I contend that the debt, after being sold, is not “real” any longer, and therefore the debtor has no moral obligation to repay it. Legal? Definitely.

The original lender has written the debt off, probably gotten a tax break from the government, and moved on.

People and companies break contracts all the time. Moralizing over it is just a distraction from the economic and juridical forces at play.

To be fair, it's completely legitimate to issue debt that the original lender can sell for liquidity, although it should probably be difficult or impossible for institutional lenders (eg credit card or mortgage) to originate those. The real problem is the combination of interest and inablity to default onto some concrete piece of collateral, which in the creditor-preferred case of making incremental payments without net reduction in the principle, amounts to fractional ownership (like owning stock in a corporation) of a person, ie slavery.

You can break your contract too by declaring bankruptcy and screwing over the debtors.

Your debt might not be real or moral but you still legally have to pay it so what does that change.

Why would selling debt make you morally not responsible for it? My mortgage has been sold multiple times. IMO, I still 100% have a moral (and obviously legal) obligation to pay it.

Unlike secured loans like mortgages, the cost of default for unsecured loans is already priced in to the interest rate of the debt. Once it gets sold a third party, that's just a bet by that company that they can strong arm you into paying them something above what they paid for it by exploiting your anxiety or misplaced sense of duty. They didn't earn anything -- they didn't create a service or good that you found valuable, didn't invent something that saves you time, didn't make you life easier or more comfortable. They are scavengers. There is no moral obligation to enrich scavengers.

> Unlike secured loans like mortgages, the cost of default for unsecured loans is already priced in to the interest rate of the debt.

That cost likely also takes into account the money they can get for selling the debt of defaulters. Otherwise the bank down the street that does this more accurate calculation would be able to undercut them by offering a lower rate and take all their business. There's no free lunches.

The existence of a secondary market for debt affects the price of primary issuance of debt (in a way that benefits borrowers).

Your argument could be applied equally to say that anyone who buys a share of stock in the open market (not during an IPO or secondary offering) hasn't actually made an investment in the company because the company didn't get those exact dollars.

With identity theft these days, while I’d agree that it’s certainly _less_, I’d contend that it’s not an insignificant number either.