Ending Perpetual Debts

51 Pages Posted: 19 Apr 2018 Last revised: 9 May 2018

See all articles by Dalié Jiménez

Dalié Jiménez

University of California, Irvine School of Law; University of Connecticut School of Law; Harvard Law School - Center on the Legal Profession

Date Written: December 1, 2017

Abstract

Consumer debts in the United States can effectively live (and grow) forever: most statutes of limitations do not extinguish them; they can morph into relatives’ obligations after the debtor’s death; and they sometimes rise from the grave even after they have been paid. All the while, interest and fees accrue. There is one sure way to extinguish most debts, however, and that is by filing bankruptcy. This Article explores the practical, philosophical, and economic effects of the current system. It proposes a form of “automatic bankruptcy” for consumer debts: a federal discharge that, by operation of law, would extinguish debts (roughly) seven years after a default, or seven years after a judgment. The Article explores additional features of this proposal including ones designed to ensure it is self-executing, and others that mirror features of the Fair Credit Reporting Act and the discharge provisions of the Bankruptcy Code.

Keywords: consumer debts, bankruptcy, garnishment, debt collection, credit reporting, FDCPA, FCRA, zombie debts

JEL Classification: K12, K35, K41, K42

Suggested Citation

Jiménez, Dalié, Ending Perpetual Debts (December 1, 2017). Houston Law Review, Vol. 55, No. 3, 2018; UC Irvine School of Law Research Paper No. 2018-35. Available at SSRN: https://ssrn.com/abstract=3152256

Dalié Jiménez (Contact Author)

University of California, Irvine School of Law ( email )

401 E. Peltason Dr.
Ste. 1000
Irvine, CA 92697-1000
United States

HOME PAGE: http://www.law.uci.edu/faculty/full-time/jimenez/

University of Connecticut School of Law ( email )

65 Elizabeth Street
Hartford, CT 06105
United States
860-570-5114 (Phone)

HOME PAGE: http://www.dalie.org

Harvard Law School - Center on the Legal Profession ( email )

1585 Massachusetts Avenue
Wasserstein Hall, Suite 5018
Cambridge, MA 02138
United States

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