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How Credit Collectors Have Reinvented The Debtors’ Prison


How Credit Collectors Have Reinvented The Debtors’ Prison


New tactics have an old ring to them and low-income debtors are falling prey.

NPR just ran a story called “Unpaid Bills Land Some Debtors Behind Bars.” As they report, ”Here’s how it happens: A company will often sell off its debt to a collection agency, generally called a creditor. That creditor files a lawsuit against the debtor requiring a court appearance. A notice to appear in court is supposed to be given to the debtor. If they fail to show up, a warrant is issued for their arrest.” Marie Diamond has more.

This is increasingly common across the country. My colleagues Matt Stoller and Bryce Covert have both written about debtors being jailed for failure to appear in court. Debtors’ prisons are illegal, and some point out that this is really jail for a summons problem, not a payment. But I haven’t had a full vision of the practice until I read this excellent working paper by Lea Shepherd of Loyola Chicago law school, “Creditors Contempt” (h/t creditslips). Beyond laying out the problems with the current system, which gives a disproportionate amount of the coercive powers of the state to creditors, this paper also has implications for another topic I’m interested in — the class bias of the submerged state.


  1. Sick of politicians December 15, 2011

    That’s why we need big government, to protect citizens from this vampires.

  2. nancym December 15, 2011

    Thank god someone is pointing out these injustices. But it’s even worse than what this article outlines. Not mentioned here (but covered in other news items about debtors) is the fact that these sleazeball credit collection agencies are so loose with the law that they routinely skip necessary steps in the process, like actually making sure a summons notice is received by the debtor in time, or at all in some cases, so that the debtor has time to figure out what to do. These agencies are becoming notorious for hiring flunkies who just throw the summons in the trash and collect their pay, leaving the debtor not showing up in court for a court date he or she never knew about. Of course at that point the judgment goes through automatically, even if the debt wasn’t valid.

    As for judges who don’t inform debtors about their rights, it is their duty to inform them about their rights, just as it is their duty to inform jurors about procedures and rules. And as for seeming as if they are advocates, they are clearly chummy with those attorneys for the creditors already. These are people they see every day of the week, since they come into the courts with a long docket of cases from some big corporation, like Capital One for example, and herd dozens of people (or maybe hundreds) per day through the system like cattle. When you see the same person every day for hours, vs. seeing a debtor you see once and likely never again, there’s a tendency to become rather pally with the creditors’ attorneys, just to keep the day going along smoothly.

    There needs to be a court advocate for the poor in these cases; I hope something is done to provide some protections.

  3. jwozniak December 15, 2011

    I once received a call from a collector trying to service a debt that I’d paid in full ten years previously! It had been resold several times until it had landed at a bottom-feeder lawyer’s boiler room operation in California, as far as the Pennsylvania State AG’s office could ascertain. Needless to say, I didn’t pay a time of this extortion. Keeping good records secured in a safe place is very important. Loudly complaining to anyone who will listen is also key, as is being just as loud and rude as your caller.

  4. DisgruntledDemocrat December 16, 2011

    There’s a little-known illegal, multi-billion dollar debt collection scam called “Zombie Debt” that’s been going on for long while now. This is where lists of long-dead debts, no longer legally collectible in any state, are compiled and sold to debt collectors, who usually pay very little for these lists. This is not the legal paper on the actual debts themselves, but just LISTS of people and very old debts. In many cases, like the example given by jwozniak, these are debts that have already been paid in full to creditors or collectors. There are loopholes in the law that favor debt collectors which they fully exploit, which allows these non-existent debts to magically morph into real, legally binding debts – this ‘zombie’ debt comes back to life for another 7-year cycle. This scam thrives because consumers don’t know how to fight it. Now the debt collectors have subverted the system to send even victims of this scam to jail. We need to enact new laws that place stringent requirements on the debt collector, including proof of the original debt, such as the contract with signature, and attach criminal fraud fines and penalties for collectors who fail to do this. Currently, a debt collector sends a written notice of a debt but no proof, and if no one disputes this debt within 30 days, in the correct way (which most people don’t know), it automatically becomes a validated, legal debt by DEFAULT. Even notices sent to the wrong address or wrong person becomes validated by DEFAULT, if no one fights it. Something is seriously wrong when it’s so easy to create an automatic default against the consumer, which is how debt collectors are getting away with things like zombie debt and putting people in debtor’s prison. In the meantime, perhaps what is needed is for these debt collection victims to start banding together and begin filing class action lawsuits for damages and punitive damages against these debt collectors until such practices are no longer economically viable.


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