Paying consumer debts is basically optional in the United States
pluralistic.net
pluralistic.net
Only AmEx sued me (and we settled). I later sued most of the collection companies with the help of a lawyer and netted about $40K in settlements. Some had called my parents and told them they’d call the police and arrest me that day (they paid). Another called me work repeatedly and told my boss (he didn’t care other than the endless harassment).
It took 7 years for my credit to be clean. I still get calls from scummy bottom of the barrel collectors about debt I paid/settled - even 20 years later. They give up easily though, statute of limitations is long past.
Anyway my point is it’s not optional, you can get sued. And they'll harass you endlessly.
Even from a purely self serving perspective, why would they do this? If your boss gets mad that you have bad debt and fires you, then it’s now even less likely that you will be paying off the debt, no?
I got a new land-line-number in the early 2000s. One day, I got a collection call for someone with a Mexican surname. I explained I had just gotten the number and I didn't know who that person was. So naturally, they called twice a day for months. I disconnected the line because I was basically paying $20/m for them to harass me. And here's the part I can't explain-- even after being disconnected, the phone would ring but only for the debt collector.
EDIT:
Another story. Solar Panels in the late early 2010s. The ex-wife's father died years ago, once or twice a week, someone would call her cell phone, ask for her dead father and then try to sell her solar panels. They would not stop. It escalated to calls 6 days a week.
I eventually got fed up and told them I'd be happy to come down there with a pistol if they kept calling. I know, not the best choice, but keep in mind this is after 6 months of daily harassment.
The guy on the other end of the phone flipped out, told me “I was committing a federal crime, and he was going to report me to the police and to expect them shortly.” Then, as an intimidation tactic, he read my full name and address-- except it was my dead FILs information.
I told him to go ahead and put his name on a police report so I knew his name.
The calls stopped for one month, and then started again.
Because nearly nothing in the world works on the level of individually self-serving, containerized ideas which have direct one-to-one causes and effects.
As an exercise, instead imagine these companies operating on high latency, realtime digital signal graphs running at low sample rates.
Say one of those companies' graphs needs to operate on an incoming stream of 10,000 samples. The company obviously desires the highest frequencies to pass into the "payment received" output.
So they add an "anger-the-boss" filter into the signal chain.
There aren't just direct consequences here-- each change causes a rippling effect for the consequent samples. And that rippling effect clearly changes the behavior of some consequent victims. For example, if victims already heard about these nasty tactics and they want to keep their current job, they might decide to pay if those tactics are still being used.
It probably doesn't get the optimal output for the company. But the article talks about how a 1% change in payment rates can be the difference between success and bankruptcy. Like most realtime systems, they don't have the luxury of screwing around with potentially better outcomes if it ever means missing deadlines for paying the company's bills.
You'd probably drive yourself crazy thinking of all human affairs as low-latency DSP graphs. But I would propose doing the exercise however long it takes to get rid of the pattern of reflexively approaching any new social puzzle by positing a perfectly self-interested and self-contained individual sample.
My friend owns 15+ apartment buildings in "not so desirable" neighborhoods. He deals with a lot of tenants who don't pay rent and eventually he has to evict them.
3 months ago he was evicting someone for not paying rent for 12+ months, and a week before the police were going to help get the tenant out of the apartment, his employer stepped in and paid the landlord his back-rent in full.
The tenant was employed at a local roofing company. Apparently he was a good roofer, and the owner of the company didn't want to see the worker homeless, so he stepped in and paid a year of the guy's back rent. (And here's the twist... after his employer stepped in and settled his back rent, the tenant still refuses to pay rent, and will be evicted again 6-9 months from now)
Maybe debt collectors have had similar luck as the landlord in this story, but that's probably a secondary motivation. Primary motivation for the debt collector is intimidation. Debt collection agencies are ruthless in all ways imaginable.
