Many do not file change of address forms with the USPS. They do NOT want to be found.
I’m very uneasy with any perceived nexus between criminal law, or detainment of people, and debt collection.
Garnish, levy against assets, repossess away . . . but don’t deprive people of their liberty in any way connected to debt.
The one exception to this that I agree with is child support, and even then it’s only for people who have the money to pay and simply will not. I.e., the money is the key which unlocks the jail cell. That’s a contempt issue. I guess this guy was flirting with contempt, too, but I have less sympathy for the behemoth loan industry.
SouthFloridamom9, it is the same process as collecting child support. A judgment for a debt is obtained (in this case through default). Part of the process is that a debtor’s hearing (or affidavit is sent to debtor) is held and the creditor gets to ask questions of the debtor - where do you work, what are bank account numbers, what are your assets. If the debtor doesn’t respond, the court issues a warrant for you to appear. If you don’t, the only power the court has is to arrest you.
What do you suggest, that the debtor gets to keep ignoring the court because paying a student loan is not as important as paying child support? The debtor is not being arrested for the debt, but for ignoring the court. Courts do not like to be ignored. Bad things happen if you ignore the court.
I’ve signed a few of those warrants. It is not done lightly. All warrants are served by the police, sheriffs, or marshals. The court decides on the warrant, the law officers just serve the warrants and don’t know or care if it is for a debt or child support or failing to appear on traffic tickets or for ‘real’ crimes. Some people ONLY respond to being arrested.
I generally understand the process, though I have never done debt collection.
Still don’t like the scenario here, but think the guy needlessly escalated the situation.
If someone won’t respond to a lawsuit, get a default judgment, garnish tax returns and/or income, levy, seize assets. Some people are judgment proof - that’s one reason why interest rates factor in risk.
I have dealt with family members who have debt collectors tell them they are going to jail if they don’t pay (with no judgment). That is just shady and wrong. Unsophisticated people become very afraid of the legal system.
And I do consider commercial/personal loans to be different from child support. Even with child support I don’t believe in imprisonment unless the person has the money and literally won’t pay.
The original figure still amazes me - $2600. I had someone owe me $5K and I knew I’d never get it.
Yet another (albeit unlikely) reason why we are adamant that our son have no debt for undergrad.
ETA: Just posted on the other thread on this topic - could the lender not have grabbed some of the guy’s social security when he retired (?). Even a small percentage?
The man was interviewed by NBC in his spacious upper middle class home. He obviously had the money for a comfortable dwelling, yet he feels compelled to dodge his debts. Deadbeats need to pay up.
The size of one’s home doesn’t necessarily mean one’s well-to-do. One could easily purchase a large spacious home on less than a middle-class income if one’s not particular about one’s neighborhood or one lives in an economically depressed area.
For instance, $100k wouldn’t be enough to purchase a tiny house without a yard in most areas of NYC or some of the nearby upper-middle class suburbs I know of. That same amount could get one at least a a spacious 2-3 bedroom in some rural parts of Ohio, upstate NY, or Western Mass…if one isn’t particular about the reasons why demand for such otherwise nice housing is so low*.
- Lack of good jobs for HS/college grads**, high crime, poor/non-existent public transportation infrastructure, etc.
** In one friend’s Western Mass hometown, the top portion of his HS graduating class who enlisted in the military or went off to college ended up permanently relocating to areas with greater job opportunities.
This IS the process for doing those things. You get a default judgment (they did) then you try to collect the judgment. The debtor’s hearing is the process for collecting the information to do a garnishment - bank account numbers, job, assets, car title. This debt was 25 years old. That information has to be updated. Student loans are signature loans, and bank account information, job information has to be obtained before you can garnish. The courts just don’t go out and look for that information, the creditor has to submit all that information to get the order of garnishment. What account do you want to garnish from which bank, which job do you want to garnish? And student loans are made without regard to risk. If they were, a signature loan to an unemployed 18 year old would have a rate of about 36%, which is the old loan shark rate of 3% per month per year (which is the rate in many states for finance companies).
Glad to see this acknowledged in black and white. And they generally can’t be discharged in bankruptcy. How many 18 year olds understand this? How many parents understand this?
And @twoinanddone - how many solo private attorneys/small law firms do you know who would pursue $2600 in federal court?
Do you have any thoughts on whether they can attach tax returns or social security benefits? Did the lender not have this guy’s social security number when they gave him the loan?
I feel strange defending the guy who owns the money because I’m very anti-debt. Nevertheless, the whole thing strikes me as weird. My broad point is that you have large institutional lenders up against the little guy. Yet those same institutions become too big to fail and we have to bail them out. Nobody on their end pays the price. But you - the little guy - darn well better pay. We will chase you for 25 years.
