26 February 2016

Student Loans and the Power of Arrest

A week ago there was a blip in the news cycle about a man being arrested for an unpaid student loan dating back to 1987. You can read a typical report here. As usual, there was more to the story and you can read a nice summary from Forbes here.

As it turns out, Mr. Akers wasn't arrested for not paying his student loan. He wasn't even arrested for not responding to the lawsuit brought by the USDOE to collect the loan. (He defaulted on that.) He was arrested, instead, for not responding to an order of the US District Court to appear for an examination to testify about his assets that could be used to pay the judgment.

Back in my collection days in Milwaukee, we regularly used the process called a Supplemental Examination ("supp" for short) to get judgment debtors to tell us where they had (or were hiding) their assets. Sometimes we'd ask a debtor to take out his wallet and give us the cash he was carrying. One of my senior partners (who later became a judge) was observant enough to notice that a debtor walked with a bit of a limp and asked his to take off his shoe where it turned out he had stashed a $100 bill. Great fun, at least from my side of the table.

Of course, some folks knew what was coming and so simply failed to show up for the supp. This amounted to contempt of court because the court had ordered the judgment debtor to appear. Thus we would ask for the court to issue the writ of capias ad respondendum (commonly known simply as a capias) to the office of the Milwaukee County Sheriff.

As I recall, two deputies had the job of finding, arresting, and bringing in the recalcitrant judgment debtor. (One wonders what they had done to deserve such a bottom-of-the-totem-pole job.) Exercising the power of arrest usually worked to loosen up an otherwise hard-nosed judgment debtor, which is not to say, however, that it necessarily led to payment but it was part of the job.

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