Fight the Power

Generali

I'm increasingly concerned about the powers being given to companies, especially large companies that tend to act in amoral (not immoral) ways. My feeling is that increasingly the economy is made of large Government bodies and large companies stitching up deals to milk the rest of us.

This is a shocking example from the USA:

http://moneyland.time.com/2012/08/28/lenders-use-a-new-dirty-trick-to-jail-you-for-small-debts/?iid=obinsite

I know that this board often has a rather censorious view of debt but people going to prison because they default on a debt of a few hundred bucks is wrong surely......?

pqrdef

I'm in something of a dilemma here, because nobody can lend money on the basis that if the borrower simply stonewalls for long enough you will just go away.

Graduated sanctions are needed, because if there are no small ones, only the big ones are left.

ILW

They do not appear to be being jailed for not being able to repay the debt, but for not turning up at court. Seems pretty fair to me.

chewmylegoff

Generali wrote: »

I'm increasingly concerned about the powers being given to companies, especially large companies that tend to act in amoral (not immoral) ways. My feeling is that increasingly the economy is made of large Government bodies and large companies stitching up deals to milk the rest of us.

This is a shocking example from the USA:

http://moneyland.time.com/2012/08/28/lenders-use-a-new-dirty-trick-to-jail-you-for-small-debts/?iid=obinsite

I know that this board often has a rather censorious view of debt but people going to prison because they default on a debt of a few hundred bucks is wrong surely......?

why is that companies being given "power"?

people are told to attend court, don't turn up, and then the court issues a warrant for their arrest and imprisonment for contempt of court.

i.e. it is the court that is doing it, not the company. the company is simply using the legal system that applies, whereas the court, which is the apparatus of the state, not the company, makes the decision to imprison on the basis that the person did not attend court - not because they did not pay their debts.

it's not like someone says "i can't pay" and then is thrown (by the lender) into a debtors' prison as punishment with no application of due legal process. that would be the company being given the power, wouldn't it?

Loughton_Monkey

Personally I think this country is far, far, too soft with debt. And also, I would swiftly add, far, far, too soft with "rip-off" companies [from double glazing, through PPI claimers, right through to payday loan companies].

It is a 'simple' matter of getting the laws broadly correct. Loans are loans and must be repaid. Companies who lend money must follow strict procedures a,b,c & d, to get their money back.

Most importantly, any breach of the rules by the company would (in my view) have the company closed down, and all directors firmly in jail for 5 years minimum. But apart from that I think they should be allowed to go through 'due process' to recover the whole amount owing, plus costs.

And incidentally, I don't always buy this thing about "only a $250 loan". If people are daft enough to borrow at 4,000% then that's their own stupidity. Those are the terms. So when they sit on their a4ses for months on end ignoring letters/court summonses, then they should not be surprised that they soon owe $8,000 plus $3,000 legal fees etc....

Personally, though, I'd really like to re-instate maximum interest rates (that I am convinced used to be embodied in law). These would be set at something like 10 points over base. I would declare loans higher than this to be 'legal' to grant, but totally and utterly illegal to enforce. It would firmly put a stop to payday loans which I think are a scourge on our society.

ILW

Loughton_Monkey wrote: »

Personally I think this country is far, far, too soft with debt. And also, I would swiftly add, far, far, too soft with "rip-off" companies [from double glazing, through PPI claimers, right through to payday loan companies].

It is a 'simple' matter of getting the laws broadly correct. Loans are loans and must be repaid. Companies who lend money must follow strict procedures a,b,c & d, to get their money back.

Most importantly, any breach of the rules by the company would (in my view) have the company closed down, and all directors firmly in jail for 5 years minimum. But apart from that I think they should be allowed to go through 'due process' to recover the whole amount owing, plus costs.

And incidentally, I don't always buy this thing about "only a $250 loan". If people are daft enough to borrow at 4,000% then that's their own stupidity. Those are the terms. So when they sit on their a4ses for months on end ignoring letters/court summonses, then they should not be surprised that they soon owe $8,000 plus $3,000 legal fees etc....

Personally, though, I'd really like to re-instate maximum interest rates (that I am convinced used to be embodied in law). These would be set at something like 10 points over base. I would declare loans higher than this to be 'legal' to grant, but totally and utterly illegal to enforce. It would firmly put a stop to payday loans which I think are a scourge on our society.

And drive the market into the hands of totally unscrupulous illegal moneylenders.

Linton

Loughton_Monkey wrote: »

....
Personally, though, I'd really like to re-instate maximum interest rates (that I am convinced used to be embodied in law). These would be set at something like 10 points over base. I would declare loans higher than this to be 'legal' to grant, but totally and utterly illegal to enforce. It would firmly put a stop to payday loans which I think are a scourge on our society.

At first sight who would disagree but this would surely put a stop to any form of short term loans. No-one is going to the effort of providing a £1K loan for a week to anyone if all they get back is the £2 or so your proposal would imply.

The problem I see with payday loans is not the high annual interest as they arent intended to be taken out for long periods, but rather the lack of understanding by their customers of the long term effect of the high interest rates. How one legislates around that is difficult to see.

Graham_Devon

ILW wrote: »

They do not appear to be being jailed for not being able to repay the debt, but for not turning up at court. Seems pretty fair to me.

The article points out that the debtor may not even know they were summoned.

Here’s how it works: The creditor goes to court and gets a judgement against the debtor. In many cases, this action is successful only because the debtor never shows up to defend him or herself, sometimes because they’ve been the victim of “sewer service” and never received the paperwork telling them when to show up to court.

If they are aware of the summons, fair enough. But there are obviously services making sure the debtor doesn't know. That's completely unjust.

I'm pretty sure none of us would turn around and say "well fair enough" if that happened to our close family.

Loughton_Monkey

ILW wrote: »

And drive the market into the hands of totally unscrupulous illegal moneylenders.

I agree totally that would happen. But it would not be too difficult to have them all put away. A simple 'helpline' to grass them up. Ability by law to 'entrap'. These would reduce them significantly, provided the law was strict enough to have them sent down for a very long time.

Loughton_Monkey

Linton wrote: »

At first sight who would disagree but this would surely put a stop to any form of short term loans. No-one is going to the effort of providing a £1K loan for a week to anyone if all they get back is the £2 or so your proposal would imply.

The problem I see with payday loans is not the high annual interest as they arent intended to be taken out for long periods, but rather the lack of understanding by their customers of the long term effect of the high interest rates. How one legislates around that is difficult to see.

Agreed. But still possible to legislate for perhaps. X% for the first 2 months, but cannot be more than Y% thereafter.

ILW

Loughton_Monkey wrote: »

I agree totally that would happen. But it would not be too difficult to have them all put away. A simple 'helpline' to grass them up. Ability by law to 'entrap'. These would reduce them significantly, provided the law was strict enough to have them sent down for a very long time.

Your'e living in a dreamworld if you really believe that. PDLs are probably the lesser of two evils.