Rant over.
It turns out the story is more complicated.
http://finance.yahoo.com/news/paul-aker-us-marshal-student-loan-debt-arrest-212047386.html
Furthermore,
I don’t know why he was in federal court except that it is a federal debt and that is an option. The government has the right to bring any action in federal court and this might be an area where they were having no luck in state court or the state court judges were small towning the cases Collections for the student loan debts sold to collectors are not done by solo practitioners or small law firms bringing $2600 suits, they are done by huge collection mills, attorneys used to bringing 200 suits a day.
Some agencies just prefer always being in federal court. I worked for an agency and almost everything was moved to federal court if it was in process in a local court when we took over because that’s the court we ‘knew’ and we preferred it. We only originated cased in federal court. We were not in the small towns or counties, we were in 10 cities around the country and we needed one process, one system. Most of us weren’t even licensed in the states we worked in, so we could go to federal court but not state. We often got rid of the original attorney and moved it to federal court with an attorney we were familiar with and who knew how to use the federal system. The exception was real estate foreclosures, but even those could be moved and sometimes we did. Sometimes we regretted that we didn’t move the case because we got stuck with local judges who though of us as the big bad government and things stalled.
Yes, they would have the SSN number from the original loan. So what? That doesn’t give the bank account information automatically to the creditor. Sometimes those show up on a credit check, but usually don’t. They can garnish tax returns if there is one, but they might be in line behind other agencies like the IRS itself, state or local taxes, other defaulted government obligations. The garnishment only works once a year too, and the timing has to be right. Some garnishments are only honored if there is money in the account on the day it is presented and the garnishment isn’t a continuing lien on the account. Very hit or miss.
Who ever thought that student loan interest rates were set by the level of risk? They are very very high risk loans, with a high default rate. No underwriting at all, everyone in the same category (undergrad, grad, Perkins, Plus) gets the same rate.
America, the land of the free… To do what your told. Another sign of the massive police state around us, most Americans sadly unaware, or just don’t care as long as there is football, social media and “the bachelor”.
Very helpful info @twoinanddone.
Somehow it seems like the IRS can sure find you with not much more than a SS number.
As far as student loans/risk/interest rates go - of course, most people know that. My point is that they ARE risky. Maybe this risk should be accounted for in a more transparent way - rather than smacking people with it years down the road? This is why I think the public policy of government- backed student loans is built somewhat on a house of cards.
That loan probably seemed harmless 25 years ago. But it wasn’t . . . and it wasn’t even a significant amount of money. Goodness today that wouldn’t get you through one semester at most schools.
My objection is on a very broad policy level. Though in fairness I don’t have the answers.
Is the government now deciding that we need to make some examples out of people?
And the following item mentioned in the article is similar to what happened to someone I know:
Pretty much, unless you’re a large donor or too big to fail.
If you think collection procedures were illegal/improper, tell that to the judge. Don’t pull a gun (or threaten to pull one) on law enforcement. How often does pulling a gun on law enforcement work out well?
We don’t know that he pulled a gun. He might have just mentioned that he had a gun. Apparently the judge wasn’t too worried about it because he let him go.
None of us know the facts. All we know is what was reported. And of course the media always gets it right.
This guy gets cuffed, but the crooks on wall st and our own government steal BILLIONS and not only not go to jail, they are revered!
Hey, folks, when the guy who refuses to pay you back what he owes you engages in this behavior, you’ll be glad we have a legal system that makes people respond to court orders.
^^except that we don’t have the apparently limitless resources of the federal government to pursue $2600.
$2600.
I don’t think the original loan amount was even $2600.
I’m all for people paying their bills. I just know in the real world it’s hard to spend much time or money with lawyers to get that small an amount.
If we’re making an example of default student borrowers let’s just call it that.
I’ve worked in courtrooms where people are collecting a lot less than $2600. A bounced check for $10 can turn into a claim for $100 plus $200 in attorneys fees. Is that fair? Well, how would you like to be the merchant who had 100 of these and everyone said ‘oh, it’s only $10. It’s not fair for the merchant to get repaid $100.’ It’s not $10 to the store owner, it’s $1000.
It may have only been a student loan for $1500, but the government has millions of them to collect, and it adds up to a lot of lost revenue if they just let the little loans go. My money, as a citizen.
I knew of someone who got hauled to jail over a warrant for a bounced check that this person supposedly didn’t know about.
I thought it had more to do with alleged check kiting or something like that.
I want to hire you, twoin, to get my $5K. 
Ha ha JK.