Drawing attention to the debt people face in the criminal justice system — by canceling it

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Hello and welcome to Businesshala’s Extra Credit column, a weekly look at news through the lens of debt. This week, we’re taking a look at the intersection of consumer credit and the criminal justice system.

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Much of the headlines around criminal justice reform have focused on the conditions accused of crimes face as they make their way through the system, including mass imprisonment, harsh sentencing guidelines, and poor prison conditions. .

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But there are also harmful financial consequences, including debt accumulation, for both defendants and their families joining the system. This week, we’re taking a closer look at what activists and scholars refer to as crimemarsim, or the way the criminal justice system compels defendants to buy products and services that are often violent.

Over the past few weeks, Debt Collective, a membership group of debtors, has been working to draw attention to the risk of falling into debt as a result of negotiations with the criminal justice system, starting with two initiatives. One effort, which we will consider later, is intended to help consumers dispute collateral loans in California. But first, how did the organization provide debt relief to thousands of people in the parole system.

A New Approach With Roots in Occupy Wall Street

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Debt Collective’s novel approach to loan cancellation first brought their attention back in 2012. The group formed during Occupy Wall Street realized they could buy debt on the secondary market, the area where debt buyers and creditors buy and sell portfolios of consumer debt for pennies on the dollar, and simply cancel it.

he started with medical loan And as of 2014 They were canceling loans held by students attending for-profit colleges. Now, they’ve expanded that strategy to private probation loans through an affiliated organization, Rolling Jubilee. Earlier this year, it bought 20,522 debtors valued at $3.2 million for about $98,000 and canceled it, “with no strings attached,” as Debt Collective legal partner Mackenzie Halter put it.

For those who are owed probation loans, there are risks of dire consequences. When someone enters a probationary period, there are often financial costs for that supervision, including fees associated with reporting to a probation officer, participating in any type of residential re-entry program, a monitoring device (if required). Yes), and many more.

many areas agreements with private companies for providing these services and collecting those charges. If consumers fall behind on these payments, they could be sent to jail. The loan that was bought and canceled at Rolling Jubilee was with one of these private companies.

Although cancellation efforts are focused on this specific type of debt, organizers say one goal of the initiative is to draw attention to all the ways that debt intrudes a defendant’s experience from arrest to release.

Manuel Galindo, a carnal debt organizer at Debt Collective, said: “Imprisonment is a vast long journey that involves multiple methods of wealth extraction.” “Carceral debt includes all forms of debt that have either been eroded or have been created because of an individual’s involvement with the criminal legal system.”

One of the first forms of debt defendants encounter

One of the first forms people face upon entering this system is collateral loans – the second focus of Debt Collective’s recent initiative. When someone is arrested, a condition of being able to go home while awaiting trial is being able to post some sort of cash bail, depending on the area and the crime they are accused of. The average bail amount in California—where the issue has focused on Debt Collective’s work—is $50,000, according to 2015 paper from the Public Policy Institute of California.

If a defendant cannot afford to pay the full amount to the court, they can use a bail bond company, which will ask them to pay a fee, often around 10% of the bail, which is treated as a premium. Known in If the defendant fails to appear in the court, the court can collect the entire bail amount from the company. Many bail bond companies will offer defendant payment plans — they pay a percentage of the premium upfront and pay the rest over time — to make posting bonds more manageable.

In most cases, companies will require the defendant to have a co-signer on the hook for the terms of the bond contract, including making sure the defendant shows up in court, being liable for bail if the defendant doesn’t show up, and a payment plan.

,“Imprisonment is a vast long journey involving many methods of wealth extraction”,


— Manuel Galindo, a raucous debt organizer with Debt Collective

The legacy of racism rooted in the criminal justice system means that low-income men of color, and especially black men more likely to get caught in it. Because of their ties to this group, low-income women of color frequently asked To serve as a co-signer on the bail bond contracts, said Joshua Page, an associate professor of sociology at the University of Minnesota.

“The people who usually do this are often friends and family members, often women, often mothers, sisters, wives, former partners,” Page said. “The co-signing process brings in a vast population of people who are not themselves accused of a crime.”

Page, who worked as a bail bond agent as part of his research, looked at how relationships between these agents, co-signers and defendants go first hand. Page said that immediately after someone is arrested, a bail bond agent can often be a source of information for defendants and their family, when little is available. A person in captivity may not have a private attorney, public defenders may have heavy caseloads, and the courts may be difficult to navigate, he said.

Then, when a co-signer is presented with a contract, they’re reviewing it under a high-pressure situation—they want to get their loved one out of jail, Page noted. Even though the bail bond agent is trying to provide the co-signer with all the relevant information, it can be difficult for them to digest. Page observed that the terms of the contract were often discussed.

The co-signers can assume that they only have to pay a single amount for the payment made to start the payment plan. They sometimes think that if their loved one drops charges, they won’t be on the hook for the rest of the contract, Page said.

“Sometimes it’s in the middle of the night, there’s a lot of fine print to read, there’s a lot going on,” Page said. “Often because it’s a stressful, high adrenaline environment and the process is really quick, people are not fully aware of all the intricacies of these contracts.”

In effect, the contract co-signers are agreeing to make them liable as a defendant for the full premium, which is non-refundable, even if their loved ones appear in court or the case is dropped, he said.

Page said debt can have financial, emotional and psychological effects.

The tradeoffs co-signers may face, Page said, are “do they pay the bail or do they pay their bills, leading to material loss.” “It also creates a lot of social tension, it’s not just the financial debt that’s created, they’re the social debt as well.”

Surety bond companies accused of misleading co-signers

It’s not just the high-stress nature of a situation in which co-signers agree to these contracts that can cause them to misunderstand their effect. Some argue that bail bond companies are systematically misleading co-signers about their liability and violating consumer protection laws that govern other types of loan products. This is a theory Danica Rodarmel began to develop as a law student.

After Rodermell’s graduation, he opened a clinic To help consumers in the Bay Area fight their collateral loans and attempt to hold bail bond companies accountable to consumer protection laws. At the clinic, she kept hearing from co-signers who had agreed to bail someone “and clearly didn’t understand what their legal obligation was under that contract.”

The collateral loan issue, “exists at a complex intersection of different laws,” Rodermel said. “We have criminal law, we have consumer law, we have insurance regulation,” Rodermell said. in California, state insurance department Licenses bail agents and regulates certain aspects of bail transactions. Rodermell argues that the bail bond industry has taken advantage of the confusion surrounding oversight of the sector to claim that consumer protection laws do not apply to their product.

Through the clinic, Rodermell began to make the case that these laws did indeed apply to bail bond companies. Rodermell often found that co-signing clients who came through his clinic were not given a specific disclosure that warned them about their obligations under the contract. Creditors are required to provide such warmth to co-signers in California. In other cases, Rodermell will listen…

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