Courts Become Gateway to Debtors Prison

NDebtew Orleans A harrowing article in the Wall Street Journal documented the success that bottom fishing debt collection agencies are having at ripping the last pennies from working families being crushed in court over relatively small claims.  I wish this were news, but of course the story is all too familiar.

The big debt predator companies are buying the debt for 3 and 4 cents on the dollar and then almost immediately going into court where borrowers are virtually defenseless.  In most cases the debtors do not appear in court since they have no representation and instead find themselves victimized by the so-called “system of justice” with more fines, court fees, penalties and an added burden of cumulative costs that may lead the original debt to increase by anywhere between 25% and 100%.  In effect judges and courts are becoming the screws for a new kind of debtors’ prison where people are on “permanent parole” and tethered to the escalating debts that are increasing even when they are being paid, little by little.

Journal reporter, Jessica Silver-Greenberg, does a service by at least naming names, not that they would feel much embarrassment over their tactics and tools:

The four largest publicly traded debt buyers—Encore, Asta Funding Inc., Asset Acceptance Capital Corp. and Portfolio Recovery Associates Inc.—purchased $19.6 billion in distressed debt last year. They typically recover three times what they spend buying debt, according to the Association of Credit and Collection Professionals, a trade group.

Behind the screen not surprisingly we find more Wall Street raptors:

Wall Street has taken notice. J.C. Flowers & Co. LLC, the private-equity firm, has a 24% stake in Encore. BlackRock Inc. owns 6.9% of Portfolio Recovery Associates, a Norfolk, Va., company. In October, the company reported its highest quarterly revenue ever.

In 2006, One Equity Partners, the private-equity arm of J.P. Morgan Chase, purchased Pennsylvania-based NCO Group, which posted $1.56 billion in revenue last year, making it the largest debt-collection company.

Analysts say that this raid on the last vestiges of citizen wealth will only become more intense in coming years given the debts of the recession.

Is there any hope for the consumer?  It seems that the Debt Protection Act says that if you haven’t paid eventually there is a statute of limitations of 5 to 7 years after you have been sued, if you can wait the collectors out and live with the consequences.

I’m not arguing that we celebrate deadbeats, but the system has to be fair and now it’s not.   Advocates and Actions has argued that we need to be ready to appear with the consent of the debtor family in court to advocate for relief from the judge, so there is at least some chance of allowing a family to get back on its feet and come back to dry land.

This is a misuse of the judicial system where no representation only equals more debt and intimidation.

Years ago when I was on the board of the GNO AFL-CIO when we would interview the countless judges that would come before us at every interview the story of a long deceased past president, Lindsay Williams of the Seafarers, would be told to one candidate after another.  Brother Williams, as the tale was told, would explain patiently to each candidate that we represent our members and what we need from a judge is an open door policy because sometimes a situation requires “not only justice, but mercy.”

These are situations that cry for mercy, but we have to organize the ability to raise up the voices to ask for both justice and mercy.


Tequila Party Makes Four


New Orleans Discussion of an independent party or a party caucus focusing on Latinos and modeled on the success of the Tea Party has now lept into public view. A story on debates within the community about a possible “Tequila Party” was reported in a piece by Delen Goldberg in the Las Vegas Sun over the weekend. [“No Label” Party, “Tequila Party,” who is coming up with these names, but that’s a question for another day.]

The trigger point in this discussion is not surprisingly the disappointment over the likely failure of any real effort at immigration reform. It is also not surprising to see this story start to breakout in Nevada in the wake of the critical importance of the role played by Latino voters in Democratic Senate Majority Leader Harry Reid’s re-election.

“I don’t know if it’s going to happen, but there’s talk,” said Fernando Romero, president of the nonpartisan Hispanics in Politics, Nevada’s oldest Hispanic political group. “There’s discussion about empowerment of the Latino vote.”

Add the fact that Latinos accounted for 15% of the total electorate in 2008 and despite the decreased participation in general in the 2010 midterms, have now seen their percentage of the vote edge up to 16%, and this would be a serious political movement if it developed.

Latinos in Nevada are watching the schizophrenic politics of a Latino running for governor as a Republican, yet embracing the anti-immigrant Arizona measure. Latino Dems are just disillusioned and weighing the coming legislative moves in Congress.

“There’s a feeling that Democrats aren’t listening,” said Louis DeSipio, a Chicano studies and political science professor at the University of California, Irvine.

Congress’ actions over the next month could decide the fate of the burgeoning Tequila Party. If comprehensive immigration reform is shelved again, some Hispanics will likely decide to strike out on their own.

“It would definitely induce us,” Romero said. “We would have to do something at that point to get ready for 2012.”

Interestingly many voices in the debate are calling attention to a piece that Carlos Munoz, the emeritus University of California professor, wrote commemorating what would have been the 40th anniversary of the Raza Unida Party in Texas and its heyday in Cristal City. Munoz ended his piece with an important, and perhaps controversial, call to create a broader, independent and progressive party in the United States.

“The story of the La Raza Unida Party teaches us that independent political parties based on racial or ethnic identity will not work. An independent mass political party that can represent the needs of our more complex diverse society must emerge to challenge the two-party dictatorship. Such a party could lead to an authentic multiracial, multiethnic and multicultural democracy for the twenty-first century.”

With all of the discussion and the various individual initiatives been shown, Munoz’s call for a broader party resonates, but still seems to be falling on deaf ears.

If these discussions continue to build, that may not last, and then we will really have something serious on our hands offering real alternatives for progressive politics.