Is this the return to older values?
Savvy consumer of the St. Louis Today on line edition points us in the direction Pete Peterson might be suggesting from this post:
Debtors prisons might have gone the way of medical leeching and boneshaker bikes, but that doesn’t mean consumers in some states can’t end up in the clink if they fall behind on their bills.
Today, the Minneapolis Star Tribune reports on what appears to be the rising number of arrests of debtors who have been thrown behind bars for missing court-ordered debt payments or for not appearing in court after being sued by debt collectors.The startling story reveals how debt-related arrest warrants in Minnesota have jumped 60 percent in the last four years, with 845 cases last year. That’s not a large segment of the state’s total arrests, but that doesn’t offer much comfort to those consumers who have been hauled into jail for court offenses stemming from debts as small as $250.
Some responsible, on-time bill payers might not be overly sympathetic to the jailed debtors’ plights, but they should keep this in mind: Often, the expense of arresting and jailing the consumers exceeds the amount owed. And that price tag, of course, is picked up by the taxpayers.
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The laws allowing for the arrest of someone for an unpaid debt are not new.
What is new is the rise of well-funded, aggressive and centralized collection firms, in many cases run by attorneys, that buy up unpaid debt and use the courts to collect.
Update: Rdan here…Yves Smith takes the high road on ‘ruthless’ in PR push against strategic defaulters underway…is there a debtor’s prison in your future?. This is Peterson’s choice of words.
I read Mr Pete Peterson’s post where he said that bankruptcy is being used as an “exit strategy” by consumers. He went on to basically state that the bankruptcy option should be removed. People, he claims, should pay their debts or suffer the consequences, even if it means a return of debtor’s prisons.
But of course Mr Peterson is not abvocating the same thing for our cherished and privileged Corporate personhoods. Corporations, it goes without saying in Mr. Peterson’s world, need to retain their right to use the bankruptcy “exit stategy”.
I would propose instead that we toss the board of directors of any corporation that goes bankrupt into prison for a few months. That might put an end to executive class looting and pillaging that drives firms to bankruptcy while the individuals in charge escape with their golden parachutes.
Perhaps a criminal attorney could enlighten us, but my impression is that in many jurisdictions imprisoned felons are expected to pay 60-100 bucks a day to recoup the cost of keeping them in prison. Properly considered, a jail system can become a Profit Center.
Oh, Bliss it is to live in such an Age!
Case in point, a friend of mine in Minneapolis who is paying child support and has been for 17 years. He lost his job during the 2008 collapse, discovered his 401k, (11 years of pension savings) had fallen from $40k to about half that.
He withdrew it all and used it up in less than 6 months for his bills and his support payments, then thankfully found another job before he could fall behind. That leaves him with near zero in savings now.
I could not believe that the law would still hold him culpable and jail him in the absence of a job in the height of the worst economy since his grandparents endured the depression. But there it is, on the books in Minnesota. I wonder how many debtors turn to break-and-enter, or leave the country, or even commit suicide, faced with such an impossible fix? And taxpayers get to pay for the jails, the cops, the courts and burying the indigent, of course. Idiots.
Actually the specific example cited is something that has been going on for a long time. Ducking child support has been always one of the debts that could lead to prison and in fact is being brought back by the dead beat dads movement. Its just like one has always been likley to be thrown in prison if one fails to pay income tax.
Have you looked at the Collage loan system? They are what I would consider a debtors prison. You can never get out of your loans even under distress. I believe at some point this is going to develop in to a loan bubble like the housing bubble was.
Shane
The World Net
Right, Noni. An interesting fact regarding Florida’s child support statutue has recently been signed into law. To determine the amount of child support due, you have to know how much income the debtor parent has. If none, then FL law previously deemed the dead beat’s income to be minimum wage in full-time employment, aprox. $16K. Now, the state has decided to use the median income of Florida wage earners instead of minimum wage. The median income is aprox. $48K. This produces a much higher child support due, of course, and a correspondingly greater chance that an unemployed parent will be unable to make his/her support payment.
Traffic fines can be equally impossible to pay and resulting bench warrants put many poor drivers all over the country in jail. We aren’t as enlightened as we give ourselves credit for being.
And we thought Little Dorrit was just Dickens being a bleeding-heart.
Not that it is much of a help, but the recourse available to those ordered to pay child support is to go to court, show that their ability to pay has changed, and ask that the court change the support order to reflect the new circumstances. Support payments are usually based on ability to pay and on need. When one of those factors changes, the order can be changed. Problem is, it means going to the expense of going to court.
My impression is that the situation for some debtors is worse than is reflected in this article. Other press coverage of the same subject indicates that borrowers often are not told of court dates. It is up to lenders (or those who buy up the debt) to find them, and they don’t. They instead go to court, get a ruling, and then the borrower is exposed to arrest when they don’t comply with a ruling they’ve never seen. All that has to happen is that the borrower find the lender after the court makes its ruling. We simply have a very pro-lender (pro-collection) set of laws.
And the government has control over all student loans, so an entire generation will be in debtors prison to government.
I would if that was planned?