Debt Collection, At The End Of A Gun (Update)

Feb. 17, 2016 (Mimesis Law) — A good friend came to me decades ago with a problem. He received a letter from the Department of Education informing him that he had to repay his student loans that had been incurred decades earlier. He did repay them, he told me. “You have proof?” I asked.

Are you kidding? It was 25 years ago. I threw the checks away decades ago. Who keeps checks for decades?

I contacted the folks who sent the letter, who informed me in that officious tone that only a low-level government bureaucrat can pull off that their records showed the loan was unpaid, and that was that. Pay it or else. The “or else” was that the DoE would get a judgment against my friend and swoop down with its might to collect.

He paid what the government demanded. Not so much because he was afraid of fighting over his student loans, but because he had a pretty sweet side business growing weed. Discretion was the better part of valor. However, in any other case, the DoE would have a fight on its hands. What happened with my friend isn’t something new, and there are many other people who have to deal with being Sued by collection agency. Although my friend had me to give him some legal advice, others would have to find a debt legal defense service that could help them take on these agencies.

In Houston, Paul Aker got a dose of “or else” consisting of a seven person SWAT team.

Seven US marshals armed with automatic weapons turned up at Paul Aker’s home in Houston, Texas, last week to arrest him over a $1,500 student loan debt dating back to 1987. It was totally mind-boggling,” Aker said. “I was wondering, why are you here? I am home, I haven’t done anything … Why are the marshals knocking on my door? It’s amazing.” Aker said he was arrested, shackled and taken to federal court. “I was told: ‘You owe $1,500.’ I just couldn’t believe it,” he told Fox 26. “I was taken before a judge surrounded by seven marshals.”

That the amount was $1,500 has been played up as part of the appeal to emotion, but it’s irrelevant. It makes no difference whether it’s $1,500 or $150,000. What does matter is that armed marshals swooped down on a guy for a debt. The debt in itself is already scary enough, there are so many people searching for how to remove derogatory credit report item from their checks so it doesn’t affect their future finances.

Texas representative Gene Green, a Democrat, said it was unacceptable that US marshals are being used to collect decades old student loans. “There’s bound to be a better way to collect on a student loan debt that is so old,” he told the station.

That the debt is “so old” is another appeal to emotion, and also irrelevant. If it’s 100 years old or ten minutes old, it makes no difference.

Arne Duncan, the former secretary of education, had said he would work to write off the students’ Corinthian loans and vowed to fight back against unethical businesses moving in higher education. “You’d have to be made of stone not to feel for these students,” Duncan said last summer. “Some of these schools have brought the ethics of payday lending into higher education. This is our first major action on this but obviously it won’t be the last.”

That there were student loans related to a disreputable for-profit college, Corinthian, is an appeal to emotion, and, again, irrelevant. If the loan was for Harvard, even for a Harvard gender studies major, it changes nothing.

Failure to repay a loan guaranteed by the federal government is enforced at the end of a gun. It may take a while for the feds to do something about it, but when they do, they use the same shock and awe that serves its interests so well when the target is drug dealers, terrorists and arbitrageurs for making too much money.

For everyone else in the nation, the failure to repay a loan would constitute a civil wrong, for which a judgment would be sought, and if obtained, collection proceedings would ensue. There are methods, albeit often problematic as the old saying, you can’t get blood from a rock, comes into play, to get back the money due.

The problem here is that the government, as it does with so many things, backs up its power with criminal sanctions. The same ones that the New York Times finds unworthy of imputing a mens rea requirement, even though the victims of government overreach are a thousand times more likely to be individuals like Paul Aker than corporations owned by the Koch Brothers.

And when civil disputes, bad debts, are enforced at the end of a gun, there is a chance that the gun will go off. This raises the question, is non-payment of a student loan, regardless of how much, regardless of how old, regardless of where incurred, worth taking a life?

But it gets worse.

Congressman Gene Green says the federal government is now using private debt collectors to go after those who owe student loans. Green says as a result, those attorneys and debt collectors are getting judgements in federal court and asking judges to use the US Marshals Service to arrest those who have failed to pay their federal student loans.

Not only are people’s lives being put at serious risk for the petty purpose of collecting a debt, but judges, federal judges, are signing off on the marshals going in hot on student loan deadbeats for the benefit of private debt collectors doing the government’s bidding. The DoE may lack the time, interest and expertise to round up unpaid loans, and so it contacts with private companies in the highly-principled business of debt collections to split fees with them so someone else will do their dirty work?

And these private enterprises get to enjoy the benefit of the United States Marshals rolling in with weapons pointed, with the court’s full approval. Eventually, a gun will discharge and a dead body will be left on the ground. Will that be acceptable if the dead former student at least owed the money, rather than a guy like my old friend, who was the victim of government’s finest bookkeeping?

Update: According to Yahoo Finance, there is an additional twist left out of the news reports:

Back in November 2007, Aker was sued by the federal government for nonpayment of more than $2,600 in unpaid federal student loan debt, according to documents from the U.S. District Court for the Southern District of Texas (embedded below). The court record shows that Aker, listed as Winford P. Aker in the complaint, did not appear in court to answer the lawsuit and, as is common when student loan borrowers fail to appear, the presiding judge ruled against him and ordered Aker to pay the full balance on April 17, 2007. According to a statement from the U.S. Marshals Service, Aker repeatedly refused to show up in court after being contacted several times. Disobeying a court order is a criminal offense. Within a few months, the judge issued a warrant for his arrest, which the U.S. Marshals carried out. So, yes, Aker was arrested, but not just because he owed a little student loan debt. He was arrested for disobeying a court order.

Not to blame Yahoo for having no clue, repeating what the Marshals told the writer and generally adding to the level of ignorance in the room, but it is not “normal” for a civil litigant who chooses not to contest a suit against him to be arrested. It is not “normal” for the plaintiff to be ordered to appear in a civil collection action. It is not “normal” for the court to order his arrest for failure to appear in a civil action.

There is nothing “normal” about any of this. Not that Yahoo would know. Then again, it’s also not “normal” that, as the marshals allege, if Akers resisted, he wouldn’t be shot and then, after arrest, would be immediately released. No, there is nothing “normal” here. Nothing normal at all. Except this:

And, to add insult to injury, he was ordered to pay more than $1,200 in fees back to the U.S. Marshals service for the cost of arresting him.

Finally, something normal.

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