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…”

Court Fines and the Poor

  • Civil rights attorneys sue Ferguson over ‘debtors prisons’, By Joseph Shapiro, February 8, 2015, National Public Radio: “In a new challenge to police practices in Ferguson, Mo., a group of civil rights lawyers is suing the city over the way people are jailed when they fail to pay fines for traffic tickets and other minor offenses. The lawsuit, filed Sunday night on the eve of the six-month anniversary of the police shooting of Michael Brown, alleges that the city violates the Constitution by jailing people without adequately considering whether they were indigent and, as a result, unable to pay. The suit is filed on behalf of 11 plaintiffs who say they were too poor to pay but were then jailed — sometimes for two weeks or more…”
  • Does Ferguson run ‘debtor’s prison’? Lawsuit targets a source of unrest, By Harry Bruinius, February 9, 2015, Christian Science Monitor: “A lawsuit filed Sunday aims to correct one of the driving factors behind the racial unrest in Ferguson, Mo., last summer: a local court system that, critics say, systematically jailed people too poor to pay fines accumulated from traffic tickets or other minor infractions. A kind of 19th-century ‘debtor’s prison’ has been in place for years in Ferguson and nearby Jennings, Mo., say those who filed the lawsuit. The result, they add, is ‘a Dickensian system that flagrantly violates the basic constitutional and human rights of our community’s most vulnerable people.’ The lawsuit comes at a time when several states and cities – including Ferguson – are beginning to address the grievances laid bare last summer. Ferguson has just not gone far enough or fast enough, the lawsuit claims…”

Credit Repair Companies

The industry that charges low-income Americans to fix credit errors they can fix themselves for free, By Chico Harlan, February 6, 2015, Washington Post: “By the time she made it to the American Bill Pay Web site, with its testimonials and its guarantee to solve credit woes, Kimberly Cox couldn’t afford another problem. She was squeaking by on $720 per month in disability checks. Her credit score was a measly 530. She lived with her son, Logan, who moonlighted on weekends as a bullrider at amateur rodeos in western Arkansas. Neither had health insurance, and one rodeo night, a 2,000-pound bull bucked hard, knocking Logan to the ground. There was a knee surgery, a long hospital stay, a $40,000 medical debt. And then a seeming helping hand. ‘REGISTER NOW,’ the American Bill Pay site said, and it offered an enticing possibility: that Cox, for a fee, could ease her debts and improve her credit score with just a few easy steps. Cox borrowed $900 from her mother-in-law to pay for the service…”

Predatory Lending

  • Rise in loans linked to cars is hurting poor, By Jessica Silver-Greenberg and Michael Corkery, December 25, 2014, New York Times: “The rusting 1994 Oldsmobile sitting in a driveway just outside St. Louis was an unlikely cash machine. That was until the car’s owner, a 30-year-old hospital lab technician, saw a television commercial describing how to get cash from just such a car, in the form of a short-term loan. The lab technician, Caroline O’Connor, who needed about $1,000 to cover her rent and electricity bills, believed she had found a financial lifeline…”
  • Churches step in with alternative to high-interest, small-dollar lending industry, By Rebecca Robbins, January 9, 2015, Washington Post: “Every month for about three years, Nina McCarthy followed the same routine after payday. She’d go into a Check Into Cash near her home in the Richmond area, and pay off an open-end loan for $700 or $800 – and then she’d take out a new one for the same amount, never accumulating interest in the process. Then McCarthy’s overtime hours at work were cut. With rent, a car payment and a 3-year-old granddaughter to feed, McCarthy didn’t have $700 for Check Into Cash. McCarthy made a partial payment, but interest piled up rapidly, at a rate she recalls was 24.9 percent a month, or a nearly 300 percent annualized rate…”

Payday Lending – South Dakota

Payday loans could cease in South Dakota, By David Montgomery, December 14, 2014, Argus Leader: “An unexpected coalition is backing a campaign to ban payday lending in South Dakota, prompting the industry to warn of far-reaching consequences if it succeeds. Payday loans and an array of similar businesses — ‘signature loans,’ ‘title loans’ and others — target small-dollar loans at people with poor credit and savings. Supporters say they help low-income people borrow much-needed money, but an array of critics say the fees are far too high and trap borrowers in a spiral of debt…”

Poverty and Debt

Debt weighs heavily on those trying to rise from poverty, By Megan Woolhouse, November 12, 2014, Boston Globe: “Roberta Brown, a 37-year-old single mother, lives in a homeless shelter, desperately trying to find the job that will help her gain a new home and better life. She recently earned a certificate as medical assistant, hopeful it would lead to a job in the state’s burgeoning health care industry. But that has not been not enough to surmount what Brown believes are the greatest barriers to her employment: the $20,000 in credit card debt she ran up while out of work several years ago and her damaged credit report. Each time she applies at a hospital, she’s asked to sign an agreement allowing the employer to check her credit…”

Child Support Enforcement

  • How our child support system can push the poor deeper into poverty, By Jeff Guo, September 26, 2014, Washington Post: “In the United States, nearly one in four children are due some sort of child support. But only 62 percent of the money owed is actually paid. To get a sense of who these deadbeat parents are, consider this chart comparing different states…”
  • Locking up parents for not paying child support can be a modern-day ‘debtor’s prison’, By Tins Griego, September 26, 2014, Washington Post: “Dwayne Ferebee, 36, father of four, has been sent to jail four times over the past 12 years on civil contempt charges for failure to pay his court-ordered child support. The first two times, he spent a couple months behind bars until his mom came up with the $3,000 the judge told him he had to pay. The third go-around, he stayed in jail six of the maximum 12-month sentence before he could scrape together the money. The fourth, he had to wait until his fiancée received her tax refund. All told, he spent about a year locked up…”

Low-income Borrowers – California

In California, a new law helps low-income borrowers build credit, By Teddy Nykiel, August 22, 2014, Christian Science Monitor: “California broadened the reach of nonprofits that target low-income borrowers who lack the credit standing needed to obtain a traditional loan, enacting a law that lets the organizations lend as much as $2,500 interest free without a license. Clients of groups like the San Francisco-based Mission Asset Fund are often unbanked, underbanked or have low credit scores. Under the new law, payments must be reported to companies that create the rankings, such as Experian and Equifax. By repaying in full and on time, borrowers can create the track record they need to qualify for regular loans…”

Jobless Benefit System – Ohio

Ohio lawmakers view overhauling jobless aid, By Catherine Candisky, August 6, 2014, Columbus Dispatch: “A special Ohio House committee discussed sweeping changes to Ohio’s unemployment-compensation system as legislators opened hearings yesterday on how to repay a $1.4 billion debt to a federal jobless-benefits fund. The debt has become a drag on Ohio businesses, which face annual increases in the federal unemployment tax until the loan is repaid. The fifth such increase — to a total penalty of $105 per employee — is scheduled for employers’ 2015 tax bill…”

Payday Lending

States look to crack down on payday lenders, By Elaine S. Povich, May 2, 2014, Stateline: “The demise this week of a Louisiana bill that would have reined in payday lending demonstrates how hard it is for states to regulate the quick loan industry, which consumer groups criticize as a trap for the working poor. Supporters say payday lenders, which emerged in the 1990s, provide a valuable service to lower income borrowers when they need small amounts of money to tide them over from one paycheck to the next. But critics say payday lenders lock desperate people into repeat loan cycles with annual interest rates that can approach 600 percent. An estimated 12 million borrowers use payday loans each year…”