CommunityThe Bullpen

DAs Lend Stationery to Debt Collectors, Intimidating Debtors into Payment

My initial post of the day concerned organizing around debt resistance as the connective tissue for a new project out of the Occupy Wall Street movement. When you read about this example of corruption around debt, you understand why organizing against it is such a vital project.

The letters are sent by the thousands to people across the country who have written bad checks, threatening them with jail if they do not pay up.

They bear the seal and signature of the local district attorney’s office. But there is a catch: the letters are from debt-collection companies, which the prosecutors allow to use their letterhead. In return, the companies try to collect not only the unpaid check, but also high fees from debtors for a class on budgeting and financial responsibility, some of which goes back to the district attorneys’ offices.

The practice, which has spread to more than 300 district attorneys’ offices in recent years, shocked Angela Yartz when she was threatened with conviction over a $47.95 check to Walmart. A single mother in San Mateo, Calif., Ms. Yartz said she learned the check had bounced only when she opened a letter in February, signed by the Alameda County district attorney, informing her that unless she paid $280.05 — including $180 for a “financial accountability” class — she could be jailed for up to one year.

“I was so worried driving my kid to and from school that if I failed to signal, they would cart me off to jail,” Ms. Yartz said.

So your district attorney, the office charged with upholding the law in your community and protecting the rights of you as a citizen, is trading its name and credibility and authority to a debt collector, in exchange for a cut of the profits when you, intimidated and chastened, pay up. District attorneys don’t charge anyone with a crime or even investigate the debt in question to see if it’s legitimate; while around 7% of these letters lead to payment and enrollment in the “financial accountability” class, around 0.10% lead to prosecutions (the examples in the article describe mistakes made by people closing out accounts or writing checks with the wrong account). The DAs simply lend their name to a shakedown enterprise. That’s your government doing this, which you own.

The “financial accountability” class, and the associated fee, looks to be a pretext to funnel money into a new and virtually useless industry, that also exists as a way to divy up the fees with the local district attorney’s offices.

Incidentally, the reach to this corrupt practice stems from debt on the other side, namely debt-strapped city governments looking for additional revenue sources to cover public services. Clearly the desperation of budget woes has bred this sickening practice.

This little incident provides the best evidence for the need for a debt resistance movement. You have financial intermediaries using law enforcement in a corrupt practice to collect debts. The means by which these bottom feeders will go after those saddled with debt has become more and more aggressive. The power relationship is completely skewed. Debtors need a way to fight back.

More from Yves Smith.

Previous post

Occupy Wall Street Begins New Organizing Campaign as Strike Debt Launches

Next post

CO: Marijuana Legalization Initiative Ahead 51-40

David Dayen

David Dayen