The Washington University School of Law and ProPublica held a spirited public forum about ProPublica’s “Color of Debt” report on racial patterns in debt collection at the law school on November 5.
“It’s a decision that individual companies make to pursue debt collection in this way,” said Paul Kiel, who co-wrote the ProPublica report with Annie Waldman. “It’s a business decision.”
The “business decision” in question is legal action. In “Color of Debt,” which The American printed on October 15, ProPublica analyzed five years of court judgments from debt collection suits in St. Louis, Chicago and Newark. “Even accounting for income,” they reported, “the rate of judgments was twice as high in mostly black neighborhoods as it was in mostly white ones.”
Most of these cases, they found, are tried in lower-level courts where defendants frequently have no legal representation.
The Rev. Starsky Wilson, co-chair of the Ferguson Commission and president of the Deaconess Foundation, said ProPublica’s findings about debt collection aligned with the commission’s finding about fines assessed by municipal courts. “It’s a dual drag on individuals seeking to advance,” he said.
He said this impacts the economic mobility of low-income African Americans who disproportionately lose assets from debt collection suits. Economic mobility was a key concern in the Ferguson Commission report. Coming out of the Ferguson unrest, the St. Louis Regional Chamber for the first time added economic mobility to the metrics it uses to judge the region’s fiscal health.
Todd Swanstrom, a political science professor at University of Missouri-St. Louis, said that racial patterns in home foreclosures would make for a triple drag on the same low-income population. Comparing ProPublica’s map of debt collection judgments to maps of foreclosures in the St. Louis region, he said, “It’s déjà vu all over again.”
ProPublica did not argue that lenders or collectors are guilty of racial bias. Instead, they found that “generations of discrimination have left black families with grossly fewer resources to draw on when they come under financial pressure.”
Swanstrom seconded that. “With the lack of assets, people lead brittle lives,” he said. “A relatively small judgment can have a cumulative effect that is very problematic.”
But is there also racial bias at work? The lenders that seek collection interviewed by ProPublica, including the Metropolitan Sewer District, all said they don’t track their customers by race. But in the largely segregated St. Louis region, it’s not difficult to make an educated guess about someone’s race based on the address where their bill is sent.
Is there another way to investigate this data that could lead to criminal action against collectors? Kiel said he was not aware of such cases leading to criminal charges.
Karen Tokarz, professor of law at Washington University School of Law, said she talks to law students about the more unsavory elements of their profession where they may one day find employment, such as filing debt collection suits against low-income people.
“I tell students there is the law and there is justice, and there is a difference between the two,” Tokarz said. “It’s a harsh lesson to teach. It’s a harsh reality that is inescapable and that we have to come to terms with.”
Another harsh reality is the Republican super-majority in the Missouri Legislature. St. Louis Treasurer Tishaura O. Jones said that her tenure as state representative convinced her that legislative change on this issue will be difficult. “Our weak campaign ethics laws prevent us from passing payday lending reforms,” Jones said.
Wilson said that means change may need to bypass the Legislature. “We need a mobilization of people,” Wilson said. “We need people power. We need voter initiatives.”
ProPublica’s report included six suggestions for reform, which The American printed in its October 15 editorial. They are: lower how much can be taken from debtors’ wages, restrict how much can be taken from debtors’ bank accounts, provide clear notice to debtors about laws that protect them, limit attorney’s fees to reflect actual work on a suit, cut interest on judgments to reasonable level, and improve enrollment in programs to help low-income debtors.
One law that protect debtors is a statute of limitations on debt, but ProPublica found many collection actions are filed to collect debt after the statute of limitations has expired. Speaking from the audience, attorney Hope Whitehead said that consumers need to file class action suits against debt collectors who violate the statute of limitations.
Two attorneys who file debt collection suits also spoke up from the audience. Both insisted the only “color” important to debt collection is the color of the money owed. Pam Patton – who did indeed get her law degree from Washington University – files debt collection suits as a principal in the local firm Kramer and Frank.
“I’m getting the impression you’re saying we shouldn’t sue people in certain zip codes,” Patton said. “Are we supposed to say to people, ‘You don’t have to pay your bill’?”
