Monthly Archives: April 2012

 

 

Recently I read an article regarding a woman who ended up in jail because she did not pay her medical bills. At first glance my thought was, “Here in America?” I thought debtors’ prisons were illegal. After my initial shock, I picked myself off the floor, took a quick shot of Jack and read further. While it is true that an Illinois woman was sent to jail, and that she had indeed not paid her medical bills, that is as far as the truth went. The fact was that she had violated a court order to appear at a hearing on a collection lawsuit. That is what caused her arrest, not the outstanding debt.

Like most media, the article was designed to instill fear into the general public. Pay your debts or go to jail!!!!  The article should have read, “If a Judge orders you to do something, you better do it! Or go to jail” As I continued reading, the article sounded as if people were being jailed for failure to pay their debts. You really had to read between the lines to get at the truth. At best, I found the article to be “misleading”.

But I guess behind all the smoke and mirrors, there is some truth to it. The fact is, if she had paid her medical debt in the first place then there would not have been court action. But another fact lies not far behind that; medical creditors are very…very…very aggressive. In fact, these days, most collection agencies have crossed the line when trying to collect. But I have already written many blogs about these cases. My concern now is if there was a real thinking by our government to return to the days of debtors’ prisons.

So first, a little history of………Debtors’ Prisons

“Debt Bondage” as it was known in ancient Mediterranean societies, was commonplace around 600 B.C. It became so common in fact that there ended up being more slaves than free people. Eventually the practice was banned and the people were freed to return to their homes.

Early in the Roman Empire, a person could actually use himself as collateral for a loan. This contract was know as a “Nexum” If the debt was not paid pursuant to the Nexum, the person would become the lender’s slave. This practice was also eventually outlawed in 326 B.C.

During the Middle Ages, if a debt was not paid a person would be put into prison until the family paid off the debt. Many times both men and women would be locked into a single cell. The conditions were deplorable. Many people died of infections or starvation. If you were one of the  lucky few, the creditor would remove you from prison and enslave you until you worked off the debt.

In Great Britain (and later the United Kingdom), debtors’ prisons were commonplace, but they varied as to the severity. For a little money, as an example, inmates were allowed visitors and even to conduct business. Sometimes prisoners were allowed to live outside the prison in nearby housing. Sometimes a prisoner could even get married while in prison in a practice known as “Fleet Marriages”. While these conditions may not have been as horrifying as the prisons of the Middle Ages, they were still very harsh and difficult. Debtors were sent to prisons and housed with vicious criminals and often confined to a single cell. Many prisons actually charged rent for the cells the prisoners lived in. And even when the original debt had been paid, the prisoners were still kept locked up until they paid their back “rent”. This cycle was so bad that many people ended up with life sentences. Many simply gave up. Suicide was a common occurrence.

Charles Dickens often wrote about conditions of these prisons, as his own father was sent to prison for failure to pay a debt.

But, like so many societies before it, the practice of imprisonment for debt was eventually outlawed by the Debtors’ Act of 1869.

The use of debtors’ prisons in the United States ended in 1833. And while most states followed the federal abolishment, almost a third of states still have imprisonment for unpaid debts on their books. But it is a long forgotten and mostly unused statute.

While debtors’ prisons still existed in the United States, several famous people were actually imprisoned for unpaid debts, including two of the original signors of the Declaration of Independence. That’s right! James Wilson and Robert Morris both signed the Declaration of Independence and both were eventually imprisoned for not paying their debts! Our founding fathers sure were rebels! And how about Light-Horse Harry Lee? Who’s that you ask. Well, he is the father of General Robert E. Lee! Imprisoned from 1808 to 1809.

There are recorded cases that show people imprisoned in the United States, for less than sixty cents worth of debt!!!

In Greece, debtors’ prisons were common until January 2008 when laws enacted declared these types of prisons as unconstitutional. Debts owed to the Government however are a different matter.

In France, laws outlawing debtors’ prisons were enacted in 1976.

In Germany, United Arab Emirates and China, debtors’ prisons are still active. And in many cases in China and United Arab Emirates, they are life sentences!

Currently in the United States, there are six states that still allow debt collectors to seek arrest warrants if all other collection methods have failed. However, whether or not a person is actually prosecuted depends on the state, county and township. Usually in these instances, the debtor is allowed to provide evidence of their financial situation to the court and if deemed appropriate the debt is considered “on hold” until the financial situation of the debtor improves.

Most states, thankfully, have laws on the books that expressly prohibit jailing people over their debts.

Fortunately, we live in a more civilized world than in the past. Prisons today, while still tough and brutal, pale in comparison to the barbarity of our past. And if, in the worst possible scenario, you find yourself faced with the possibility of jail-time over an unpaid debt, don’t forget three simple words that could save you;   Chapter Seven Bankruptcy

For more information about bankruptcy and how we can help solve your debt problems, please visit:  http://www.cantpay.com

Find us at: http://www.facebook.com/cantpay

 

 

 

 

 


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Ready to retire? I know I am. My wife and I recently sat down and went over our finances. And after lots of creative money management techniques, we found that we could plan to retire as soon as the year 2097.  (That is, if our great-great grandchildren decide to help us out financially).

But, for the lucky few of you that are ready to retire, be careful. Retirement is a land filled with scary unknowns, and pirates ready to steal your booty.  And, if you are not careful you can easily outlive your money and then it’s back to work you go. 

