Modern American Debtors’ Prisons

New Orleans    Lord please help the poor, because in America these days it has become a crime to be poor!

Local jails are becoming debtors prisons thanks to the fact that local courts, where justice is rumored rather than meted out it seems, in many areas have outsourced fines and fees leaving people with a “go to jail” card and no “get out of jail” possibility.  Add this to the discussions we have had previously about judges who sent juveniles to prison to pay for the jail system and potentially pad their pockets and the similar pyramiding fee that has left some former students with mountains of debts because of the larded on fees and penalties for missed payments.

Today’s Times included a story by Ethan Bronner featuring two people in Alabama that had gotten traffic tickets and started sliding down the slippery slope of missed appearances and inability to pay (and tell me which of us has not been there!) and ended up doing jail time (in one case over 2 years worth during a decade of joblessness!) while still carrying the debt (up to $10,000 now!).  This defines debtors’ prisons that most Americans have thought we left in England a couple of hundred years ago when we came to this country.

Various lawyers and law professors are quoted reminding people that the Supreme Court has determined that this shouldn’t be the case by ruling that there have to be alternatives for the poor in lieu of inability to pay various fines and fees.  Problem is that these for profit blood suckers don’t feel any obligation to tell folks this and, clang, that’s the sound of the door shutting on the jail cell.  As despicable is the fact that some judges are using the fines and fees to pay for their own retirement benefits.  In fact there’s a dispute right now in the Orleans Parish courts about an additional retirement plan for the judges that no one seemed to know about and all involved seem convinced may be unethical.  It seems that this is common in a number of states according to a study cited particularly in the South by the Times.

I was talking to a judge last week in Ontario (yes, that’s in Canada) who was surprised to have courted some controversy because he had taken the radical step of using the fees his court has collected as something other than a slush fund for local feel good causes and instead was using the $200,000 plus as a mini-cy pres operation that funded nonprofits directly related to changing the conditions that led to the problems, provided rehab, and were involved in the criminal and juvenile justice system.  Have you got this?  It’s controversial and perhaps radical to use such fees to fund improvements in the system, but increasingly standard operating procedure for courts to use such funds for their own perks and pad the pockets of slick operators, while the poor carry the weight of the debt and do hard time for what might have started as a single speeding ticket.

This neo-liberal, pay-as-you-go-down system of criminalizing and impoverishing the poor has to be stopped.  By any means necessary!

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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.

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