RSSCategory: Consumer Protection

Debtors’ Prison Still A Reality?

July 19, 2010 | By | 4 Replies More
Debtors’ Prison Still A Reality?

According to a recent article by Chris Serres at the Minnesota Star Tribune, courts still order debtors to go to jail when they can’t afford to pay a judgment.

Not only are the national media largely unaware of this phenomenon, but The New Yorker published an article last April that characterizes debtors’ prisons as a pre-20th Century institution, and describes the America as a refuge for debtors.

As many as two out of every three Europeans who came to the American colonies were debtors on arrival. Some colonies were, basically, debtors’ asylums. By the seventeen-sixties, sympathy for debtors had attached itself to the patriot cause.

Jill Lepore of The New Yorker goes on to describe how American treatment of debt has evolved to allow bankruptcy and why this is a good thing.

Debtors’ prison was abolished, and bankruptcy law was liberalized, because Americans came to see that most people who fall into debt are victims of the business cycle, and not of fate or divine retribution.

Even Wikipedia describes debtors’ prisons as a thing of the past, or at least an unconstitutional one, according to this 2009 New York Times editorial, “The New Debtors’ Prisons.”

20th Century Debtors’ Prison

Times have changed. To be sure, most Americans who are deep in credit card debt do not have bench warrants issued for their arrest. However, in Illinois, Indiana and other states, a person who’s gotten a judgment entered against them can miss a court date and find themselves being hounded by the police.

What about the argument that defendants may owe the money they are being sued for, and should have gone to court? Perhaps the threat of jail is the only way to make them appear in court.

Reporters from The New York Times and The Federal Trade Commission have found that the collection industry is in dire need of repair, and cited numerous, ubiquitous problems. Some of these problems are startling. To wit:

[More . . . ]

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American democracy: Not dead yet

June 12, 2010 | By | Reply More
American democracy: Not dead yet

Much has been written, here on Dangerous Intersection and elsewhere, about the corrupting effect that massive amounts of corporate spending and lobbying has on our democracy. And I don’t disagree with any of that – I think public financing of elections, or at the least more stringent disclosure laws, would be hugely beneficial in creating […]

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Got 3 Parking Tickets, None Valid

June 8, 2010 | By | 1 Reply More
Got 3 Parking Tickets, None Valid

On the heels of Tim’s Messing with the stoplight thieves, we just received 3 completely contestable parking tickets in one swell foop. Parking officers are local Treasury Agents, not police. Our story is as follows:

Wife finally picks up the car that I just received from my parent’s estate. I got the title last week, and insured it yesterday so we could drive it home, get it inspected and licensed. The executor had let the plates expire, and neither he nor we thought to remove them. So she drove it homewards, stopping at a friend’s house for a visit. She’d parallel parked in the rain between two other cars on the quiet residential block. When she came out, there were 3 tickets. One for expired plates. One for expired inspection. And a third for parking in a handicapped zone.

Handicapped zone? Then she saw the tiny little blue signs on posts around the car behind her. The trunk of our car apparently occupied the front 2 of the 22 feet they reserve for those private parking zones. The car behind ours, the one actually in the handicapped spot, had plenty of room both in front and in back. She hadn’t seen the sign in her blind spot as she parked, but I guess ignorance is no excuse.

I do wonder whether the person who got the city to carve out a private parking spot on the public street still needed it. When my brother broke his leg, he applied for a handicapped hanger. By the time it arrived, his cast was off. But at least the hangers have expiration dates requiring renewal and proof of need. The private parking spot has no expiration. Gaah!The need might well have expired ten years ago. We don’t know. But such is the law .

The other two tickets, basically both for not having current inspection or plates, can be fought on the grounds that we hadn’t had time to get them. There is a grace period when one buys a car.

