An Idea to Limit Body Attachments

As many Credit Slips readers will know, so-called "body attachments" allow a creditor to haul a judgment debtor into state court if the debtor fails to respond to court summonses to answer questions about the debtor's financial affairs. It is a highly coercive tactic and was originally intended as a last resort against a recalcitrant debtor. Today, it is an overused tactic that intimidates debtors who often understand only that they have been arrested because they have an unpaid debt.

An AP article ran yesterday around Illinois about abuses in this state. The story recounts how a teaching assistant paid $600 after being arrested over a hospital bill she had been told was issued in error. Two weeks ago, I blogged about widespread errors and problems in the debt collection industry, so it is not difficult to imagine the story recounted in the article is an isolated one. Coercing ill-informed and poorly resourced debtors into paying debts they may not even owe is outrageous. Even readers who may not be particularly sympathetic to the plight of these debtors should question the use of taxpayer financed courts and law-enforcement systems to engage in expensive collection practices on small debts for the benefit of private creditors. These practices are not just a problem in Illinois but across the country.

At least in Illinois, some help may be on the way. A bill is moving through the Illinois legislature, with the support of Attorney General Lisa Madigan, to put some common-sense limits on the use of body attachments. The bill would require personal service, instead of mail service, of a summons before an arrest could occur, a very worthwhile idea in an industry where record-keeping problems seem rampant. The bill also would return any bail to the debtor (in most cases) instead of the creditor. Although the bill has cleared the Illinois House, the latest report says the bill has been postponed before the Senate Judiciary Committee. I hope that action has not dimmed its prospects for passage.

One of the things that annoys me in this story is the corruption of a useful tool for against extremely recalcitrant debtors. When I was in private practice, I remember trying to enforce a judgment in a commercial case against a debtor who had lied about his assets in entering into the transaction that was the subject of the case. The assets he did have were concealed around the country. He answered our interrogatories about his assets because, after a lengthy court proceeding, he finally had no other choice. WIthout the coercive power of the state and the courts, I don't think we would have been able to get any information out of him and collect the small amount of money we did get for our client.

The root of the current problem stems from the fact that the costs are borne primarily by taxpayers and the benefits fall upon private creditors. The system won't really work until these incentives are more aligned. Right now, it makes financial sense for creditors to ask a court and a sheriff to arrest a debtor over a $200 unpaid bill in a consumer transaction. A rule requiring a creditor to pay a substantial fee (maybe $1,000?) before a body attachment could occur might help a lot. And, it would be important that the creditor could not pass along the fee to the debtor as a cost of collection. Such a fee would help ensure that body attachments were again only a measure of last resort, reserved for cases with only the most recalcitrant debtors ignoring court orders and with debts in an amount that justify the expense.