DutchmanAZ

After all the wailing and nashing of teeth over individuals committing moral suicide by stragically defaulting on their mortgage, it's funny how acceptable it is in the corporate/business world.

We're currently slightly under water on our property values and have no plans to default, but I can certainly understand someone who is 100K or more upside down walking away.

What's your opinion?

http://online.wsj.com/article/SB1000...googlenews_wsj

LVG

I'm going to try to keep politics out of this post as best I can, so here goes:

I made this observation several years ago. We grant corporations rights (read up on Corporate Personhood), treat them like people (through the expectation that they don't do evil things), and otherwise generally humaanise them. However, we also apply a different set of laws to them.

If you, as a person, tried to run your personal life like a corporation does, you'd be locked up in a second for committing fraud or violating any number of statues. However, if a corporation does the same, it's considered "good business", and those in charge are lauded as being astute businessmen.

Therefore, I would suggest that we either make one of two decisions and change the laws accordingly:

1. Remove the "Corporate Personhood" argument from legal theory, and recognize corporations for what they are: a vehicle to shield the shareholders from liability, and that any rights guaranteed under the constitution are those held by the shareholders, and not by the corporation itself;

2. Change people's status from individuals to "Personal Corporations", where the same rights and business dealings that corporations have are also afforded to individuals.

JMHO.

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Divide Et Impera

Great post!

Corporation walking away from a property and defaulting = Business decision

Person walking away from a property and defrauding = You have no business making that decision!!!!

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conraddobler

No one really stops the citizens from walking away, except state laws, the Federal BK laws are really the only protection from creditors you really have as a private citizen.

Most of the real bad laws that cause people to get thrown under a bus for making said decisions are state laws.

We did recently under Bush just make it harder to file BK, which I think Obama should of repealed but then again he was busy with other things.

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DWKB

Is an individual shielded from any person repercussions when the business they own defaults on a commercial property?

Seems like that eases the decision process as you can just open up another LLC under a different name and start over once the previous business dissolves.

As an individual, you can't get away from your own name.

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LVG

Short answer is no, you're not. To use the housing crisis as an example - if an individual decides to do a strategic default (meaning, they intentionally let the house be foreclosed upon), they will carry that for 7 years on their credit score. In addition, the bank can seek a judgment against that individual for the difference between the amount left on the loan vs. what the house was sold for. The individual would then be forced to pay that money back to the bank, even if it is many years down the road.

In contrast, a corporation could go through the same strategic default on a property, dissolve, and then organize under a different tax ID # and name, with no long term repercussions.

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DWKB

You answered my assumptions in the affirmative, but it looks like you're telling me I was wrong.

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LVG

You're right.

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"The problem with quotes on the Internet is that it is often difficult to verify their authenticity." - Abraham Lincoln