[-empyre-] Debt Culture--types of debt

Annie McClanahan anniejmcclanahan at gmail.com
Thu Nov 22 08:14:21 EST 2012


Hi Deena et. al.--

I'm kind of curious about this idea that bankruptcy is perceived as a moral
failure: I wonder, I guess, whether that's really so true anymore. For one
thing, relatively open bankruptcy laws are a very American tradition; for
another, tho, I wonder whether the credit boom (during which, as you
probably all remember, the only way to be deemed worthy of credit was to be
in a ton of debt!) didn't allow us to dispense once and for all with the
ideological association of debt with shame and guilt. Certainly we still
have a sense that it's "irresponsible" not to pay one's debts, but I wonder
about the language of *morality* and whether it's still operative. I'm
honestly still puzzling over this, so I welcome others' thoughts.

Re: student debt, that's entirely right. It used to be the case that
student loans were seen as "good debt": federal loans have lower interest
rates, typically, than other kinds of debt; you can get forbearance or
deferment more easily; student loans don't show up on credit reports in the
same way etc. But as you observe, once the law changed in the late 1990s
and student debt became the only form of debt besides back taxes and
criminal penalties not dischargable by bankruptcy, student debt started
looking a lot less good. The reason why Rolling Jubilee can't buy up
student loans in the same way they can buy unenforceable medical debt is
because the collection rates on unpaid student loans are really high: that
is, collection agencies typically collect about 30 cents on the dollar when
they're going after defaulting credit card debtors, which means they're
willing to sell it pretty cheap, but the federal student loan collection
rate is more than 70 cents on the dollar. That's because the state has
extraordinary powers they can use without having to go through the courts
first (as a private bank would)--they can garnish not only wages but SS
payments, disability, vet benefits; in 25 or so states they can actually
take away your professional certification/degree--and they've extended
those powers to the private loan collection agencies they contract with.
Student loans show the continued role of the state as capitalism's
enforcer/manager of last resort better than almost anything else, I think.
(And it's also worth mentioning that the other reason it's not "good debt"
nowadays is that it in no way guarantees decent employment, or any
employment at all--so much for that "investment in your future.")

Because the state is so incredibly powerful, any student debt mass
default/debt strike movement would have to set up really powerful
structures for mutual aid. That's why I find the Student Debtor's Pledge (
http://www.occupystudentdebtcampaign.org/student-pledge/) in which signers
pledge to default once 1 million others have similarly promised a much more
powerful organizing model than the Rolling Jubilee (which uses a
philanthropic system to collectively buy back non-secured loans,
anonymously, but in no way threatens the debt system as a whole and only
asks folks to give money, not to take the larger risks that any
transformative movement will require). It's interesting to me too how the
"Pledge" actually relies on, even as it subverts, the form and language of
the credit contract: rather than a promise to pay one's creditor, tho, it's
a promise not to pay, and to bond with other debtors. It's this last point
that I think might begin to answer some of the questions I raised in my
first post concerning how we can hold onto mutuality and interdependence
while refusing the language of indebtedness.

Annie



On Tue, Nov 20, 2012 at 5:25 PM, Deena Larsen <deenalarsen at yahoo.com> wrote:

> I wonder how we perceive different types of debt. Although medical bills
> cause over 60% of the bankruptcies in the US, we perceive bankruptcy as a
> moral and financial failure.
>
> Attempts to take medical debt off of credit reports have so far failed. So
> this would indicate that we do not differentiate between medical debt and
> "consumer" debt.
>
> Student loan debts can not be forgiven in bankruptcy, and now there are
> reports of parents who cosigned on student loan debts and who are being
> held responsible for those debts after the children die.  So this would
> indicate that consumer debt is somehow better than an education debt...
>
> Deena Larsen
> http://www.deenalarsen.net
>
> _______________________________________________
> empyre forum
> empyre at lists.cofa.unsw.edu.au
> http://www.subtle.net/empyre
>
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