This is an important point that I think supports the overarching message if this article and the Paulson quote.  The system of credit reporting has been setup to support this "debt as a moral obligation" assumption.  The fear of poor credit scares people into continuing to pay.<p>In reality, a bankruptcy only lasts 7 years on your credit report and most banks will start lending after merely 2-3 years.<p>Underwater homeowners should look at the longer time horizon and see that it will take quite a few years for their assets to be above water.  That's several years to re-build their credit with a much lower cost of living.