No kidding. According to the Wall Street Journal:
More than one third of U.S. states allow borrowers who can’t or won’t pay to be jailed.
Yes, jailed. Think Shawshank Redemption, the Birdman of Alcatraz. Jail, a 6′ x 8′ cell with an open toilet, a sink, two cots, and cellmate (and new best friend) Max, who is nothing short of 6’5”, 300 pounds.
The burgeoning debt collection industry appears to employ a tricky strategy, one which is either deceiving judges or convincing them. The FTC oversees and enforces the Federal Debt Collection Practices Act, which imposes strict rules. No leg breaking or finger bending, no death threats, no threat of jail. That’s right, collectors can’t even threaten jail, but judges in states such as Illinois are making threats unnecessary. Collectors have been successfully seeking criminal contempt of court judgments against debtors for failure to pay adjudged debts or failure to show up for court (sometimes without ever knowing they are due in court). When these judges issue arrest warrants, the debtors—often just regular Joes with an outstanding credit card bill—end up in prison. In the end, debt collectors and judges circumvent rules against jailing in civil matters by making the issue out to be a criminal one. Clever.
In a survey of only nine counties, judges had signed off on more than 5,000 such arrest warrants since 2010 alone. If a warrant is issued in your name—rightly or wrongly—you can be cuffed at any moment. You might be stopped for speeding or making an illegal left turn. They run your driver’s license and boom, the next thing you know you are handcuffed and in the back of police cruiser, wondering what hit you.
My first concern: How the hell can you lose your liberty for failing to pay a private debt? I thought that practice was abolished almost 200 years ago.
Second, how—after all the abuse we’ve seen in the sub-prime mortgage market, with robo-signing and other shady practices—can debt collectors be trusted to get it right? To not abuse a statutory process? To actually follow a procedure and afford debtors all their due process rights? Much more likely, collectors will abuse the added leverage in prying money from struggling Main Street-ers.
Finally, where is the outrage??? I found this issue buried on Page C3 of today’s Wall Street Journal. Instead its eradication should be a primary focus of the Occupy Wall Street movement and a priority of the new Consumer Finance Protection Board. Fortunately, Illinois Attorney General Lisa Madigan has taken up the cause. Debtor’s prison should have disappeared with the buggy whip, over 100 years ago.