Debt, bankruptcy and the institutions that perpetuate them

How Chicago, a hospital and private companies make money off the poor

By Logan Jaffe

Happy First Friday of July, Illinois. We’ve got some updates and some stories we think you should read this week about debt, bankruptcy and profiting off the poor:

1. Our ongoing reporting on how Chicago’s vehicle ticketing policies harm black and low-income motorists helped spark a decision from a federal appeals court that may allow thousands of motorists every year to get their impounded cars and trucks back sooner than before.

The city of Chicago used to immediately return impounded vehicles to people who filed for Chapter 13 bankruptcy. But two years ago, it stopped doing so, sometimes holding onto the vehicles for months until motorists agreed to pay back more of what they owed in ticket debt during their bankruptcy payment plans. City lawyers had a number of justifications for holding onto the cars and trucks, including saying it was a matter of traffic safety. Lawyers for motorists argued that the city was trying to pressure them to pay and generate revenue.

A panel of the 7th U.S. Circuit Court of Appeals agreed with the motorists.

“We are persuaded that, on balance, this is an exercise of revenue collection more so than police power,” the judges wrote.

Basically, the court said that the city was just trying to make money from people who are already financially struggling, and that the policy violates one of the leading purposes of bankruptcy, which is to help get people back on their feet.

2. Earlier this month, ProPublica and MLK50 reported on a hospital in Memphis, Tennessee, that’s filed thousands of lawsuits against patients — and even its own employees — for unpaid medical bills. While Methodist Le Bonheur Healthcare isn’t the only hospital in Memphis or in the country that sues patients, Methodist also owns a collection agency, and the hospital’s aggressive collection practices stand out in a city where nearly 1 in 4 residents live below the poverty line. The hospital’s CEO has since promised a review of its policies and this week suspended its “court collection activities.”

3. ProPublica also reported this week on how electronic monitoring devices such as ankle bracelets are driving defendants into debt. Private companies charge defendants hundreds of dollars a month to wear the surveillance devices. If people can’t pay, they may end up behind bars. In Illinois, lawmakers recently passed a bill that would require the Illinois Department of Corrections and the Prisoner Review Board to collect data on how electronic monitoring devices are being used and post that information publicly.

This article was originally published by ProPublica Illinois.

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