Towards a Creditor State - One in Seven Americans 
Pursued by Debt Collectors
By Matt Stoller, the former Senior Policy Advisor to 
Rep. Alan Grayson and a fellow at the Roosevelt Institute. 
Naked Capitalism
February 28, 2012
http://www.nakedcapitalism.com/2012/02/matt-stoller-towards-a-creditor-state-%E2%80%93-one-in-seven-americans-pursued-by-debt-collectors.html

I went through the Federal Reserve's Quarterly Release
on Household Debt and Credit released today, and there
were two notable trends.  One is that the amount of
consumer debt is declining, but that delinquency rates
are stabilizing above what they were before the crisis.
And the second is in this graph, which is that the
number of people subject to third party collections has
doubled since 2000, from a little less than 7% to a
little over 14% of consumers.  Ten years ago, one in
fourteen American consumers were pursued by debt
collectors.  Today it's one in seven.

The experience of debt collection can be chilling, as
this 2007 ABC News report suggests.

    Consumers around the country have taped threatening
    phone calls from collectors who have called in the
    middle of the night, used abusive language and have
    threatened to have people fired from work or thrown
    in jail.  All of these tactics are illegal under
    federal law.

One of the characteristics of the new social contract
ushered in by both George W. Bush and Barack Obama is
the increasing power of creditors to govern outright,
from tax farming by banks to the use of credit checks to
access employment opportunities.

There are now thousands of people legally jailed because
they aren't paying their bills, ie. debtor's prisons
have returned.  Occasionally elites let it slip that
this is not an accident, but is their goal - former
Comptroller General David Walker has wistfully pined for
debtor's prisons overtly (on CNBC, no less).

This may be somewhat mediated by government action, as
the CFPB is beginning to make noise around debt
collection and credit ratings, and Illinois Attorney
General Lisa Madigan is working to stop debt-related
arrest warrants.  But only somewhat, only where the
government can protect you and only when there is the
political will to do so.  Increasingly, creditors are
coming to set up the institutional structures for
financial surveillance, state-sponsored enforcement of
their claims through tightened bankruptcy laws and the
selective use of jail, and the denial of economic
opportunity based on one's interaction with the
financial system.

This is part of the new social contract.  The sheer
percentage of consumers with third party collections in
pursuit is striking.  Additionally, the uptrend through
both Bush boom and Obama bust years of the percentage of
people being tracked down by third party collection
agencies suggests we live in a different country than we
did just ten years ago.

Again, ten years ago, one in fourteen Americans were
pursued by debt collectors.  Today it's one in seven.  I
suspect this number will keep going up.  And though debt
collection is a highly competitive field, it's also a
growth industry.

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