The $648 Monthly Fine for Not Having a Job

As part of the President’s deficit reduction plan, he proposes changing the rules to allow debt collectors to call people on their cell phones.

Allow agencies to contact delinquent debtors via their cellular phones. The Administration also proposes to amend the Communications Act of 1934 to facilitate collection of debts owed to or guaranteed by the Federal Government, by facilitating contact of delinquent debtors who are most readily reached on their cell phones. This provision is expected to provide substantial increases in collections, particularly as an increasing share of households no longer have landlines and rely instead on cell phones.

As soon as I read this, I thought of the widow in Hawaii whom Bank of America called 48 times a day because her late husband had missed one mortgage payment.

Deborah Crabtree, of Honolulu, Hawaii tragically lost her husband to cancer on Aug. 3. The bank to which he owed money, Bank of America, didn’t even wait for a day after his death to begin calling Crabtree to remind her that her husband had missed a $3,000 mortgage payment on their home.

Crabtree told Bank of America that she had $5,000 on hand, and that she needed this money to buy food and bury her husband. Convinced that Crabtree should be using this money to pay them, Bank of America repeatedly “robo-called” Crabtree during her husband’s wake, sometimes with only 15 minutes between each call.

Now, Crabtree is suing the bank, alleging that it called her up to 48 times a day, even repeatedly demanding evidence that her husband was dead, and once receiving it, losing it. Crabtree’s complaint cites the emotional distress and mental anguish caused by Bank of America’s behavior.

So under Obama’s proposed rules, BoA might call someone 48 times a day on their cell phone? Say each one were billed as a 1 minute call, that would amount to 1,440 minutes a month–maybe double a pretty normal 700 minute/month plan. The remainder of those minutes might be billed at $.45 per minute, or a grand total of $648 a month, all so a debt collector can get money for Uncle Sam.

Add in the fact that the most likely group to fall in this category–students with federally backed loans, particularly those who used those federally backed loans to go to diploma mill for-profit colleges–and you’ve effectively got the Federal government penalizing these young adults a second time because they were preyed upon by a previously under-regulated industry a first time. Not to mention graduating from school into the post-crash economy.

In short, while I understand the necessity of finding a way to collect debt from those who don’t have a land-line, I also see how this policy will become the Bankruptcy Bill of the housing crisis, a policy with easily foreseeable devastating consequences that will exacerbate the popping of the next bubble that will pop.

9 replies
  1. rugger9 says:

    Why the WH thinks even now that big business will pass $$$ to them baffles me. It’s the only way to explain the continuos caves when ant deals struck aren’t honored by the big business community.

  2. William Ockham says:

    Yesterday, my attention was called to the following story (the setting is the early Roman empire):

    “… a king who wanted to settle accounts with his servants. As he began the settlement, a man who owed him $7 trillion* was brought to him. Since he was not able to pay, the master ordered that he and his wife and his children and all that he had be sold to repay the debt.

    “At this the servant fell on his knees before him. ‘Be patient with me,’ he begged, ‘and I will pay back everything.’ The servant’s master took pity on him, canceled the debt and let him go.

    “But when that servant went out, he found one of his fellow servants who owed him a $2,100*. He grabbed him and began to choke him. ‘Pay back what you owe me!’ he demanded.

    “His fellow servant fell to his knees and begged him, ‘Be patient with me, and I will pay it back.’

    “But he refused. Instead, he went off and had the man thrown into prison until he could pay the debt. When the other servants saw what had happened, they were outraged and went and told their master everything that had happened.

    “Then the master called the servant in. ‘You wicked servant,’ he said, ‘I canceled all that debt of yours because you begged me to. Shouldn’t you have had mercy on your fellow servant just as I had on you?’ In anger his master handed him over to the jailers to be tortured, until he should pay back all he owed.

    I couldn’t help but thinking of the banksters (who have received well in excess of $7 trillion dollars from the “king”, that is, the government). If we re-told the story today, the king would be out there helping choke the poor sucker who owed a couple of thousand dollars.

    *Converting the value of ancient monetary units into today’s is inherently difficult, but these conversions are defensible.

  3. earlofhuntingdon says:

    This will, indeed, decimate tens of thousands of poor, acute and chronic, who can barely afford a few hours of cheap cell phone time a month, barely enough to keep in touch with a family, if s/he still has one, and to search for work.

    If Mr. Obama the Democrat wants to advocate for “fairness”, he should require the collector to pay for the call – though I don’t see how that works – and rescind the Creditor Protection Act known as the 2005 Bankruptcy “Reform” Act.

  4. earlofhuntingdon says:

    Mr. Obama doesn’t act like a poor kid from a single-parent home who went to school and two Ivy League universities by leave of the charity of others. Perhaps his assumption is that, his own family life notwithstanding, he “earned” those scholarships, but the thousands today who are being denied them wouldn’t have earned them. Perhaps he assumes that those scholarships for school, college and law school were paid via by tax-deductible charitable gifts from rich white folks, and he is just paying them back with interest.

  5. orionATL says:

    gotta collect that debt. go, repo man.

    this should be no surprise.

    banker-lovin’ barry spent his high school years living with a grandmother who was a bank v-p

    (and a grandfather who owned a furniture store).

  6. orionATL says:

    president obama lived with his grandparents in hawaii where he attended a private prep school from fifth grade thru high school graduation – 1971 to1979.

  7. Sojourner says:

    @earlofhuntingdon: That “2005 Bankruptcy “Reform” Act,” in retrospect is one of the biggest examples of William Ockham’s story above. There are so many people who need the opportunity to start over, free and clear, due to the havoc that the banks’ policies created. I suspect that the Bankruptcy Reform act is probably keeping a number of big financial institutions afloat in terms of the “loans” that they can keep on their books. Persons having to “repay” certain amounts up to 4 years instead of getting a clean slate surely has reenforced TBTF.

    I just have to wonder if that bankruptcy reform bill was something the banks foresaw a need for, or something that they used for leverage once things got pretty bleak?

  8. Mary McCurnin says:

    Maybe we could start a “work around” list of ways to circumvent the MOTU. Like don’t put much money in the bank so it can’t get taken by court order for a credit card debt. Put the money on a debit card from Western Union or (evil) Walmart. You can use the Walmart card only if you pledge not to use the card itself in the Walmart. Of course, this only works if you are self employed or on Social Security.

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