Data-driven look at America's brutal, racist debt-collection machine

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And how is this a surprise?

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Less a “surprise” but more of a “holy shit, look at the sheer horrifying scale of it when we actually take a close look at the monster we’ve built”, plus another piece of evidence against the neigh-religious faith in the free market’s supposed ability to provide equitable outcomes for all.


Not 100% related, but for all the bad things we in the West hear about Sharia Law, the act of charging interest on loans (in most cases) is haraam (sinful).

I’m not a proponent of Sharia Law in general, heck no, but I am a proponent of taking the best things a culture offers and adapting them into the American “melting pot” culture.

…but I guess if Christians were conviced that greed is a Christian value then the Muslims will eventually as well?


I am assuming that the rise is also a result of all the pay-day loan places? NEVER get one of those. I’d rather the original bill go to collections or what ever than use one of those.

I can’t believe that shit is still legal. At least not at those interest rates. IIRC pawn shops are regulated on how much interest they can charge, and it is pretty modest.


This seems far more Kafka-esque than long lines at our airports.


Last year NPR reviewed a book about debt collection and how it’s run by less-than-stellar folks:

Bad Paper

In his new book, Jake Halpern looks at the industry, where having a criminal background is no barrier to entry. He explains debt buying and how little regulation gave rise to a chaotic marketplace.

Debt-collectors are represented in court by lawyers.

Probably not, if the debt is under $1000. A law clerk rubber-stamps the lawyer’s signature, a court clerk rubber-stamps the judge’s signature, and your bank gets a court order.


Mrs Poet tried to close a credit card a couple years ago and after doing so had a ‘auto-pay’ charge go through (2 months later).

The card let the charge go through even though the account had a 0 balance and had been closed.

2 years later without any prior notice she got served. (this actually happened last month)

1 charge for 40 dollars that resulted in a claim of 800 dollars. Note she closed the account and forgot about it - and we never got a single call or letter indicating that there was an issue.

I settled for 600 because technically (as I remind her) it was our fault. Still - 600 bucks due to a 40 dollar charge. Mind you I’ve never had a single moment in the last 2 years I couldn’t have taken care of a 40 dollar charge in a moment. I paid the 600 in cash same day (because I have a savings account). This kind of crap happens to people all the time. Want to stop it - make it illegal to get more than the debt + interest max - 90% of the cost were ‘fees’ that had no basis in reality. The summons was interesting as well - I got to go through 20+ pages of lawyers that ‘looked’ at the debt.



Although interest is sinful, loans are structured so the principal to be repaid overtime is higher – higher in an amount that’s curiously close to the present value of the principal + interest over time.


What a fabulous poverty-machine you’ve got there in the USA!!!

I sure hope you find a way to rewrite or undermine the laws in other countries so that we could all enjoy the magnificent prospects enjoyed by America’s poor.


We’re on it!


Don’t I know it! :confused:

Thanks Obama (and the rest of the crowd corporatist American leadership)!!!


That weirdly inspired me to make this:


Bern motherfucker, Bern!!!


I’m curious. This article does not make it clear but I presume from the tone of outrage that they are collecting debts that do not exist and that the people being taken to court do not actually owe anyone anything related to the case? Would that sum it up? That would seem to make this a fairly major case of fraud on a wholesale level

Or is there just the slightest possibility that these are legal debts someone promised to repay but has never done so? If the latter, why is this wrong? Do some people get a pass on paying back money they borrowed, money that was given to hem from someone’s pocket with the expectation of getting it back eventually.

I find I am very confused about this based on what I am reading here. If I loan someone a hundred dollars and they promise they will pay ti back to me, should I not avail myself of legal means to get that money if the person then wanders off and never pays it?

Oh, there are multiple problems.

Starting out at the lenders’ end, they’re charging usurious rates, preying on people who have no other options but to pay those rates, or misleading them. Like payday lenders - sure, you can borrow $200 for $20, and pay us back with the next paycheck, but if you still need that $200 to tide you over to the next paycheck, it’s going to cost you a lot more than $20. Consider that with a credit card with a bad annual rate (~30%), you’d only be paying ~$5 on that $200 each month.

Next, there often isn’t a good-faith attempt to collect the money owed; at the first sign of non-payment, the debt gets sold off to a collection agency for pennies on the dollar. So, for that $200, this is your fourth paycheck, and you’ve already paid the payday lender $225 for that $200 you keep passing back and forth. Now, for the same reasons you couldn’t get by without the $200 in the first place, you’re unable to pay the lender back. Instead of trying to set up a payment plan, they add a huge fee to it for non-payment, and then sell it for the new cost ($300) to a collection agency for $10.

The collection agency now “owns” the full value of the debt, though they’ve only spent a fraction of its value to get it. The agency doesn’t bother to check if this is a valid debt; your debt could have been the result of a computer glitch, or a misfiled paper, or outright fraud. They don’t care: they own the debt, and they want it paid. So, going back to our payday lender, you’ve already overpaid the amount of money that you borrowed in interest, but you manage to scrape the money together and, and paid it back again, but a week after it was due, and had already gone to collections. Collections doesn’t care who you’ve paid or what - they paid $10 in good money for $300 in debt, and they want it now. You refuse, so they sue you.

You end up in a courtroom, having to spend money that you don’t have on transport, on child care, and are losing more money because you couldn’t show up for work today. At this point, you’re understandably pissed off because of the whole process. You don’t have a lawyer to advise you to keep your mouth shut, and, even though a lawyer would have been able to prove that you didn’t owe a dime, you say the wrong thing, or the right thing in the wrong way, or maybe you’re consumed by the frustration at this whole process and burst out in a string of expletives. The judge then garnishes your salary, and now you’re even closer to the brink of starvation.

You try to scrape by, but the rent’s coming due, and, what with your paycheck being smaller than it should, you’re $200 short, so you stop by a different payday lender…

It’s not the concept of “people need to pay back what they’ve borrowed” that’s broken. The broken part is that the entire lending industry is engaged in a systemic and morally outrageous attempt to squeeze every last cent they can from the people who are least able to afford it. They get trapped in a vicious cycle that they can’t escape, and when they fail to pay that money back (which is the end result that the system is designed to drive them to), then people shrug off their plight and ask, “Do some people get a pass on paying back money they borrowed?”


Instead of borrowing $10,000 to pay a medical bill and having to pay an extra $2000 in interest, under Sharia law you borrow $10,000 with a fixed-return markup of $2000.

Instead of paying interest on a mortgage (decreasing over time), under Sharia law you pay rent on the house you’ve mortgaged (decreasing over time.)

Instead of not qualifying for a loan, under Sharia law you don’t qualify for a loan.


New business model: set up co-operative collection agency to forgive debts.


Rolling Jubilee.