People should pay their debts. There are two types of people who don’t pay their debts: 1. People who have the money and don’t want to pay what they owe; 2. People who don’t have the money to pay whether they want to or not.
People of type 1 are not really a problem if you have a law enforcement system that can take the money. The traditional way creditors avoid getting stuck with people of type 2 is by only lending to people with collateral. That way it is a simple matter: if they don’t pay you get their stuff. Pawn shops have survived on this business model for centuries.
But in the modern age, lenders take a risk on borrowers with no money and no collateral in the hope that they will work to pay their debts rather than hurt their credit score. This works much of the time, but lenders are taking a risk and have to accept losses in cases where debtors get overwhelmed.
But yesterday (on Christmas!) Fox News reported on “reviving ‘debtors’ prison.”
As if out of a Charles Dickens novel, people struggling to pay overdue fines and fees associated with court costs for even the simplest traffic infractions are being thrown in jail across the United States.
Critics are calling the practice the new “debtors’ prison” — referring to the jails that flourished in the U.S. and Western Europe over 150 years ago. Before the time of bankruptcy laws and social safety nets, poor folks and ruined business owners were locked up until their debts were paid off.
Reforms eventually outlawed the practice. But groups like the Brennan Center for Justice and the American Civil Liberties Union say it’s been reborn in local courts which may not be aware it’s against the law to send indigent people to jail over unpaid fines and fees — or they just haven’t been called on it until now.
These aren’t normal debts, yet; but it wouldn’t be surprising if many of the unpaid fines are the result of people being maxed out and no longer able to access credit. The problem is that people can’t work and pay anything when they lose their jobs because they are incarcerated. There were good economic reasons why debtors’ prison went out of style. The only reason governments are re-inventing debtors’ prison is because they don’t really care about the financial gains and losses.
Advocates are trying to convince courts that aside from the legal questions surrounding the practice, it is disproportionately jailing poor people and doesn’t even boost government revenues – in fact, governments lose money in the process.
The main problem I see is what will happen when we have another massive economic crash leaving people with unaffordable mortgages or other debts so that companies are in danger of going bankrupt. If debtors prison gets expanded at that point, we could see a new serfdom.
Jesus came to set us free. Debtors’ prison is anti-Christmas.