Thinking about the consumer debt crisis, mortgage defaults, US debt ceiling:
What would happen if . . .
Any payment made – on a credit card, mortgage, or other debt – would have a cap on the % going to interest – for example, be split 50% to principal, 50% of the payment going to any accumulated interest or fees.
With 50% of each payment going to principal, the lender’s return on investment would still average at least 50 -100%.
Assuming new purchases on open credit cards, and/or a large mortgage debt, or a corporate or country debt in the millions or more, the unpaid principal would continue to accrue interest, with any remaining unpaid interest and fees paid off at the end of the loan and/or whenever the remaining principal on revolving debt totalled less than half the payment.
A large benefit of this would be to avoid the “trapping syndrome” where a consumer or debtor is led to feel that their only ways out of the debt are to either walk away from the debt, or remain in the unhappy drudgery of an indentured slave trapped with continual payments for life.