America’s criminal justice system is being used to enforce private debts. That’s according to a new in-depth investigation by the American Civil Liberties Union (ACLU) into the extent and impact of courts cooperating with the private debt collection industry in the U.S.
In “The Criminalization of Private Debt,” the ACLU reports that courts in 26 states (including Florida) plus Puerto Rico have issued warrants for the arrest of alleged debtors, all because a private debt collection company asked them to. Of course, such practices violate numerous state and federal laws, as well as international human rights laws. Perhaps unsurprisingly, the hammer of these practices comes down especially hard on Black and Latino communities, primarily because of a long history of gaps in wealth and poverty along ethnic and racial lines.
It’s estimated 77 million Americans – 1 in 3 – has debt that has been turned over to a private collection agency. Of those, the ACLU reported, thousands were arrested and thrown into jail because they had not paid this money. Bear in mind: Debtors’ prisons were eradicated in the U.S. way back in 1833. And yet, the ACLU discovered tens of thousands of debt-related warrants are issued annually.
The civil rights organization reviewed some 1,000 civil court cases wherein a judge issued an arrest warrant for people who owed money to collection agencies. In some instances, these amounts were less than $30. Even in cases where there was no arrest warrant issued, these companies routinely threatened arrest and jail as a means to squeeze the debtors for payments. This happens even when the threat of arrest is not legally founded. Some 200 district attorneys’ offices have reportedly allowed debt collectors to use the prosecutor’s office seal and signature to demand payments. The ACLU reports there is evidence some 1 million Americans receive these kind of threatening letters annually.
Here’s how it works:
- Someone fails to repay a debt, such as a credit card or medical bill.
- The creditor hires a debt collection company to pursue that debt (or the debts are sold to collection agencies for pennies on the dollar). There are more than 6,000 debt collection agencies in the U.S.
- Debt collectors then flood small claims court and state courts (sometimes filing hundreds a day) demanding payment. Millions of these claims are filed annually, and the majority of cases on many state dockets are debt collection lawsuits.
- Small claims court allows very little in the way of due process, and move quickly.
- Ninety-five percent of debt collection lawsuits are decided in favor of the collector. (It’s worth noting that less than 2 percent of all debtors are represented by a debt defense attorney. These companies have the upper hand in ever respect.
- Defendants, who often don’t know they have been sued, don’t appear or respond. Or if they do, they don’t have an attorney.
- Once a case is decided in the debt collector’s favor, it can garnish defendant’s wages or bank accounts, seize their vehicle or other property or impose a lien on their home.
- Collectors can also ask the court for a judgment debtor exam to glean information about bank accounts, property, assets, etc. If the debtor does not show up to court, creditors can request a civil warrant for the debtor’s arrest.
Ninety percent of these cases end in a default judgment against the debtor.
There are many reasons why someone might miss a court appearance in these cases. Many have to work or care for small children. Some lack transportation. Others have physical disabilities or other illnesses – even dementia.
Many later said they had no idea there was a warrant for their arrest, and only found out when they were stopped for a minor traffic infraction. Others are caught in “sweeps” of public housing residence checks for warrants.
Once they are under arrest, some stay in jail for days or weeks trying to arrange bail. They have lost time and money. They have suffered psychological distress, lost wages and consequences to their employment, housing applications and educational opportunities.
Private debt collectors have entered partnerships – actual contracts – with local district attorney’s offices to allow these companies to use their letterhead to collect their money.
If you’re battling debt collection in Miami or the surrounding areas contact Jacobs|Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday at 5 p.m. on “Debt Warriors with Bruce Jacobs and Court Keeley,” discussing foreclosure topics that matter to YOU.
More Blog Entries:
Consumer Protection Agency Needs New Leader, Not New Mission, Feb. 15, 2018, Miami Debt Defense Attorney Blog