The problem in the current market is that in many places there's far more demand than supply, so there's little pressure on the landlord to actually be a good landlord. If people could actually find other apartments at a similar price point in the area, people would just move out when the landlord doesn't uphold their part of the bargain, and competition would drive prices down to a point where the financial difference between buying and renting is a reasonable fee for the conveniences and flexibility of renting. But that's not the world most American cities live in. Instead tenants are stuck because there are no viable alternatives on the market, and some landlords shamelessly exploit that.
DM is okay, if you don't want to post it on the internet.
Indeed, given how many people flat-out couldn’t afford to buy in a world without landlords, landlords prevent homelessness. Just like farmers, distributors and grocers prevent starvation.
Many renter commenters assume that anyone owning a house automatically owes the society to provide housing to those that don't. Of course such people don't actually like taking care of the house or pretend that depreciation and maintenance don't exist.
You should probably fix that also, no? Unless you want all housing to look like abandoned blocks in Detroit.
It might increase the chances that when you get another job you will agree to start making payments on the debt so that they won't get you fired from that job too.
Same, in December 2002. Feels a little strange how it works now, compared to be drug out of the barracks by MPs like a criminal. The Army never apologizes.
I do see the occasional person bringing their SO to the Navy and Marine balls.
The bureaucracy will drag out any separation action for months; like at a minimum it will include a series of formal counseling statements by your first-line supervisor and commander, visits to Trial Defense Services, and mental and physical health assessments that take weeks to schedule.
Even in cases of actual criminal conduct, the MPs are very rarely involved. A first-line supervisor NCO would handle the task of escorting the person to their appointments and pulling guard duty if there were some restrictions in place (also rare).
Is there more to these stories?
This, in a functional legal system, should have them immediately arrested and/or slapped with a fine.
Or the law could get a little more flexible and punish them for their intent, even if what they do is a "gray" area.
Or it could also make "collection agencies" illegal in their entirety.
The other side can just inform you of your debt, once, and if you fail to comply within a legally mandated deadline, they can go through the courts if they want to pursue it further. Who said "debt collecting" companies should be a thing?
It takes time for the legal system to set precedents and create a legal body of work around issues like these. It moves very slow.
Thankfully, at least for medical debt, there are pretty harsh laws against collections.
Finding consumer lawyers willing to take FDCPA cases is tough.
Norms like being honest and not stealing? society gets really expensive and unfriendly when we have to use enforcement instead of norms.
It's not just a corporate thing, but a problem in the US as a whole that the government banks on. When people are overworked, underpaid, and uneducated then they don't have the time/ability to keep up with politics, fight for their rights, and see how they've been getting fucked by local, state, and federal government for decades.
Discover actually laughed at my wife when she asked about it: "you're not even delinquent yet!" We were going to be the next day, and would've liked to negotiate before that point. They have no systems for that nor (apparently) any ability to recognize it.
Their comfort zone is this system of debt collections.
The plus side is that you and your wife were able to access credit very easily compared to the past, the downside is that when you tried to treat it like a long-term relationship, it was shocking how not like that it was. don't change!
Lovely folks there, I fear the day they get bought up and turn bad.
You'd think with all the personal profile data they're able to buy and collect themselves, they could identify the accounts that are just in a temporary bind vs. those that are going to be long-term problems. But AFAICT they don't do this.
> Well, not all of it. I didn’t inherit the assets. She didn’t leave a will, which meant the state of Tennessee inherited her house. What I inherited was her debt.
Wait, is this right?! In Ireland, and I thought most common-law places, if someone dies intestate, an administrator is appointed, in practice generally the next of kin. Any assets go in the estate, the administrator pays any debts out of the estate. At the end, anything remaining goes to, generally, the person’s children (there are more rules for if there are no living kids or parents). If debt exceeds assets, then some debts are paid, the estate is closed, and that is the end of that; the creditors generally have no further recourse, and certainly no recourse against the debtor’s kids. Is this not how it works everywhere, more or less?
Edit: looks like the literature referenced was from almost 200 years ago.
