4 ms·

But it is not illegal to not pay back private or federal debt, right? The federal gov has ways to get payment via tax refunds and social security benefits.

• mywittyname 11y ago
  That's what makes this so crazy. They spent thousands in salaries of these federal marshals, plus court costs and time, just to get this guy to sign another promise to pay a couple thousand bucks. They could have forgiven the debt and come out ahead. Or they could have garnished his wages, or seized his assets and got their money while spending very little.
  • idorosen 11y ago
    The only rational argument for why it might be remotely worthwhile to spend more money than the debt on pursuing a debtor would be to make an example to prevent others who owe similar amounts from defaulting (or not paying back when defaulting is illegal). This only makes sense if pursuing a debtor who is willfully ignoring the debt but otherwise able to pay it. I think use of the police force to enforce private loan contracts is short-sighted based on the ham-fisted overuse of incarceration as punishment in our legal system. Interest rates are already built into the loan instrument to compensate lenders for the risk of nonpayment, while this practice is just kicking someone when they're down...
    • Goronmon 11y ago
      The only rational argument for why it might be remotely worthwhile to spend more money than the debt on pursuing a debtor would be to make an example to prevent others who owe similar amounts from defaulting (or not paying back when defaulting is illegal). Isn't this pretty much the argument for law enforcement in general? I doubt it's ever "cost effective" to have police respond to say, noise complaints or minor acts of theft, but the goal is to show people that are consequences for breaking the laws or going against court orders.
      • idorosen 11y ago
        Yes, but with loans and debt there is already a more apt mechanism for handling exactly the nonpayment case: interest rates. Student loan interest rates would go up with more nonpayment, making them less affordable, making school tuitions grow more slowly, and other knock-on effects based on straightforward supply/demand. (Remember, price just means "willingness to pay", and schools are optimizing tuition pricing and other costs of attendance for which these student loans are taken out based on their own Laffer curve.) Whereas kicking someone when they are down (i.e. already can't pay) is cruel and unusual, I agree that making an example of willful nonpayment makes sense, but that shouldn't be done at the expense of taxpayers(/no need for police involvement). That's why wage garnishment and other tools already exist for lenders to use with a simple court order. If the government foots the bill of enforcement, rather than the lenders footing the bill of wage garnishment intervention and court costs, then it will get represented in taxes rather than loan interest rates, which privatizes the gains (loan payments) and publicizes the losses (enforcement costs). The other side effect is that it subverts supply/demand based pricing of education based on student loan interest rates, which props up higher education price inflation.