Debt Collectors Unconstitutional Threat of Jail Time Is Key to $10 Billion Profit: ACLU Report
Third-party debt collectors are using the threat of jail to scrape cash out of millions of people, in flagrant violation of the Constitution and numerous laws banning the use of debtors prisons, a new report from the American Civil Liberties Union shows. Worse, the companies are getting a huge assist from both judges and prosecutors to skirt peoples rights on an industrial scale.
They contract with local district attorneys to print threatening letters on official prosecutor letterhead and file a deluge of small-dollar collections suits to judges who sign off on them without any meaningful due process or verification of claims.
The debts in question are often tiny. One lawyer in Washington told the ACLU hes documented over 10,000 [bounced] checks for under $10 that triggered letters threatening consumers with jail. The debts claimed in court are also inflated dramatically from what a person might have initially owed, courtesy of the under-regulated debt-buying industrys proclivity for tacking on arbitrary fees to expand their takings.
Third-party debt collection is a snaky thing. Once a hospital or grocery store or auto mechanic has decided that a given debt on their books isnt really worth the effort to collect, theyll sell it on the secondary market for pennies on the dollar. To turn a profit, the company buying the debt has to convince the debtor to pay full freight on something their own business practices just priced far lower - and thats if the collector can even find the person from the records theyve bought.
Despite those headwinds, the industry is pulling down annual revenues north of $10 billion. The threat of jail time is a key ingredient in that profiteering.
Its illegal to imprison people for being poor, at least in theory. But the ACLUs review of more than a thousand small-claims court cases involving debt collectors found that judges are happy to take a bit of a bank-shot around those prohibitions to help corral an alleged debtor. American courts are putting out arrest warrants by the tens of thousands, the group found, often setting bail for the warrant at the exact same level of the debt claimed by the company that filed the collections suit.
Judges are allowed to issue arrest warrants for debt cases in 44 states. Collectors contract with more than 200 local prosecutors offices around the country for auto-generated official letters threatening arrest and jail should a person not pay up immediately. Con't...
Read more, https://thinkprogress.org/debt-collections-courts-prosecutors-e7e489e0839e/
CozyMystery
(652 posts)is that the judges are in cahoots with the debt collector's attorneys.
The judge orders the debtor to pay up within X number of days, whether or not that is feasible for the debtor to do. If the debtor does not comply, or is unable to, he goes to jail for disobeying a lawful court order.
This happened to me. I was sued for the balance of a private student loan. My husband refused to pay it, although he was able to do so. He promised to represent me in court. We got there, my husband did nothing. The judge ordered me to pay the balance within 30 days, which I could not do because I was stay-at-home mom to 4 little kids (triplets +1).
I sat in that courtroom for several hours watching all the debtors get processed. The ones who went first were not in jail. But sitting on a bench waiting for their turn were a dozen people who were in handcuffs -- they had not obeyed a lawful court order and were going to jail because of their debt.
I got lucky. My husband didn't want me to go to jail, probably because he would have to take care of the kids. So he went to his office afterwards and wrote the check to pay the bill.
I hope you guys believe me. The only other time I told this story on a forum, the people turned on me and every single one of them accused me of lying.
appalachiablue
(41,188 posts)had with the serious, unethical and extremely profitable debt collection industry that involves the courts. I have no reason to doubt what happened with the collectors or your husband and can't imagine people attacking you on a forum for it. But that's humans unfortunately, esp. online. Since then I hope things have much improved with your situation and children. A lawsuit is one of the most stressful things a person can go through in life, not to mention an unsupportive, lying as*hole spouse. All the best.