Back in the early part of the 20th century, it was commonplace to continue working until you were disabled or too sick to work. Retirement was a thing for the rich.  And even if you were planning to retire, you only needed to cover 5-10 years, but thanks to advances in medicine we live considerably longer and now need to plan for a retirement of 20 or more years.

Don’t count on Social Security saving the day either.  From the sounds of things, the Social Security Administration will be out of money within the next 10 years. So scrape and save. Put as much money as you can into your 401(k) and do not borrow against it or cash it out.  As I stated earlier, I think my 401(k) will be enough for me to retire on in about 95 years at the rate I am contributing.  But I digress.

There are several things to be aware of as you begin your retirement years. Most are common sense, but it is sometimes easier to prepare for it rather than trying to deal with it at the moment.  And even if you are not planning to retire in the immediate future, it is not too early to consider your options and the potential dangers that are out there.

Long-term Health Care Insurance

It is a sad reality that many of us will end up at a “Heath Care” facility. And if you have assets, such as a house or retirement account, you will not get financial aid (if it is still available at that time). Even at the cheap end, plan on several thousands of dollars per month for this kind of care. And like most things, there is an insurance to cover it. It may not be for everyone, and it is certainly not a very happy thing to have to consider, but it must be considered. Speak to an insurance agent and see if it is right for you.

Life Insurance

Somewhere along the line, life insurance has changed. Rather than helping the surviving spouse or family with their financial needs after your passing, it now being used as an inheritance for your children and grand-children. There is nothing inherently wrong with that. But be careful. I have heard of people paying over $7,000 per year into their insurance with the promise of a $50,000 benefit upon your passing. If you took that $7,000 per year and instead put it into a money market account, after 10 years you would have over $70,000 plus the accumulated interest to pass on to your children. Of course tax laws may be different from life insurance proceeds to inheritances, so talk to a tax professional and do the math. Figure out your best options before signing the life insurance paperwork.

Annuities

Okay, I must admit, I do not fully understand the in’s and out’s of annuities. While they do provide some sort of tax shelters for things like death benefits, they come chock full of fees. Speak to a financial advisor to see what is best for you. A “fee-only” investment advisor may be the best way to go as he only does one thing, financial advice. You can pay him as you go rather than staying on a retainer.

Reverse Mortgages

On the surface, this sounds like a great idea. But remember what happened back in 2006 and 2007?  Lots of people began using their house as there own personal piggy bank. And before they knew what was happening, the house was “underwater” and they could no longer afford the monthly payment. Reverse mortgages are a little different in that you do not need to payback the loan until your death, but consider the kiddies. They really want your house. Or the money it represents anyway. But if that is not your concern, then a reverse mortgage may be right for you. But as before, be careful, you can start too early to begin the process of a reverse mortgage. It is a highly regulated field, and you will be required to take counseling before you are approved. You may want to do some research before you commit yourself. Check the AARP’s website, or the Department of Housing and Urban Development. Both of these websites can offer information regarding reverse mortgage and their potential hazards.

Reverse Pension Plans.

What’s that you say. Reverse Pension Plans? As I stated before, there are a lot of people ready to take your money, especially when you retire. From what little I have heard about these types of plan, the only word I can think of to say is “RUN”.  Run far, and run fast. Do not consider this type of scam. The old adage is “If it sounds to good to be true, it probably is”.  Scams like this seem to run rampant in the retirement community. Which brings me to my final and probably most important thought…..

Phone scams/Internet scams

I recently spoke to an older couple considering filing for bankruptcy protection. What brought them to it? Nigerians! If you don’t know what I am talking about, this might sound rather silly. But it is true. Commonly referred to as “Nigerian scam”, as most of these scams seem to originate out of Nigeria, these scams sound relatively realistic (I guess) but once you know it for what it is, it is easy to recognize.  It will go something like this;  “Greetings…. My name is …….I work at a large banking institution here at……a client of mine recently passed away leaving $12,000,000,000,000.0 and I need a partner to help me get it out of my country…..I need your bank account number to transfer the money to………you send back 75% of the money to me and you keep the remaining 25%….”  Really? This is almost too ridiculous to believe, but many many people fall for it and end up giving their bank account information to a complete stranger only to find their accounts empty the next day. 

Beware unsolicited calls or emails. If you get an email from paypal stating your password needs to be verified, DO NOT click on the link. Log out and go directly to paypal to verify your status.

If you get an unsolicited call from someone do not be afraid to ask questions. Who are you calling on behalf of? What is your return phone number so that I can call you back? What is your name and/or ID number. Before I give ANY personal information to a caller I will get their number and then call them back directly. 9 out of 10 times it is a wrong number or goes to some switchboard that has nothing to do with the company they said they were from. BE CAREFUL !!

Most of this is common sense. But common sense can sometimes fade with the promise of money or a concern about your money. Think things through, slowly and carefully, never let anyone rush you to make a decision. Even if you are interested in a product, never sign or do anything on the spot. Sleep on it. You will see it a little more clearly the next day and it will probably not seem as important as it did the day before.

For more information about bankruptcy and how we can help solve your debt problems, please visit:          http://www.cantpay.com

Find us at: http://www.facebook.com/cantpay

 

 


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