Social Security and Student Loan Debt

The disturbing trend of people losing Social Security benefits to student debt, By Danielle Douglas-Gabriel, December 20, 2016, Washington Post: “To recoup student-loan debt, the government is leaving people who rely on Social Security with benefits that fall below federal poverty guidelines, the Government Accountability Office said Tuesday.  The number of older Americans defaulting on education loans has steadily increased in recent decades, as many have returned to college or co-signed loans for family members. Unpaid debt has resulted in the government garnishing the benefits of 114,000 people age 50 and older in the past year, more than half of whom were receiving Social Security disability rather than retirement income, the GAO report said…”

Subprime Auto Lending

As subprime auto borrowers default, collection suits pile up in local courts, By Walker Moskop, June 6, 2016, St. Louis Post-Dispatch: “In August 2008, William Lesinski walked into a Car Credit City in Bridgeton and made a decision that would be far more expensive than he ever imagined.  Wanting to buy his son a car as a high school graduation gift, Lesinski put $1,750 down and drove off the lot in a 2003 Ford Mustang. The loan for the car was $11,367, and it carried 29 percent annual interest over nearly four years. His son would make the payments, but the loan was in Lesinski’s name…”

Court Fines and the Poor

Debtors prison a thing of the past? Some places in America still lock up the poor, By Rick Anderson, June 8, 2016, Los Angeles Times: “Unemployed and fighting to stay clean, Jayne Fuentes had few options when a judge offered her a particularly unappealing choice – go to jail or spend her days on a work crew. Her crime? Being too poor to pay the fines and court costs that came with a drug conviction and several theft charges…”

Court Fines and the Poor

How prison debt ensnares offenders, By Juleyka Lantigua-Williams, June 2, 2016, The Atlantic: “Even after serving time for a felony conviction, former inmates can remain legally bound to the judicial system for the rest of their lives due to court-imposed fines and fees related to their crime. In some counties in Washington State that adds up to an average of $9,204, according to Alexes Harris’s new book A Pound of Flesh…”

Payday Lending

Payday loans’ debt spiral to be curtailed, By Stacy Cowley, June 2, 2016, New York Times: “The payday loan industry, which is vilified for charging exorbitant interest rates on short-term loans that many Americans depend on, could soon be gutted by a set of rules that federal regulators plan to unveil on Thursday. People who borrow money against their paychecks are generally supposed to pay it back within two weeks, with substantial fees piled on: A customer who borrows $500 would typically owe around $575, at an annual percentage rate of 391 percent. But most borrowers routinely roll the loan over into a new one, becoming less likely to ever emerge from the debt…”

Court Fines and the Poor

Court costs can be crippling for low-income drivers, report says, Associated Press, May 31, 2016, Roanoke Times: “Kimberly Hopkins was so strapped for cash, she was selling her blood plasma to make ends meet. When a court socked her with a $25 monthly payment for a speeding ticket and court costs, the divorced mother of four simply couldn’t pay. ‘Sometimes I just did not have it at the end of the month,’ the 44-year-old Amherst County resident said.  So she defaulted on the payment plan and her driver’s license was suspended. She continued driving, out of necessity, and got caught, resulting in more fines and costs. Her total court obligation swelled to about $1,500 — an impossible sum for Hopkins, who by then was unemployed and unable to legally drive anywhere to apply for jobs…”

Payday Lending

  • 1,000% loans? Millions of borrowers face crushing costs, By Alain Sherter April 25, 2016, CBS News: “Last Christmas Eve, Virginia resident Patricia Mitchell borrowed $800 to help get through the holidays. Within three months, she owed her lender, Allied Cash Advance, $1,800. On the other side of the country, Marvin Ginn, executive director of Native Community Finance, a small lender in Laguna, New Mexico, reports that some customers come to him seeking help refinancing loans from nearby payday lenders that carry annual percentage rates of more than 1,000 percent…”
  • Payday lending: Will anything better replace it?, By Bethany McLean, May 2016, The Atlantic: “Fringe financial services is the label sometimes applied to payday lending and its close cousins, like installment lending and auto-title lending—services that provide quick cash to credit-strapped borrowers. It’s a euphemism, sure, but one that seems to aptly convey the dubiousness of the activity and the location of the customer outside the mainstream of American life.  And yet the fringe has gotten awfully large…”

