The Return of Debtor Prisons

(2PM EST – promoted by Nightprowlkitty)

  When the Wall Street bankers ran up hundreds of billions of debt they could not pay back they convinced the American taxpayers (via the government) to bail them out, no questions asked.

  However, when the American taxpayer runs up a little debt, not only is there no bailout, there is no mercy either.

 It’s not a crime to owe money, and debtors’ prisons were abolished in the United States in the 19th century. But people are routinely being thrown in jail for failing to pay debts….

   “The law enforcement system has unwittingly become a tool of the debt collectors,” said Michael Kinkley, an attorney in Spokane, Wash., who has represented arrested debtors. “The debt collectors are abusing the system and intimidating people, and law enforcement is going along with it.”

 Frequently the bail is set at the exact same amount as the debt owed. While this makes it easy for judges, it is also a tacit admission that these are de facto debtor prisons.

 Many state constitutions bar imprisonment for debts, yet in many cases the judges in these states don’t seem to care. Some seem eager to side with the powerful against the weak.

    The laws vary by state, as does enforcement.

 “We have created a de facto debtors prison system in the United States that is largely unconstitutional,” said Judith Fox, a law professor at Notre Dame Law School. “In some parts of the country, people are so fearful of arrest they are scrambling to pay money they might not even owe.”

   In states such as Indiana and Illinois, people are being locked up for not making court-ordered payments. Known as “pay or stay,” it can mean days in jail and multiple arrests for the same debt. Some legal experts say the practice is unconstitutional because the arrest is directly linked to the failure to pay a debt.

…

  Jack Hinton of Kenney, Ill., was sentenced to jail indefinitely in January after he fell behind on a court order that he pay $150 a month on a debt of $6,440.

  According to a court transcript, Hinton, then a self-employed roofing contractor, said he broke his neck and back in a fall from a roof and filed for disability. The judge got upset after learning that Hinton used $1,000 for other bills rather than his court-ordered payments. Hinton was ordered to the county jail indefinitely until he could come up with $300.

  After three hours in a holding cell, his wife got him released by borrowing $300 on a credit card. He is considering a challenge to the ruling on constitutional grounds. “I couldn’t pay, and I was stuck in jail until I did,” he said. “How is that any different from debtors prison?”

 There are two issues involved here.

The first issue is the idea that the poor have an obligation to pay their debts, an obligation that the rich and powerful don’t have. This quick video of David Walker, the CEO of the Peter G. Peterson Foundation, founded by billionaire financier Peterson as a think tank on fiscal issues, is a good example. He openly pines for the days of debtor prisons for the poor.

 The other issue involves the predators of society. People so immoral and callous that they see no problem with making a living by taking advantage of people undergoing hardship.

  Currently 29 states allow city governments to bundle up tax debts to investors for pennies on the dollar. The purchasers then assume the responsibility of collecting the unpaid debt, and the opportunity to foreclose on property who’s owners can’t pay.

  These tax debts include tax liens for unpaid local taxes or utility bills. Of course tax debt is only a small percentage of the debts involved. In most cases it bills from cellphone providers and credit card issuers. Most of these bills are just a few thousand dollars.

 Valentine had inherited a home in West Baltimore from her father, who died, after a long struggle with Alzheimer’s, in 2003. The house was free and clear, but many of the utility bills had been left unpaid.

  Struggling with chronic depression after taking care of her dying father, Vicki was soon dealing with unemployment as well. In 2006, Vicki paid $100 on an outstanding water bill of $462.28. That figure shot up to more than $700 after the city added interest, processing charges, and property taxes.

   Under severe financial strain, Vicki filed several legal challenges, which delighted the firm that had purchased the lien, since this permitted them to tack on additional legal costs. On September 19, 2008, a judge ordered Vicki to pay $3,603.41, or lose a home that was already bought and paid for. She didn’t have the money. So last February, the local sheriff’s department seized Vicki’s home on behalf of Montego Bay Properties, the entity that held the lien following at least two post-auction transfers of ownership.

  Collection agencies typically have profit margins of 10-15%. In comparison, Walmart’s profit margins are just over 5%.

  It shouldn’t really surprise anyone that the despicable, bottom-feeding characters that run these collection agencies have little regard for the law that they abuse to make profits.

 Rosenberg, who profited handsomely on the debts of others, is no stranger to bad debt himself. “Over the past decade,” reported the Enquirer in 2003, “Rosenberg’s name has appeared on Ohio income tax liens, an overdue notice for Vermont real estate tax, and a lawsuit for an unpaid auto loan.”

  Unlike many of his victims, Rosenberg has never felt the cold steel of handcuffs biting into his wrists. Given the pervasive perversity of our times it’s not surprising to learn that Unifund, which is able to suborn police and courts into doing its bidding, is a criminal enterprise.

  During the past decade, Unifund has settled several class-action lawsuits asserting that the firm routinely engages in illegal practices – such as imposing bogus legal fees and collecting on debts beyond the statute of limitations. In one settlement, Unifund was forced to pay Queens resident Jose Luis Muniz an undisclosed sum after it fraudulently attempted to collect on a $21,000 credit card debt Muniz had paid off ten years earlier.

Unifund was known to hire professional liars to read a computer screen, and sign affidavits that they had personal knowledge of the authenticity of the accounts.

  Unifund frequently sues families for credit cards they didn’t own. Some will not know they are being sued until their wages are garnished.

Unifund, which earned the nickname “Unifraud”, was later bought by the infamous Zises Brothers. During the 1980’s, the Zises Brothers ran a pyramid scheme-cum-tax shelter, funded by junk-bond king-turned-felon Michael Milken, in which they managed to sell their holdings for a tidy profit before defaulting on their debts. Other shareholders were not allowed to sell their stake in AT Integrated Resources Inc.

  Using political ties to the neo-conservative establishment (they are major funders of Israel’s Likud Party and promote the building of West Bank settlements), they managed to arrange a settlement years later in which they paid their creditors pennies on the dollar. They used their profits to buy Unifund, where they would get rich punishing defaulters who are poor and not politically connected.

 How appropriate that the debtors prisons for peasants and serfs are working with master criminals?