Credit Card Usurers

While my mind is on medieval morality how about a thought or two on the subject of usury?

Mortgage and credit card debt have received a lot of notice recently. The average American credit card debt is $8,000. This is apparently both better and worse than it sounds. Less than half of American households owe anything at all. The bad news is that more than a third with debts over $10,000 have household incomes income under $50,000 and 13% who owe that much have household incomes under $30,000. Same old shaft for the poor.

I have talked to clients for years with horrible debt. I will have a kid come who was in college a couple of years and he somehow has gotten credit cards and run up that $30,000. Plenty of times I have had good, respectable middle class types--school teachers, government clerks, etc. come in with amazing and oppressive debts, all from credit cards.

I don't keep up with the bankruptcy law or file bankruptcies, but my friends who do discuss the increasing difficulty of discharging credit card debt with bankruptcy.

Generally, I have thought bankruptcy is a bad idea. Most people with a lot of debt and no assets don't need it, because there is nothing they can do about it anyway. Those with a little debt a good assets, don't need it either, because usually they can sell some stuff and get out of trouble.

Bankruptcy can be onerous because of the supervision by the trustee and it is easy to get into trouble. False statements in bankruptcy or actions to circumvent the bankruptcy court can be criminally prosecuted by the feds and it is easy to be perceived of having made false statements or taken actions to circumvent. I heard a horror story recently about a woman who was prosecuted after her teenage daughter had used a credit card to make purchases at Victoria Secret that somehow were viewed as unauthorized expenditures circumventing the bankruptcy orders.

I had a client who had three or four worthless old junked cars in his yard that he cannibalized for parts. He was charged with fraud when the FBI found the cars in his name and decided he was hiding assets.

What is the moral obligation to pay those debts with double digit interest rates? Generally, I think it is far lower than most of the other things the client should be doing with the money--like educating and clothing his children.

Credit card companies of course trick their customers. Hidden charges and unilateral interest rate increases often come from fine print and requirements the customer must reject an offer--usually ignored--within a certain time in writing.

Why aren't credit card companies and their officers thrown in jail for this crime of usury? Families are destroyed, futures are ruined by their tricks and lies. Surely, they are a greater social menace than, say, drug dealers or shoplifters.

Why isn't the credit card debt viewed as a debt by a slave to a slave owner or drug addict to pusher would be--void because contrary to public policy?

When I started practicing law, as I recall, Texas prohibited loans for more than 6%. Anything else could be challenged and not paid. Of course a little thing like the Texas Constitution was no match for the power of the lenders and that prohibition is long since preempted by federal law.

Roman Catholicism during the period after 1050 AD declared usury a sin prohibited by the Old and New Testaments. Any interest rate greater than zero was declared usurious. Usurers were refused confession, absolution, Christian burial and their wills were invalid.

Loan sharks (not within the credit card club) get prison terms and in some Islamic countries, caning.

Unfortunately, if you have a big enough lobby, the crime ceases to be a crime.