Insurance Coverage under the ACA

  • Immigrants, the poor and minorities gain sharply under Affordable Care Act, By Sabrina Tavernise and Robert Gebeloff, April 17, 2016, New York Times: “The first full year of the Affordable Care Act brought historic increases in coverage for low-wage workers and others who have long been left out of the health care system, a New York Times analysis has found. Immigrants of all backgrounds — including more than a million legal residents who are not citizens — had the sharpest rise in coverage rates.  Hispanics, a coveted group of voters this election year, accounted for nearly a third of the increase in adults with insurance. That was the single largest share of any racial or ethnic group, far greater than their 17 percent share of the population. Low-wage workers, who did not have enough clout in the labor market to demand insurance, saw sharp increases. Coverage rates jumped for cooks, dishwashers, waiters, as well as for hairdressers and cashiers. Minorities, who disproportionately worked in low-wage jobs, had large gains…”
  • Obamacare seems to be reducing people’s medical debt, By Margot Sanger-Katz, April 20, 2016, New York Times: “Even if you lack health insurance, you’ll probably be able to get treatment at a hospital in the event of a catastrophe — if you’re struck by a car, say. But having insurance can mean the difference between financial security and financial ruin. A new study is showing that, by giving health insurance to low-income people, Obamacare seems to have cut down on their debt substantially. It estimates that medical debt held by people newly covered by Medicaid since 2014 has been reduced by about $600 to $1,000 each year…”
  • Obamacare expanding coverage for the poor, study finds, By Karen Pallarito, April 20, 2016, Philadelphia Inquirer: “State Medicaid expansions under Obamacare have improved low-income Americans’ insurance coverage, increased their doctor visits and enhanced detection of chronic health conditions, which could lead to improvements in health, a new study suggests. The findings are important as policymakers continue to debate the value of expanding Medicaid, the publicly funded health insurance program for the poor, researchers said…”

Court Fines and the Poor

  • Justice Dept. tells state judges to stop targeting the poor, By Cathaleen Chen, March 14, 2016, Christian Science Monitor: “As part of the Obama administration’s latest civil rights initiative that examines individual states, the Justice Department is now calling out state court systems for operating ‘unconstitutional’ policies that unfairly target poor people in a cycle of fines, debt, and imprisonment.  ‘This unconstitutional practice is often framed as a routine administrative matter,’ Vanita Gupta, the Justice Department’s top civil rights prosecutor, wrote to chief judges and court administrator warning them against procedures like using arrest warrants to collect fines and debts…”
  • Justice Dept. condemns profit-minded court policies targeting the poor, By Matt Apuzzo, March 14, 2016, New York Times: “The Justice Department on Monday called on state judges across the country to root out unconstitutional policies that have locked poor people in a cycle of fines, debt and jail. It was the Obama administration’s latest effort to take its civil rights agenda to the states, which have become a frontier in the fight over the rights of the poor and the disabled, the transgender and the homeless…”

Incarceration and Child Support

For men in prison, child support becomes a crushing debt, By Eli Hager, October 18, 2015, Washington Post: “Earl L. Harris did not owe child support when he was sent to prison in 1997 for selling marijuana. He now concedes that dealing drugs may have been a stupid move for a new father. But Harris, then 19, had grown up poor and dropped out of school, and the only legitimate work available to young, black men like him, he says, was a temp job without benefits. ‘Nobody was hiring,’ he said. ‘I got into hustling because I wanted to support my baby.’ The state of Missouri sent Harris to the penitentiary in Boonville, 250 miles from his home and baby daughter. His girlfriend moved on, later marrying someone else. After just two months in prison, Harris started getting the letters.  Child support. You owe: $168.  They came once a month, piling up debt.  Child support. You owe: $168. Arrears: $336. Arrears: $504. Arrears: $672. Plus interest and other fees. Of the 2.2 million people incarcerated in the United States, about half are parents, and at least 1 in 5 has a child support obligation…”

Racial Disparity in Debt Collection

The color of debt: How collection suits squeeze black neighborhoods, By Paul Kiel and Annie Waldman, October 8, 2015, ProPublica: “On a recent Saturday afternoon, the mayor of Jennings, a St. Louis suburb of about 15,000, settled in before a computer in the empty city council chambers. Yolonda Fountain Henderson, 50, was elected last spring as the city’s first black mayor. On the screen was a list of every debt collection lawsuit against a resident of her city, at least 4,500 in just five years. Henderson asked to see her own street. On her block of 16 modest ranch-style homes, lawsuits had been filed against the occupants of eight. ‘That’s my neighbor across the street,’ she said, pointing to one line on the screen…”

Court Fines and the Poor – California

California unveils amnesty program for unpaid traffic tickets, By Kurtis Alexander, September 30, 2015, San Francisco Chronicle: “Millions of California motorists with suspended licenses have a chance to win back their driving privileges at a discount, starting Thursday, under a state amnesty program for unpaid traffic tickets. The state is cutting fines by at least half and waiving late fees for payments on tickets that were due before Jan. 1, 2013, an effort to eliminate what Gov. Jerry Brown called a ‘hellhole of desperation’ for those who can’t afford penalties and lost their licenses as a result. Brown signed the amnesty legislation in June. It takes effect Thursday and runs until March 2017…”

Court Fines and Debt

After Ferguson, states struggle to crack down on court debt, By Sophie Quinton, August 26, 2015, Stateline: “Say you’re caught driving 10 miles an hour over the posted speed limit in California. The state’s base fine for that offense is $35. But then the state adds an additional $40. The county adds $28. There’s an $8 fee to fund emergency medical services, a $20 fee to fund DNA testing, a $40 court operations fee and more. In total, that relatively minor moving violation just cost you $238.00. For years, state and local governments have attached additional fees and costs to everything from speeding tickets to parole supervision. The extra assessments are supposed to pay for court operations and associated justice system programs, such as DNA testing. According to a growing body of research, however, they also can trap poor people in debt, and corrupt law enforcement and the courts…”

