalem College of Technology. To comment or pose a question, please click here.


Previously:

Can I threaten to spread the word about someone who cheated me?
How can the terminally ill tap into their life insurance?
Is there value in an unhappy marriage?
Where does the Almighty fit into your corporation's mission statement?
Does an expert witness have to be impartial?
Should I give recognition to a modest man who did a great deed?
In representing my firm, can I tell a white lie?
Defrauding insurance to save a life
Can top level management unilaterally give away money to corporate dollars to charity?
Loans to Family Members
How much worker supervision is too much?
Should I turn in a colleague for inappropriate acts?
Priority in charitable giving
Trolls and ogres
How many hours of work is too many?
Can I promote my product by having it unobtrusively written into a story?
He's not heavy he's my brother
All's fair in war?, II
All's fair in war?
Girth vs. worth
Is it proper to tax bequests?
Ethics of Being Overweight
Penalized for working swiftly
When is it a bluff?
'Rate and switch'
My paycheck is late!
Should schools cater to an elite?
All's fair in love?
Comfort and Competition
Do I need the caller's permission to put a call on the speakerphone?
Overtime for lost time
Is it unethical to play suppliers against each other to get the lowest bid possible?
Do family members have precedence in charity allotments?
What the world of business can teach us about our annual process of repentance and renewal
Are religious leaders subject to criticism?
Vindictive Vendor: How can I punish an abusive competitor?
Blogging Ethics: Is the blogger responsible for defamatory posts?







© 2005, The Jewish Ethicist is produced by the JCT Center for Business Ethics