The book she mentions is pretty old, but the situation with her mother she mentions is current.
but missed this bit:
> A second scrub will typically remove dead debtors, because they infrequently answer their phones. (Debts are not inherited in the United States, a fact which the debt collection industry frequently demonstrates strategic ignorance of.)
The major function of the executor of an estate is to settle the debts of said estate. If the estate runs out of money (even after selling property, for example) before paying all the debtors, according to order of seniority, then everyone else in line is out of luck.
However there are quite a few states with "filial responsibility" laws (Tennessee is one of them) that oblige children to take care of their parents in usually vague and under-specified ways ... those have been used to chase children for unpaid nursing home debts etc.
Huh. Interesting; was totally unaware that was a thing.
Some places seem to go further:
> Singapore, Taiwan, India, and Mainland China criminalize refusal of financial or emotional support for one's elderly parents
Emotional support! Idea for Chinese sitcom; awful couple make life difficult for their adult children, on the basis that the children are legally required to be nice to them.
“You have to pay your parent’s posthumous debts” still seems like a hell of a leap from “you have to take care of your parents”, tho. I’m very surprised more states haven’t repealed these (looks like about half of US states have one, though it’s not clear how active they are).
Is this actually an impression informed people have? I’m the prime target for such opinions because of my issues with the U.S. healthcare system, but even I always understood the common understanding to be that most bankruptcies are caused by medical debt, and not debt defaults in general (most debt default doesn’t lead to bankruptcy, especially with credit card debt. It usually just leads to a payment plan).
Only 4% of US bankruptcies are because of medical bills. <https://www.washingtonpost.com/blogs/post-partisan/wp/2018/0...> A tipoff that [insert large percentage here] of bankruptcies aren't actually because of medical costs is that only 6% of bankruptcies by those without health insurance are because of that cause. The biggest cause of bankruptcies is lack of income, which health insurance doesn't affect anywhere in the world.
Yes, it's optional in the sense that you won't go to prison.
But if you want any chance of being able to take out a mortgage on a house, or to finance a car purchase, then it's not very optional. Not to mention a bad credit score makes it much harder to even rent many apartments.
Also, lenders will sue you if you have the money. In which case it's no longer optional either, when they win.
The article is about shady practices of debt collectors, but in no way does that ever make a leap to the idea that paying consumer debt is "optional". If you don't pay, it generally has real negative consequences. It's up to you whether those consequence are worth it.
If you owe a lot of money on your credit cards, the lender will actually sue you - rather than selling the debt - and then put a lien on your property. I once bought a house in an estate sale which was also a short sale (I do not advise this) and both American Express and another bank had done this to the prior owner who owed $20-30K.
That sounds like an interesting story...
Plus if there is any FUBAR paperwork it is much more difficult to fix if it means going back to probate court to (for example) add a spouse who was wrongly omitted from the approval to sell ... in this case, I ended up getting the mortgage and deed by myself and then quitclaiming the property to the two of us because that was less hassle.
Oh, and short sales in probate are basically always as-is because the estate has no money to make good any repairs to the property.
https://www.bitsaboutmoney.com/archive/the-waste-stream-of-c...
McKenzie doesn't know what will fix this. But Michael Hudson, a renowned scholar of the debt practices of antiquity, has some ideas. Hudson has written eloquently and persuasively about the longstanding practice of jubilee, in which all debts were periodically wiped clean (say, whenever a new king took the throne, or once per generation): https://pluralistic.net/2020/03/24/grandparents-optional-par...
He then summarizes Hudson's position that "debt's that can't be paid won't be paid", and goes on to share a few other stories related to this problem.
yes
I have no particular opinion on that question but, having read the original patio11 post, virtually 90% of this one is just paraphrasing of its contents.
I feel like this paragraph basically invalidates the rest of the article. If it's this easy for them to sue and get legal access to your money how is paying "optional"?
They get to mark it 90% of it as a loss on their balance sheet and pay less taxes as a result.
In Mexico there's something called the Credit Office (buró de crédito) that banks can check if you've paid all your debts.
Wrong on both counts.
