by Mike Konczal
ew tactics have an old ring to them and low-income debtors are falling prey.
NPR just ran a story called “Unpaid Bills Land Some Debtors Behind Bars.” As they report, ”Here’s how it happens: A company will often sell off its debt to a collection agency, generally called a creditor. That creditor files a lawsuit against the debtor requiring a court appearance. A notice to appear in court is supposed to be given to the debtor. If they fail to show up, a warrant is issued for their arrest.” Marie Diamond has more.
This is increasingly common across the country. My colleagues Matt Stoller and Bryce Covert have both written about debtors being jailed for failure to appear in court. Debtors’ prisons are illegal, and some point out that this is really jail for a summons problem, not a payment. But I haven’t had a full vision of the practice until I read this excellent working paper by Lea Shepherd of Loyola Chicago law school, “Creditors Contempt” (h/t creditslips). Beyond laying out the problems with the current system, which gives a disproportionate amount of the coercive powers of the state to creditors, this paper also has implications for another topic I’m interested in — the class bias of the submerged state.
The key here is something called in personam debt collection remedies. In an agrarian economy, it was relatively straight forward for creditors to order a sheriff to seize the property of a debtor. In rem actions, where a sheriff would go and seize property, would work just fine. But this became harder to do as time went on.
The debt collection market evolved in personam debt collection remedies. This in personam action has two goals: discovery and collection. The court orders the debtor to disclose information about his property, location of his assets, etc. to help creditors track down those assets. Then the court orders certain payments to be made, which allows for collection. This court order is enforced through the court’s authority to hold debtors in contempt, which in turn is enforced through threats of imprisonment. Depending on the jurisdiction, contempt charges can be made against either the failure to show up for the discovery process or the failure to stick to the collection ordered.