There is never a reason to impose punishments for failure to repay debt and then for that reason debt does not exist

There are strong arguments to say that in the case, specifically, of monetary debts, there is no justification in imposing punishments for failure to repay: http://bit.ly/g0fJCM

In the case of general debt, the arguments are perhaps less strong but equally valid.

We know that there is no (or at least very little) incentive to repay a debt if there are no punishments associated with a failure to repay, except perhaps to maintain our good standing in the community. For debts to exist, in a legal sense we must have the possibility (risk) of some form of punishment being imposed upon us. But for the use of force to be valid, it must be defensive and it is difficult to see how failure to repay (inaction) can correctly be characterised as an aggressive act. Even if we (as the debtor) oppose efforts made by the creditor to reclaim the loaned object (in the case of non-monetary debts) we might, in some sense still be being defensive, if the ownership of the object is in dispute in our mind.

If we fail, or refuse to return an object once it has been loaned this is not equivalent to saying that the object has been stolen. We have not stolen something if we fail, or refuse to give it back once it has been loaned to us.