I worked in a Mexican credit startup 10 years ago and one of the main issues we dealt with was just that: there is no legal mechanism for a lender to recover the money they borrow. Not paying a loan is not illegal. And people in Mexico have 0 financial education .
So you have to include your default rates as part of your lending model. 30% default first loan. 15%-20% default mixed 2nd+ loan .
That in addition to a base bond rate of 10% (you can lend your money to the Mexican government for an extremely secure 10% interest) is what makes credit in Mexico Soooo expensive.
I have a friend who is lawyer and used to work in the enforcement area if Scotiabank mortgages . The stories he tells about people that just decided not to pay their mortgages but had 4 or 5 Harley Davidsons in their houses when they went to evict them... among other crazier stories.
Of course they'll never actually do that. Usurers are unreceptive to any notion that you won't pay every last extortionate penny. They'd rather sell it to collections for 5 cents on the dollar than let you settle for 50 in a straightforward conversation.
But I wonder if it could be possible to crowd fund something like this, or have a non-profit that just buys cheap debts like this and forgives them all? Idk what that would cost, but it could help shrink the shady debt collector industry a little.
The whole sold-in-bulk thing I could see being 'remedied' by having some sort of federal clearinghouse that each item of debt has to pass through. Though, that'd probably get fought tooth and nail so money-men can pull subprime-shenanigans.
One would expect that the cases that actually get to the point of lawyers and courts are atypical. It seems likely that the ones who can't document the debt would probably drop the matter when first challenged, long before that stage.
Is that not the case?
I serve discovery thinking they’ll never be able to respond, they do.
I’d like to know the deciding factor for sue or sell.
He happened to have all the original paperwork on file and it proved they hadn't followed the required legal procedures.
Trying to forge an essential document wasn't going to help their case.
I've heard from a number of people who work for banks, lenders, and insurers that record keeping is a complete mess, and a certain amount of unlawful creative improvisation isn't unusual.
So... they may claim to have proof, but there's a reasonable chance that if it's examined closely and/or all original correspondence is kept, they don't.
This seems to be worse in the US where debts are traded and retraded and the original paperwork may be long gone.
The extent to which the headline is true is probably only because of the above quote. If a significant number of people who actually had the means to pay simply chose not to, of course debtors would start taking collection more seriously.
Perhaps this means you could game the system, but I’m still skeptical that any debtor would choose not to sue you over 20k+ if they thought you had the means to pay.
Are you unaware of Medicare and Medicaid?
But if its already reached collections then it doesn’t really make a difference to your credit eligibility for the next X many years
The score almost means nothing with them present.
Not that everyone's experiences will be like this, just pointing out it is not necessarily always 7 years on the report.
On the ethics front: let's say I owe money to a credit card company. They sell it off to EZ-Sleez, the debt collection company. What do I owe to them? I certainly didn't borrow money from them. We have no particular relationship. They have one with the credit card company, but that's none of my business, from an ethics standpoint. The idea of selling debt itself feels very unethical to me, and I'd like to see that justified before we talk about what we may or may not owe people.
Right — this “optional” description really only means anything after the borrower has nuked their credit for many years.
You must be appaled by the existence of the global bonds market then.
And yes, it is a coerced choice. It's difficult to live in modern American society without a credit card, or a credit score which is very difficult to keep high without a credit card.
As for not building a credit score, well, it sounds like you're not really interested in taking out loans in terms that others wish to offer them, so what good is a credit score? The people who care about credit scores are largely the same who will only do contracts with collections classes and be unwilling to adjust contracts. If you're working with a lender who is willing to change contracts like that they're probably also going to be fine evaluating your non-normal financial arrangements.
Thank you.
college debts? hope Dems get power in DC
biz debt? declare bankruptcy
its hard to find a type of debt that cant just be magically blinked away with a procedural wave of the hand
And they want to do debt forgiveness as opposed to another war.
Pointless unless the root cause is addressed first
That's totally an option for individuals too (modulo student debt for the most part).