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Comment by eat | Hacker News Reader

I always hear people say things like "we don't have debtors prisons in the U.S.". If enough people start doing this, I have a very strong feeling that that will change. As student loans become more of a crisis, we're sure to see more people simply deciding not to pay. What recourse to lenders have if this happens on a large scale?

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The US continues to jail people for failing to pay fines, child support, and similar. So there is in one sense still debtors prison, but it really only applies to debts owed in certain situations.

They can start garnishing your wages, so unless you never want to hold a job again, creditors will get their money.

With Federal loans they can also just take payment directly from your tax returns.

You can leave the country. Most of the people deeply in debt with degrees or training that won't pay the debt would find, for example, teaching English in China a relatively comfortable living. If you have the imagination to look beyond Europe, finding a gig that's better than debt slavery isn't too difficult.

The future repercussions may not be worth it.

As a US citizen (or Green Card holder) you must a file an annual tax return wherever you live in the world, plus disclose foreign bank accounts. Failure to do so can have very harsh penalties.

https://americansabroad.org/issues/taxation/us-taxes-while-l...

http://www.irs.gov/Individuals/International-Taxpayers/Forei...

So, you're paying taxes to the local government, and getting a credit towards your US taxes. You'd still file your informational return with the IRS, but they don't touch a dime of your foreign income.

The demographics targeted by predatory for-profit colleges could easily teach English in China? That's absurd!

As someone else said, you'd never be able to re-enter the country and would risk having your assets in the US seized.

Its almost impossible in Florida for a creditor to garnish your wages, as you have to agree to it.

> Florida law does provide an exemption which is specific to wage garnishments. This exemption is not automatic and must be claimed by filing an affidavit with the Court when you are notified that the creditor intends to request a wage garnishment. If you properly claim the exemption, your wages cannot be garnished by a judgment creditor if you are head of the family and your wages are $750 per week or less. If you are a head of family and your wages exceed $750 per week, they can only be garnished by a judgment creditor if you have agreed in writing that the creditor can garnish your wages. To qualify as head of family, you must provide more than one half of the support for a child or other dependant.

We don't have debtors prison because it doesn't make any sense as a means of recourse.

If debtors stop paying, lendors will stop lending.

Exactly. If you're free, they can garnish your wages, no matter how small. If you're in prison, you can't make any money. Creditors would rather have even a 1% return than nothing at all, so why would they put you in prison?

A debtor's prison isn't much use to creditors.

For an isolated case, that's true. But in the aggregate, as a tool to get debtors to avoid default, that may be a different story.

They wouldn't have a lot of recourse, I imagine. Perhaps this will teach lenders to be more careful about unsecured loans.

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