Local Governments and Debt Collection Practices

Can local governments play a role in stopping harmful debt collection practices to help lower income families? According to a recent article in American Banker, correcting some of the present problems with the debt-collection system in the U.S. may involve local governments. More specifically, according to the article, “consumer advocates are urging local governments and courts to improve their debt-collection systems to take into account the ability of low-income households to pay fines or court costs related to traffic violations or other infractions.”
While certain fines are unlikely on their own to lead a family to seek protection by filing for consumer bankruptcy, even small debts can add up quickly. If local governments could find a way to account for the financial difficulties faced by lower income families when assessing certain fines and fees, more families may be able to deal with their debts. In the event that debt does become too difficult to manage, an Oak Park bankruptcy attorney can help with options.
Civil Fines and Fees Affect Non-White and Low-Income Families Disproportionately
Are government debt-collection practices harming non-white and low-income individuals in the Chicago area? The article cites a recent report that argues current government debt-collection practices are indeed harmful, and that they “are contributing to downward spirals for low-income communities and communities of color.” Many individuals who are within these communities are “more likely than others to accumulate unpaid debts, such as vehicle-related tickets and video tolls.”
That research was conducted in four different states: Illinois, California, Maryland, and North Carolina. In Chicagoland specifically, researchers determined that many residents of the city have become trapped in a “cycle of debt” due to current collection practices. The report was authored in part by the Woodstock Institute in Chicago, which is a nonprofit organization working to advance economic security and community prosperity in the city. Not only do individuals from communities of color and low-income areas get more traffic tickets and citations that people who come from different communities, but those fines and fees are more likely to lead to unmanageable debt.
How Local Government in Illinois can Help to Prevent a Cycle of Debt
What can local governments do to help prevent this cycle of debt and, perhaps, to help families manage their debts in a productive way? Rather than piling on ticket after ticket, the article suggests that, for example, the city government in Chicago could “develop ability-to-pay programs that evaluate an individual’s financial situation to determine the proper amount of fine or fee.” In other words, not everyone would pay the same amount for a civil fine or fee, but instead would be responsible for an amount tied directly to that person’s income and assets.
While local governments may not have all the answers, they can at least take steps to avoid making financial circumstances worse for lower income families in Chicagoland.
Learn More from an Oak Park Bankruptcy Attorney
Even though bankruptcy might seem daunting, it could be the best choice for you if you are struggling to repay significant amounts of debt. An experienced bankruptcy attorney in Oak Park can discuss your options with you today. Contact the Emerson Law Firm to learn more about how we help individuals and families in the Chicago area.
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