Here’s What the Fate of Debt Will Be After a Dollar Crash

As preppers, we spend most of our time getting ready for loud, destructive, and calamitous events—disasters, riots, war, societal upheaval, and things like that. If you’re really serious, you might be preparing for nuclear war or something else truly cataclysmic.

But ironically, the most likely disasters aren’t heralded by much sound and fury. Things like plummeting economies, massive depressions, and the attendant collapse of currency don’t make any noise, but the shockwaves will upend society all the same.

It’s scary to think about, but the good news is you can prepare for them as long as you know what to expect. If you’re like most people, you’ve got some debts you are paying down. You’ll want to know what will happen to your debt after a US dollar crash, so keep reading.

Your Debt is Not Forgiven

We need to get the most important lesson out of the way first: if the dollar collapses, your debts are not forgiven. Sorry, that’s just not the way things work!

I suppose if society completely goes to pot and reverts to a pre-Industrial or even Stone Age in the aftermath of a major war that might be different. Your debts will likely die with the institutions that held them.

But make no mistake; you’ll still be on the hook for whatever you owe to any person or any institution even when the value of the dollar is cratering.

And depending on the T&C of your agreement for mortgages, personal loans, auto loans, and a lot more, you might not have any recourse, and things might, in fact, get a lot worse for you…

A mortgage might be called due by the lender in an instant, meaning you must pay the balance or forfeit your property. The same thing could happen with a car. If that isn’t on the table for whatever reason, your interest rates might simply be driven up to unsustainable levels.

There are tons of possible outcomes on that front, way too many to get into here, but that’s why it’s so important for you to do the following.

Pay Attention to the Letter of Your Agreements!

You must, absolutely must, take the time to read every section, paragraph, clause, line, and all the fine print of every single agreement you have concerning any debt you hold. From credit cards to mortgages, student loan debt, anything.

I know: no one wants to do it. These agreements are always door-stopper thick, and it’s very easy to just take the word of the kindly, patient person who is helping you sign your life away when doing the paperwork.

Gut check time. They don’t have your best interests at heart. They have no fiduciary responsibility to you. Not your loan advisor, not your banker, not the finance manager at the dealership, none of them.

Only you have that responsibility to yourself, and so you must take the time to read through all of this stuff no matter how long it takes.

Because that is what you will be contractually obligated to, and that is what will be legally enforceable. Will you be facing a ballooning interest rate on your home? Will the bank have the option to just call the loan due when the financial market starts turning against them?

This stuff isn’t conjecture. It’s happened before, many times, and will continue to happen. The only way you can defend yourself against predatory practices is to know precisely what you are signing your name to. No excuses, no exceptions.

Read this stuff, and if you can’t understand it, seek out a competent attorney that is on your side to interpret it for you.

Debts Secured with Collateral Will Go Into Collections

Your debt might be secured with collateral of some kind. Collateral is anything valuable that’s pledged against defaulting on the loan.

In other words, this is stuff that you’ll give the lender legal right to in case you don’t pay the loan back. Like, say, if you’re living in the middle of a terrible financial collapse…

This could be your car, your house, jewelry, guns, gold—really anything that the lender will accept and is legal tender for such debts.

If you don’t pay, your debt will go into collections, which means the lender will send agents to take the collateral assuming it isn’t already in their possession.

This means you and your family could be forcibly evicted from your home if you pledged it as collateral. Your car will get towed away. People will, very literally, come for your guns and have the legal right to do so. And so on and so on.

Once again, you need not think any lender, any of them, will have the humanity or the courtesy to give you a break under the circumstances. Go back and look at pictures of auctions during the Great Depression. Arguably the most trying time, financially, in our nation’s history…

People were frog-marched right out of their homes, and in some cases, neighbors and folks from the next town over would be bidding on the property before they even made it to the sidewalk.

Sad stuff, but that’s the reality of the lending business…

Devalued Currency is Bad News for Lenders

Keep in mind, not everything about the circumstances is bad for you, as a debtor, necessarily.

When the value of the dollar drops, you’ve got to spend a lot more to buy the things you are used to buying.

For instance, during a sharp dollar devaluation, a gallon of milk might go for $10, then $20, then $40, $50, or even more. Scary, but again, it has happened in the past and this pattern could repeat for all kinds of goods and commodities.

But remember that agreement we talked about, your loan agreement? It turns out that the actual value of your debt doesn’t change, assuming, of course, that your interest rate doesn’t change.

If you owed $100,000 before the dollar plummeted, you’ll still owe $100,000. This means that the lender is in a very, very bad position because they are now collecting nearly useless currency.

This matters because with a dollar devaluation there is usually an attendant hike in wages as a natural consequence of economics.

You’ll be making boatloads of cash in most industries, but those dollars are nearly worthless for buying actual goods. But they will still spend just the same for paying down your debt!

Assuming your lender doesn’t call it due and attempts to seize the more valuable assets or collateral, you can quickly and efficiently pay down your debt using the severely devalued “Monopoly” money.

It is Also Bad News for People Who Save Money

Don’t celebrate too hard. Even though a tanking dollar hurts lenders and might possibly provide an easy path to ridding yourself of debt in some circumstances, assuming you still have income, it will also prove to be just as devastating if you have cash savings.

I know Grandma and Grandpa always taught you to save for a rainy day, and that’s good advice.

The problem is if your saved money isn’t making you money, or isn’t in the form of an actual commodity (meaning not in the form of the genuinely worthless fiat currency that it is) then it is already devaluing over time thanks to inflation.

When the bottom falls out and the dollar plummets, that nest egg you built up painstakingly over months or years won’t be worth a dust bunny.

Because of this sad side effect of currency devaluation, it is wise—no, imperative—to diversify your savings between practical assets, valuable commodities, and cash.

How to Protect
Yourself From Debt During a Dollar Crash

A dollar crash is coming. It is an inevitability, like a star heading to a red giant and then collapsing into a white dwarf before it turns into a black hole. If you aren’t ready, truly ready, by the time it happens you’ll be facing financial ruination.

Here’s what you can do to improve your financial survival fitness prior to that fateful occurrence:

Eliminate Debt

All this talk about debt being a tool is only useful when the sun is shining and society is thriving. Debt makes you a slave, period, and is a massive vulnerability in times of financial uncertainty and societal unrest. Develop a plan for paying down all of your debt as quickly and efficiently as possible.

Invest in Tangible Assets Like Precious Metals

Things that are perennially valuable, during good times and bad, are great things to invest in. Invariably, this is precious metals like gold and silver.

These metals have been valuable since antiquity, and will remain valuable into the future no matter what because they have intrinsic value to people and are also necessary components in the manufacture of all sorts of modern technology.

Have Plenty of Practical Sustainment Supplies on Hand

As important as cash savings and gold are, you can’t eat either often, and as we learned, you might not be able to buy food at all for a reasonable amount of money.

Having 6 months to a year of the food and everything else you need on hand, safe and sound, is going to be the biggest possible comfort during a dollar collapse.

This is where all of your efforts put into readiness as a prepper will pay off. Don’t neglect those classic preps while you are getting rid of debt and acquiring hard assets!

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