Thursday, June 10, 2010

The Return of Debtors' Prison

The Minneapolis Star-Tribune has a story about the return of debtors' prison in Minnesota and other states, well not actually debtor's prison but certainly incarceration for owing money and not making, in some cases court-ordered payments. The following lengthy excerpt is from Chris Serres and Glenn Howatt's terrific article:

"It's not a crime to owe money, and debtors' prisons were abolished in the United States in the 19th century. But people are routinely being thrown in jail for failing to pay debts. In Minnesota, which has some of the most creditor-friendly laws in the country, the use of arrest warrants against debtors has jumped 60 percent over the past four years, with 845 cases in 2009, a Star Tribune analysis of state court data has found.


Not every warrant results in an arrest, but in Minnesota many debtors spend up to 48 hours in cells with criminals. Consumer attorneys say such arrests are increasing in many states, including Arkansas, Arizona and Washington, driven by a bad economy, high consumer debt and a growing industry that buys bad debts and employs every means available to collect. Whether a debtor is locked up depends largely on where the person lives, because enforcement is inconsistent from state to state, and even county to county.  In Illinois and southwest Indiana, some judges jail debtors for missing court-ordered debt payments. In extreme cases, people stay in jail until they raise a minimum payment. In January, a judge sentenced a Kenney, Ill., man 'to indefinite incarceration' until he came up with $300 toward a lumber yard debt.

'The law enforcement system has unwittingly become a tool of the debt collectors,' said Michael Kinkley, an attorney in Spokane, Wash., who has represented arrested debtors. 'The debt collectors are abusing the system and intimidating people, and law enforcement is going along with it.'

How often are debtors arrested across the country? No one can say. No national statistics are kept, and the practice is largely unnoticed outside legal circles. 'My suspicion is the debt collection industry does not want the world to know these arrests are happening, because the practice would be widely condemned,' said Robert Hobbs, deputy director of the National Consumer Law Center in Boston.

Debt collectors defend the practice, saying phone calls, letters and legal actions aren't always enough to get people to pay. 'Admittedly, it's a harsh sanction,' said Steven Rosso, a partner in the Como Law Firm of St. Paul, which does collections work. 'But sometimes, it's the only sanction we have.'

Taxpayers foot the bill for arresting and jailing debtors. In many cases, Minnesota judges set bail at the amount owed.  In Minnesota, judges have issued arrest warrants for people who owe as little as $85 -- less than half the cost of housing an inmate overnight. Debtors targeted for arrest owed a median of $3,512 in 2009, up from $2,201 five years ago.'The law enforcement system has unwittingly become a tool of the debt collectors,' said Michael Kinkley, an attorney in Spokane, Wash., who has represented arrested debtors. 'The debt collectors are abusing the system and intimidating people, and law enforcement is going along with it.'

How often are debtors arrested across the country? No one can say. No national statistics are kept, and the practice is largely unnoticed outside legal circles. 'My suspicion is the debt collection industry does not want the world to know these arrests are happening, because the practice would be widely condemned,' said Robert Hobbs, deputy director of the National Consumer Law Center in Boston.

Debt collectors defend the practice, saying phone calls, letters and legal actions aren't always enough to get people to pay.  'Admittedly, it's a harsh sanction,' said Steven Rosso, a partner in the Como Law Firm of St. Paul, which does collections work. 'But sometimes, it's the only sanction we have.'

Taxpayers foot the bill for arresting and jailing debtors. In many cases, Minnesota judges set bail at the amount owed.  In Minnesota, judges have issued arrest warrants for people who owe as little as $85 -- less than half the cost of housing an inmate overnight. Debtors targeted for arrest owed a median of $3,512 in 2009, up from $2,201 five years ago."
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Over the last couple of decades credit card companies and banks made it increasingly difficult to discharge debt in bankruptcy.  These debt collection practices resulting in incarceration directly stem from those bankruptcy "reforms" of the system, with banks and credit card companies selling their bad debt to debt collection rackets.  These operators utilize what amounts to legalized "extortion" to generate revenues. 

Let me make a further allusion to the Talmud, the "oral law" which by tradition was "received" by Moses.  Financial obligation is supposed to expire every 7th year.  The idea seems to me to be designed to allow a functioning economy, predictability and decency.  With debtors' imprisonment, we are moving backwards.

Ghastly!

7 comments:

  1. One more thing. Ex post facto laws, de facto bills of attainder, no bars to search and seizure, suppressed speech, sedition, an extra-legal 'security'culture, indefinite detentions without charge, torture -- why not debtor's prison?

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  2. These law enforcement systems involves the prosecution and defense of suspected criminals.

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  3. If it were an express condition of non-payment to a contracted loan, that the debtor may be subject to legal action or confinement, then the borrower should rightly assume his or her risk on non-payment, as well as the interest rate agreed upon, to counterbalance the risk of default to the lendor. The risk should be split between parties, and the taxpayer on the hook for a bad contract.

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  4. If only Dickens were here to comment.

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  5. Interesting you run an article quoting Michael Kinkley - an attorney who hasn't even paid his property taxes since 2010. - Class Act.

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  6. Founding father Thomas Jefferson (1743-1826) and law professor George Wythe (1726-1806) worked on revisions of Virginia's statutes from 1776-1779.

    During this time, they had ascertained, that a crime could not be perpetrated against a corporation.

    As a derivative of this concept, an officer of the state could not carry forward with a criminal prosecution as the state itself is a corporation. The corporation is an artificial, useful creation of structured rules with duties and attendant obligations. Would we not consider it merely as an operating system?

    The Virginia constitution of 1776, while having a Bill of Rights, had no provision for the Grand jury process. In 1789 the Grand jury process was included in the 5th Amendment to the Federal constitution in Washington D.C.

    The several states completed ratification of the constitution with the inclusion of the first ten amendments, The Bill of Rights. The United States of America came into being in 1791 as a nation. Does this not give us certainty that Grand jury process began as the law of the land in 1791?

    The 5th amendment to the American Bill of Rights requires a Grand jury to establish 'probable cause' that a crime has been committed. If the allegations made convince the grand jurors that the allegations are more probable than not, then the Grand jury will issue a True Bill. This will give the state corporation privity to the issue and provide legal standing to move forward in a court of law with a criminal action.

    The founders' original intent was that anything that would interfere with a persons life, liberty or pursuit of happiness, had to have a Grand jury make the call on it first. Property is covered in the 7th amendment.

    Can we not make the connection here on a bill collector's position as a corporation? Is it not clear that it requires a Grand jury to act before any warrant for arrest can issue?

    Thomas Jefferson proposed that all issues involving $20 or more, a right to trial by jury be guaranteed. This was included in the American Bill of rights and made the law of the land in 1791. The 7th amendment guarantees the right to a jury trial in all issues involving $20 or more.

    "In Minnesota, judges have issued arrest warrants for people who owe as little as $85 -- less than half the cost of housing an inmate overnight. "

    The fellow who for $85 was taken away and held for ransom; is that not $65 over the trial by jury guarantee?

    In American law, was he not entitled to a jury trial to decide the issue first? Can we only wonder what Thomas Jefferson would say about this?

    Is there not a deeper and more significant issue involved in who it is that issues the bourse; bourse the thing we call money?

    Can labor not take control of the bourse so that we can straighten this out nice and sweet?

    When can we hope that labor will take over the issue of money? Labor; when will you STRIKE THEM OUT?

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  7. Mike Kinkley - Booted out of his law office in Spokane for not paying his rent. Doesn't pay his property taxes. Doesn't pay Department of Revenue taxes in Washington State until sued repeatedly. Some expert.

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