Tag Archives: debt

Debt Means “Can’t Win for Losing”

Ponce       Arkansas Community Organizations, one of KABF and ACORN’s partners on many projects, especially those involving financial security for low-and-moderate income families, recently released a report about major debt that is oppressing these families.  The report is called “Can’t Win for Losing,” and that just about says it all, but digging into its outreach and conclusions is shocking even to the most jaded among us.

This isn’t just an Arkansas or southern problem, but a national one.  It just affects southern states like Arkansas more, which is why the Annie B. Casey Foundation created the Southern Partnership to Reduce Debt, including ACO, ACI, and a number of other national and southern nonprofit organizations. The report doesn’t sugarcoat the problem, but jumps right into it from the first paragraphs:

A recent study by the Urban Institute revealed that 33% of all Americans have debt in collections. That percentage is closer to 40% in Arkansas. The research shows that there are significant disparities along the fault lines of race and class, with low-income people of color bearing the greatest debt burden. In Arkansas, 36% of white households have debt in collections compared to 58% of black and brown households. The burden falls most heavily on people of color because of the stark differences in household income. The average income for white households in Arkansas is $63,887, while black and brown households in Arkansas bring home an average of $43,749 each year.

When the Arkansas Community Institute, the tax-exempt research arm of ACO, surveyed more than 1800 people in Pulaski and Jefferson Counties, who used the organization’s tax preparation services, the most common debt burdens also became very clear.

The total amount of debt reported by these community members was over $19 million.  The four major types of debt were student loans (493 respondents), hospital bills (478), auto loans (362), and court fines and fees (190).  Seventy percent (847) of those with debt said they were having problems making their payments. Forty-three percent (516) of respondents had debt in collections.

Like they said, in these situations, families “can’t win for losing.”

The stories in the report are as heartrending as they are almost commonplace.  A grandmother supporting her grandchildren and herself on disability and social security with $2500 in court fines that began with an unpaid $59 dental bill where interest charges and late fees have accumulated over the twenty years she has been trying on limited income to pay off.  A woman with school debt from a technical program that went belly up before she got a degree that she thought was forgiven, but lingered on for thirty years and is now an obstacle in her current educational ambition.  It goes on and on.

When the report comes to “what’s to be done,” the recommendations are clear, but almost as depressing as the findings.  Many require national solutions like the ambitious programs proposed by some of the current candidates for presidency like Medicare for All or free tuition.  Others presume a kinder, gentler state than Arkansas or many others found in the south, but also a state with deeper pockets and richer citizens and institutions, whether judicial, medical, or educational, that understand affordability and citizen wealth as clearly as their primary missions.

Nonetheless, lawmakers and others need to pay attention to this report.  Even changes at the margins could mean huge differences for low-and-moderate income families.  Discretion is important in the way institutions and government deal with debt.  In dealing with families, mercy is as crucial as letter-of-the-law justice in a family’s economic survival.  There is a long “to do list” in this report, and there are many people that need to get into gear and start checking the boxes on what needs to be done.

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We Need More Jubilee

New Orleans      I heard about it in Sunday school or read it myself in the bible, I don’t really remember it.    When in South Africa in 2004 a decade after the end of apartheid in South Africa with a delegation from the Organizers’ Forum, I remember well our whole group of fifteen or more trooping into a small office to meet with a group called the Jubilee Debt Campaign.

The Jubilee Debt Campaign in South Africa was connected to campaigns in other countries and was centered in the United Kingdom.  The initial push had been for debt relief in 1990, but the drive had continued with the focus on debt owed to the World Bank and the International Monetary Fund that had often been initiated and then diverted by corrupt governments and authoritarian leaders but continued to be imposed on an emerging nation’s citizens, breeding inequality, and retarding development.  The debts were unjust so the demand was clear:  cancel them.  Wipe the slate clean!

Was this idea crazy?  Of course not.  The notion of jubilee came from the bible, which had great appeal and, regardless of whether or not it was divinely inspired, had deep historical roots.  Quoting from the campaign’s website, “There is historical evidence for debt jubilees – cancellations – in Babylon, dating back almost 4,000 years. Such cancellations happened in response to peasant uprisings. For peasants in the Middle East at the time, if they had a bad harvest, they would get into debt. Then in order to pay this debt they would be forced to sell their land. And finally, they would have to sell themselves and their family into slavery. Cancelling debt and freeing slaves was undoing this injustice.”

In biblical times, the sabbath was Sunday, a day of rest, and the sabbatical was observed every seven years, a practice picked up by academia, as a more extensive period for rest and reflection.  The jubilee was seven sabbaticals or forty-nine years and observed on the fiftieth year most historians believe.  In Leviticus 25:10, “This fiftieth year is sacred—it is a time of freedom and of celebration when everyone will receive back their original property, and slaves will return home to their families.”  Paraphrased by Wikipedia, “According to Leviticus, slaves and prisoners would be freed, debts would be forgiven, and the mercies of God would be particularly manifest.”  Jubilee creates a better deal from a hard hand dealt years before.

We need more jubilee when it’s possible.  The consequences of mass foreclosures and the banks’ unwillingness to modify or forgive loans in their own self-interest and therefore denying property to the owners was a clear case where a jubilee was clearly required.  Student loans are driving the future of younger people and the government is tightening the grip, rather than bringing a little jubilee to the table which the situation demands.  I was reminded that in the deep south there was a story of jubilee somewhere when fish jumped up to the bank, and everyone harvested, or a truck full of goods was abandoned on the interstate, and of course when all slaves were set free.

Ok, maybe I’m dreaming, but we need a lot more of this in our lives, businesses, and governments.

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