Is it Halachically sound to settle debt for less than owed with a credit card company?


Hm. We have a concept called "it is a mitzva to pay back your debts" (and thus, for instance, if you were looking to liquidate some assets anyhow, you must give your creditor cash, rather than the assets). On the other hand, here the creditor is completely willing to waive the remainder of the debt.

From a strict halachic perspective, if they waive the debt that's it you're fine. From an ethical perspective ... I'd think one should make a reasonable effort to pay in full (e.g. purposely going into debt with a plan of making some kind of deal like this is a very bad idea, for all sorts of reasons), but if someone's really in a pinch, we'd say a waived debt is a waived debt.

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    ... but CYLOR, of course. – msh210 Oct 4 '10 at 16:24
  • To rephrase and clarify: The question is asked with the concept of "it is a Mitzva to pay back you debts". Reuvain would love to pay his bills, however he has lost his job, and is unable to at this point. Credit card companies do not care if you are in trouble and want their minimum payment that is due each month. He can default and settle with them for 20-30 cents on the dollar. Is this Halachically correct? – Gershon Gold Oct 4 '10 at 21:08
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    Should be no different than declaring bankruptcy. There's a machlokes achronim whether dina d'malchusa alone would suffice to allow it; however, we have a stronger principle here: "hakol k'minhag hamedina." ("It all follows the custom of the land.") The company enters a relationship with Reuven understanding fully well that some percentage of their customers could default. – Shalom Oct 4 '10 at 23:03

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