THE HARRIS COLUMN
GETTING THE TAXPAYERS TO PAY COLLECTION COSTS FOR CREDITORS By SAMUEL J. HARRIS
Putnam Pit columnist
Oh, those poor loan sharks! Doesn't it just make you cry when people who promise to repay debts stiff them. I know I cry -- crocodile tears, that is!
Take a look at this law:
Tennessee Code Annotated39-14-116. Hindering secured creditors.
(a) A person who claims ownership of or interest in any property which is the subject of a security interest, security agreement, deed of trust, mortgage, attachment, judgment or other statutory or equitable lien commits an offense who, with intent to hinder enforcement of that interest or lien, destroys, removes, conceals, encumbers, transfers, or otherwise harms or reduces the value of the property.
(b) For purposes of this section:
(1) "Remove" means transport, without the effective consent of the secured party, from the state or county in which the property was located when the security interest or lien attached; and
(2) "Security interest" means an interest in personal property or fixtures that secures payment or performance of an obligation.
(c)An offense under this section is a Class E felony.
This criminal statute is abused far more than it is used for the public's benefit. A person who has entered into a credit transaction giving collateral as consideration for the extension of credit is often forced into criminal court where the cost of fighting the charge, especially to those without means, outweighs the principle of clearing one's name. On its face the prosecutor (usually the creditor) must prove INTENT, but the accused is assumed guilty -- why else would they be in the courtroom? Working backward from the assumed guilt, one can presume the mens rea (a Latin and therefore, I guess, a legal term for having the requisite criminal) of the poor debtor as having been intentional in the destruction, removal, concealment, encumbrance, transfer - or whatever -- of the collateral.
Creditors use this statute to save collection costs for their business expenses. Why pay for your own attorney when the taxpayers will pay for your litigation collection? The District Attorney's office isn't busy, so they won't mind. In fact, because of the overbearing position of the State and the creditor against the lone, often poor accused, the State can pump up its case statistics and the creditor has what would otherwise be an illegal collection method. The threat of jail or the threat of criminal litigation expenses can bring a debtor to his or her knees very quickly. In civil general sessions the matter of who owes what can be resolved in one or two visits, but final resolution of the criminal charges can take much longer. Creditors win, and the debtor can not even file a counterclaim in criminal court.
A debtor who intentionally destroys or hides collateral out of anger over having to pay a legitimate debt should be held accountable. To do otherwise would undermine the sophisticated credit society of the western world. The downfall of our credit-driven economic system would not be similar to the "Asian flu," it would be more akin to "American economic plague." For a person to burn down a home after receiving a foreclosure notice or someone to sell a piece of jewelry knowing it is collateral with the intentions of never paying the creditor, criminal prosecution is probably appropriate.
However, when title pawn shops, charging interest rates that would make a loanshark blush, have no basis in fact that active efforts to hinder their security interest with criminal intent are being undertaken, routinely charge otherwise good people with felonies something is wrong with the system. Why pay for your own attorney when the criminal justice system can bring pressure that no civil attorney can in small collection matters.
If you loan money whether it is to Donald Trump (who had creditor problems at one time) or to someone obviously living week to week, you take the risk of nonpayment. There exists a poverty industry that preys on the "week to week" crowd, sucking every last dollar from the poor. No, I'm talking about someone other than the criminal court system and its unsatiated demands for payment of court costs. The check-cashing places, the finance companies, the rent to own shops (absolutely the most expensive way to buy anything) and the title pawn shops. Some of these businesses charge an annual percentage rate in excess of 250% (no typo and no decimal point)!!!!!
[Note, my columnist skills are increasing because I just "discovered" the exclamation point.]
I have no sympathy when these places don't get paid. They have forced thousands into bankruptcy thus denying worthier creditors payment for legitimate services and goods.
So when these places arbitrarily use criminal law to squeeze the poor, clogging up the courts and jails, costing the taxpayers, costing other creditors, keeping the working person off their jobs so they can pay several visits to the court where courtesy toward the accused in some counties is an unheard of commodity, I get a little pissed. I also get happy because I guess lawyers can maintain job security. These wrongdoers often violate the Tennessee Consumer Protection Act and federal consumer laws, where applicable.
Your thoughts are welcome. Continually seeking improvement is the logical path to perfection. My columns are no different from the institutions and laws I criticize. It is the rejection of any attempt to improve something that constitutes stupidity, laziness, and immorality.
[However, I welcome everyone's opinion except Geoff Davidian's].
Samuel J. Harris
Return to The Putnam Pit