Shirking Your Student Loan Shouldn't End in Handcuffs
A Houston man, Paul Aker, was arrested last week by U.S. marshals and hauled into federal court on charges that stemmed from his failure to pay a $1,500 student loan. How could this happen in a free country?
We’re used to thinking that what makes a civil case different from a criminal one is that you can’t go to jail. But that isn’t exactly true. If you fail to show up in court after you’ve been ordered to do so, the judge can issue a warrant for your arrest on contempt of court -- which is a crime. In the light of Aker’s case and the viral attention it received, it’s worth asking both why an arrest doesn’t happen more often and whether the system ought to be changed so that it can’t.
Some fairly complicated facts led to the arrest. The story begins with a 29-year-old student loan debt for $1,500 that Aker never paid. The Department of Education tries to collect such debts, and can even garnish your wages to do it. But when it doesn’t succeed, the department hands such uncollected debts to the Department of Justice. That’s what happened to Aker.
The Justice Department is busy, too. So it contracts with a private lawyer to sue you for the money you owe. Aker’s case was brought on behalf of the federal government by a Houston lawyer with a name -- Butch Cersonsky -- that couldn’t be improved upon even by Elmore Leonard, patron literary saint of debt collectors everywhere.
Back in 2006, Cersonsky filed a federal suit against Aker on behalf of the government. Ordinarily, a debt collection suit would be in state court. But because Aker owed money to the federal government, the federal court had jurisdiction. (You can see where the U.S. marshals are going to come in.)
When Aker didn’t show up to contest the case, the federal court issued a default judgment against him. That’s normal enough, and wouldn’t have gotten anyone arrested.
But the federal government, acting through Cersonsky, wasn’t done. It asked the court to order Aker to show up and to find Aker in contempt of court if he didn’t.
The decision to find Aker in contempt and then to issue a warrant for his arrest was within the court’s discretion. It’s unusual for a court to order the arrest of someone who hasn't shown up to contest a civil suit, but it can happen.
It’s thus technically correct to say that Aker wasn’t arrested for defaulting on his debt but for flouting a court order. But it’s also true that the arrest flowed directly from his debt default.
From Aker’s perspective, there was no obvious reason to think that the various orders issued were leading to an arrest. He knew the case against him was civil, not criminal.
Will the incident be repeated? Very possibly the answer is yes. There was nothing unusual about Aker’s case, except that a lot of deputy U.S. marshals showed up when he allegedly said he had a gun. Anyone who fails to show up after being ordered to appear in a student debt case could legally get the same treatment. A private lawyer who’s paid by the government for what he collects has every reason to scare more debtors into compliance with more arrests -- and the more public the better.
Should the law be changed to avoid such scenarios? In principle, it makes sense to give courts the authority to compel people to appear and to jail those guilty of contempt. In practice, however, in an ordinary civil debt case where default judgment has already been entered, it’s excessive for a court to order an arrest.
After all, on appearance, Aker was compelled to enter a payment plan. But what if he defaults on the plan, as he did on the debt in the first place? Is he to be rearrested? There’s no new remedy available to the government. Debtors’ prison no longer exists, happily. Given that the arrest accomplished little in practice, there’s no strong reason to allow such arrests to continue.
It would make sense for Congress to pass a law barring arrests for contempt on defaulted debt cases, and for states to follow suit. The loss to judicial authority would be incidental. The gain to liberty would be considerable.
Short of that, the Justice Department should tell its designated collection agent-lawyers not to use strong arm tactics in the name of we the people. A department rule to that effect might be sufficient. Failure to pay a debt shouldn’t lead you to jail, no matter what the route.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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