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Lumifer comments on Buying Debt as Effective Altruism? - Less Wrong
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Is the clock running? Loans are rarely made at zero interest rate, as the time goes by does my total obligation increase?
Also, what is my incentive to make any payments?
How is this relevant to anything?
It could be zero interest, if the primary purpose for holding onto it is to remind the person of their obligation and produce good feelings when they return the favor.
If you hold onto a debt, it shows on your credit report. Paying it off could improve your credit. But apart from that, there's the matter that it is functionally identical to donating to effective charity.
The subjective feeling of obligation with regards to the original debt might affect probability of repayment over time.
Having debt without being in default improves your credit score.
So my incentives to pay off the debt are exactly the same as my incentives to donate to some charity that I didn't pick?