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

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.


It’s funny (it’s really not) that at least part of the modern stereotype about Jews being greedy is probably because Christians weren’t supposed to charge interest. The whole “if someone asks you for your jacket, give them your shirt as well” Bible quote. So, if you needed a loan, you went to a Jewish moneylender, who would loan you the money, for a price.

It’s funny (it’s really not) how far Christian morality has swung in the other direction (but the stereotype about Jews remains).


With medical debts it starts even earlier when poor and historically uninsured people get stuck in debt over simple medical services.

Single payer would eliminate all this while cutting costs dramatically


If I were an omnipotent being, asking one of my followers why they had flouted my will, and they replied, “Well, technically…” I’d immediately reincarnate them as a mosquito.


Correct. When a “delinquent” debt is created by slipshod billing practices (say $40 billed to a closed credit card account) and then there is no good faith effort to re-bill, or contact the debtor, the “debt” can be demonstrated to be invalid. It would be written off and should disappear from the books. Grotesque interest and fees on such a “debt” are also invalid, if it can be demonstrated that the dunning process was flawed, negligent, etc.

For $600 you can purchase 2 hours of a lawyer’s time in order to get this done. A good one will disabuse a collections agency of the notion that they’re entitled to an 8-9X payment on a “debt” created by clerical errors.

There are legal protocols in every state that constrain collection of fee-inflated small debts like the one discussed above. It is painful to concern trollies to find out about them, but they exist.


I remember an (atypically-religious) Libertarian/Objectivist weighing in once on the Israel issue with a vomit-inducing “Well, why didn’t your people use your God-given financial talents to just buy the land instead of conquering it?”

My response was something I can’t really post here without getting my reply flagged.

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I’m glad you can - where I live to hire a law firm is 700 up front - and that’s on the cheap side.

That being said - if I pay a lawyer 600 or I pay the agency 600 - it’s still 600 I’m out - honestly I felt responsible (I tell my better half to check accounts monthly for abnormalities - she’s not very good at it) so whatever. I’ll remind you that the claim was for 800 - not 600 - wonderful stuff they just tack on - it’s much like a bounced check fee (haven’t seen one of those in around 9 years) where you get 35 bucks from the bank and 25 from the store - yup - it’s your fault for bouncing a check - but there is little you can do to the 60 bucks you are now ‘out’ in fees.

What’s really funny is that the bible does layout how to handle debt - no debt should ever last more than 7 years - and every 7 years all debt is forgiven.

Kind of like you can file bankruptcy every 7 years.

It almost makes you wonder what they based the bankruptcy law on…

Until the ‘Christian coalition’ gutted the bankruptcy law to make it harder to file, and made some debts (student loans) un-dischargeable - etc. Because apparently the ability to start fresh was some kind of gimmick - the way people follow the old testament when it pleases them (such as against LGBT issues) and ignore it the rest of the time is hilarious.

There can be fraud on the part of the companies. Years ago, my husband opened a store credit card at a chain jewelers. He bought my engagement ring with that financing. The terms were no interest for one year; 3 months before we were to have paid it off, the company suddenly stopped sending us statements.

Fortunately, we were keeping track and made the final three payments (the company claimed they didn’t have an apartment number for us, but we’d received 9 other statements with the address correct.)

Another couple of months went by, and suddenly they dinged his credit report for the “unpaid” interest charges. But we’d paid this on time, no late payments, and I’d made the final one over the phone to insure that it wasn’t late. We didn’t owe any interest charges; we’d stuck to the terms of the agreement. It still took us a year to get it off his credit report. I am quite certain that the company had a plan here: to stop sending statements in the hopes that we’d make late payments, thus leaving us on the hook for the interest. When we paid anyway, they still tried it.


I live in Reno, NV and my ‘family’ lawyer is $450/hour, so I was under-stating the case, I know. I’d need to live much deeper in ‘flyover’ to get $300/hour nowadays. Like, maybe, a small town outside Utica, NY. However, If you consider $700 per as ‘on the cheap side’ my suggestion is: don’t use your business lawyer for home stuff. Even in the Bay Area, $700 is reasonable for upper middle/professional class personal stuff.
It’s clear you are a high functioning professional whose time is worth a lot, but, dammit man, you are feeding a vile beast when you settle – after perhaps one phone haggling session of ~20’ – and pay greater than 10X the original charge. It’s a luxury to do so, not a duty. Paying the original $40 + 2-3X fee is duty. Paying for this rapine which will be thrust upon other, less able people tomorrow, is not. It’s kind of the opposite.

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