mathbabe

I wrote here about the way normal people who are in debt are imbued with the stigma of immorality, whereas corporations are applauded for debt (and even for declaring bankruptcy). I admit that my second post, which contained outrageous examples of the ideas in the first post, was rather frustrated, because I had little in the way of solutions. I like to propose solutions rather than just point out problems.

First, I’ve got some good news. Namely, as described in this Wall Street Journal article, a judge has ruled that the debt collection agency harassing an elderly woman for her dead husband’s debt was indeed harassment. From the article:

The case could set a precedent across the U.S. and discourage lenders from using collectors to get money from surviving relatives on debts left behind by the deceased, according to other state-court judges.

That’s something!

Next, I’ve been discussing the language of debt with various people and we’ve come up with a plan. This language issue was the main point of my first post: the words we use make individuals feel dirty when they are indebted, but sanitizes the concept of debt for corporations (“restructuring”).

Let’s turn this around. Let’s come up with our own vocabulary to separate the issues and also to point out what brings people into debt in the first place. We’ve come up with three proposed vocabulary terms to add to the discourse:

1. Poisonous debt: this is debt that comes from actually fraudulent lenders, or who lent to vulnerable people under false pretenses. Actually existing laws should be taking care of these things, but the problem is of course that people who are in massive amounts of debt typically don’t have good lawyers.
2. Debt under duress: this term should refer to debt that people incur in emergency situations, like medical emergencies, divorces, or funerals. Elizabeth Warren has done a lot of work describing how many families in serious money trouble got there with exactly this kind of situational debt.
3. School system debt: the school system in this country is inconsistent, which causes enormous competition for families to buy a house in a good school district, often buying houses they can’t quite afford for the sake of their childrens’ educations. This is well-documented and, for any individual, totally understandable.

What I like about the above terms is that they separate the people who take on the debt from the reasons they take on the debt. Anyone can relate to the above reasons, and when that happens, a sympathy, rather than a moral judgement, emerges. If I hear someone has taken on debt under duress, I immediately want to know if they’re ok.

They also provide a much-needed balance to the typical argument you hear against people who bristle at the idea of debt amnesty, namely the concept of free-loaders milking the system for cheap cash to spend on unnecessary trinkets and then not paying it back.

If you understand the extent to which people are in debt because of health issues, your response may be something more like, hey we should really make the health care system in this country more reasonable. In other words, it starts a much more interesting and potentially useful conversation than mere finger wagging.