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Elizabeth Warren on why we need a consumer agency to protect borrowers

April 29, 2010 | By | 1 Reply More
Elizabeth Warren on why we need a consumer agency to protect borrowers

Federal TARP watchdog Elizabeth Warren is warning that the Republican proposal for a “consumer protection agency” is anti-family.

“I’m tired of hearing politicians claim to support families and, at the same time, vote with the big banks on the most important financial reform package in generations. I’m deep-down tired of it.”

The current Senate bill, sponsored by Democrat Christopher Dodd, which would house the new consumer agency within the Federal Reserve,

adheres to Warren’s four tests: a chief appointed by the president, an independent source of funding, the authority to write consumer rules and the ability to enforce them against unscrupulous lenders. The unit, thus, focuses squarely on consumers. Ensuring banks’ profitability is left to banking regulators. The Republicans’ counter-proposal, released this week, fails all four of Warren’s tests.

Warren describes the Republican proposal as follows: “”The whole idea of the substitute is to take a bunch of regulators that already failed and throw them in a committee together.”

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Unconscionable credit card fees

April 1, 2010 | By | Reply More
Unconscionable credit card fees

How onerous are credit card fees. Consider this example described by the NYT:

Robert Triozzi . . . found that over a period of several years, Ms. Owens had paid nearly $3,500 on an original balance of $1,900. But Discover was suing her for $5,564, mostly for late fees, compound interest, penalties and other charges. He called Discover’s actions “unconscionable” and threw the case out.

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Five minutes is all it takes to help cap Missouri payday loans at 36%

April 1, 2010 | By | 1 Reply More
Five minutes is all it takes to help cap Missouri payday loans at 36%

As I indicated here, Missouri is considering a 36% rate cap for payday loans. Currently, payday lenders often charge 400% and 500% interest on such loans that are financially devastating to the poor and the working poor (Missouri’s 9% “usury” cap does not apply to payday loans).

Bill 2116 is now pending before The House Committee on Financial Institutions, which is chaired by Republican State Representative Mike Cunningham. This important bill will not get a hearing unless Mr. Cunningham decides to grant a hearing, at his discretion. This single bill, HB 2116, “combines two bills filed by Representative Mary Still in January into one bill dealing with both annual percentage rates (APR) caps and restrictions of nursing homes offering payday services to employees.”

Here’s how you can help. Please consider writing to Mr. Cunningham today, requesting him to hold a hearing regarding Bill 2116, to consider capping Missouri payday loans at 36% interest. Your letter can be two sentences, or you can spell out your reasons in more detail.

Mr. Cunningham can be reached at mike.cunningham@house.mo.gov . His snail mail address is:

Representative Mike Cunningham
201 West Capitol Avenue, Room 411-2
Jefferson City MO 65101
Office Phone: 573-751-3819
Fax: 573-526-1888

Even a small number of emails, faxes or letters will make a big difference. If you want to be part of a citizens’ movement cap interest rates of payday loans at 36%, please take a moment to write to Mr. Cunningham. I can’t emphasize enough that your single email, fax or letter could be the difference between this bill getting a hearing, or nothing being done.

As for the detailed reasons for imposing a rate cap, see my earlier post on the proposed legislation. I have also inserted (below) a letter written by John Campbell (an attorney with whom I work). Thank you so very much for considering this. Please do consider sending me a copy of any emails you send to Mr. Cunningham.

[Letter from John Campbell to Mr. Cunningham]

Representative Cunningham:

I am writing to request that the House Committee on Financial Institutions grant a hearing on Bill 2116, a bill to limit the interest rate on payday loans to 36%.

I have extensive personal experience with payday loans. I am an attorney, and I spend much of my time representing consumers. In the course of my practice, I have talked with dozens of payday loan borrowers. Their stories are remarkably similar. Payday loan borrowers are generally low wage earners with high school degrees or less, and they are typically in desperate situations when they go to a payday lender. In my experience, payday loans lead to create a debt cycle that is difficult for most borrowers to escape.

[more . . . ]

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