Court Fines and the Poor

‘Sweeping’ court reform comes as Nixon signs bill to cap cities’ revenue, end predatory habits, By Robert Patrick and Stephen Deere, July 10, 2015, St. Louis Post-Dispatch: “Gov. Jay Nixon on Thursday signed a broad municipal court reform bill that will cap court revenue and impose new requirements in an attempt to end what the bill’s sponsor called predatory practices aimed at the poor. Nixon called the reform bill the ‘most sweeping’ municipal court reform bill in state history, and the bill’s primary sponsor, Sen. Eric Schmitt, R-Glendale, called it the ‘most significant…'”

Unemployment Insurance Debt – South Carolina

South Carolina pays off $1B unemployment debt to federal government, By Seanna Adcox (AP), June 11, 2015, Post and Courier: “South Carolina’s unemployment agency has paid off its nearly $1 billion debt to the federal government, five months ahead of schedule. Gov. Nikki Haley announced that the Department of Employment and Workforce made a final payment Thursday of $120 million. Early payments over the past four years have collectively saved businesses nearly $13 million in interest, while also reducing their insurance taxes…”

Experimental Poverty Programs

The anti-poverty experiment, By Jason Zweig, June 5, 2015, Wall Street Journal: “The U.S. and other wealthy nations have spent trillions of dollars over the past half-century trying to lift the world’s poorest people out of penury, with largely disappointing results. In 1966, shortly after President Lyndon B. Johnson declared war on poverty, 14.7% of Americans were poor, under the official definition of the U.S. Census Bureau. In 2013, 14.5% of Americans were poor.  World-wide, in 1981, 2.6 billion people subsisted on less than $2 a day; in 2011, 2.2 billion did. Most of that progress came in China, while poverty has barely budged in large swaths of sub-Saharan Africa, South Asia and Latin America. Is it time for a new approach? Many experts who study poverty think so. They see great promise in a new generation of experimental programs focusing not on large-scale social support and development but on helping the poor and indebted to save more, live better and scramble up in their own way…”

Court Fines and the Poor – California

California governor pitches amnesty on traffic debt for poor, By Judy Lin (AP), May 23, 2015, San Francisco Chronicle: “Calling California’s traffic court system a ‘hellhole of desperation’ for the poor, Gov. Jerry Brown is proposing an amnesty program for residents who can’t afford to pay off spiraling fines and penalties that have resulted in 4.8 million driver’s license suspensions since 2006.  The push by the Democratic governor spotlights concern among lawmakers and court administrators that California’s justice system is profiting off minorities and low-income residents. It’s a civil rights issue that has prompted discussions between the Brown administration and the U.S. Department of Justice, according to the governor’s spokesman, Evan Westrup…”

Spending of Low-Income Americans

It’s expensive to be poor, By Tami Luhby, April 24, 2015, CNN Money: “Low-income Americans are spending far more than they earn, forcing many to dip into savings, lean on family or go into debt.  Those in the bottom 30% of the income scale make an average of $14,000 a year, including the value of many government benefits like food stamps or disability payments. But they spend more than $25,000, or 182%, of their annual income mostly on basic needs like housing, food and transportation, according to a CNNMoney analysis of Bureau of Labor Statistics data…”

Payday Lending

Feds aim to protect low-income users of ‘payday’ loans, By Josh Boak (AP), March 29, 2015, Detroit News: “Each month, more than 200,000 needy U.S. households take out what’s advertised as a brief loan.  Many have run out of money between paychecks. So they obtain a ‘payday’ loan to tide them over. Problem is, such loans can often bury them in fees and debts. Their bank accounts can be closed, their cars repossessed.  The Consumer Financial Protection Bureau proposed rules Thursday to protect Americans from stumbling into what it calls a ‘debt trap.’ At the heart of the plan is a requirement that payday lenders verify borrowers’ incomes before approving a loan.  The government is seeking to set standards for a multibillion-dollar industry that has historically been regulated only at the state level…”

Court Fines and the Poor – Washington

Poor offenders must be asked if they can afford to pay fines, state Supreme Court says, By Mike Carter, March 12, 2015, Seattle Times: “The state Supreme Court, citing the burden imposed on poor defendants by uncollectable court fees and fines, has reiterated that judges must ask about a defendant’s ability to pay so-called ‘legal financial obligations’ (LFO), and not impose them if they can’t be paid.  The justices found the state’s LFO system ‘carries problematic consequences’ for poor offenders, can impede their ability to re-enter society and can contribute to recidivism.   The high court sent two cases back to Pierce County for resentencing based on findings that sentencing judges, at the prosecutor’s request, imposed costs, fees and fines of more than $3,300 in one instance and $2,200 in another without first determining whether either man could pay…”