If a lender manages his loans properly, then he will be able to be properly compensated for his time/effort necessary to liquidate the collateral that was securing the loan (and often actually end up being compensated very generously when borrowers default).
that's really not the point, though. lenders are in the business of lending in return for interest + principal. they aren't in the business of speculating on collateral defaults---some may enjoy that aspect, but some (probably most) do not. i would have no interest in that if i were to lend here.
The reason a lender will ask for collateral is to protect themselves in the event of a default. If the lender has no interest in owning/selling the subject of the loan then he should not be making the loan in the first place.
incorrect. a lender makes a loan in the first place to recover the principal + interest. if a loan is secured, that doesn't change that fact. and it doesn't make it okay to default on loans. If a savvy lender can profit off of loan defaults, that has nothing to do with how trustworthy a loan defaulter is.
I would assume that BitcoinBoss666 wants to get his name cleared of being a scammer, and I would ask you how he should go about doing that. I would assume that you would respond in saying that he should repay the loan that he defaulted on, however once BitcoinBoss666 repays the defaulted loan he would then be owed the collateral that has more likely then not since been sold, which would make the lender a scammer when he cannot produce the collateral.
Should BitcoinBoss666 be forced to forfeit the collateral he provided even if he repays the loan? Should BitcoinBoss666 be forever be labeled a scammer over a $25 loan?
the bolded assertion is beyond crazy. the collateral was secured in the first place for the express purpose of being liquidated in the event of default. this was known by all parties. also, not only is this customary, but it is entailed logically by the securing of collateral in the first place.
i would say that there should be a similar rationale to credit reporting. take the example of an overdrawn checking account. the bank will generally hold the debt for several months before eventually selling the debt and reporting the debtor to Chex Systems. if the debtor repays the balance before the debt is sold, the slate is wiped clean. if, however, the debtor cannot repay the debt in a reasonable amount of time, their record can only be repaired by time----3 or 5 years, i believe. like bitcointalk, it is at the debt owner's discretion whether or not to publicize the default.
similarly, if BitcoinBoss666's lender was forced to liquidate the collateral, BitcoinBoss666/BonusGame should not be let off the hook. the default is already public, so pandora's box is already open. there is no going back. the loan was defaulted on, the collateral was liquidated, and there can be no repayment of the original loan.
"forever" may be a bit much, as my analogy implies. but for the foreseeable future: yes. the fact that he defaulted over such a tiny loan as $25 makes him all the more untrustworthy.