Harsh Creditor Remedies and the Role of the Redeemer

Abstract

The concept of the judgment-proof or collection-proof debtor is fundamental to our understanding of civil law and of what distinguishes it from criminal law. But when civil creditors can threaten unduly harsh or cruel debt collection measures (whether legally or not), they extend their reach into the pockets of those whom this Article calls “redeemers,” third parties with a familial or quasi-familial relationship to civil debtors who have reason to pay on their behalf. This Article examines four such measures—imprisonment, homelessness, destitution, and deportation—remedies that sound like they come from another time and place, but which are threatened by some creditors in the United States today.

Such “remedies” are problematic because (among other reasons) they undermine a core pillar of civil law: that liability—absent a guarantee—is limited to the defendant. Because harsh creditor remedies can affect third-party redeemers, they also provide a classic example of an externality that justifies nonparentalistic intervention. We should think of this field not as “the law of debtors and creditors,” but as “the law of debtors, creditors, and redeemers.”

The role that redeemers play in debt collection law is one of many instances in which legal institutions display a myopic view of communities: redeemers too often stand outside the field of vision of courts and legislatures. Even so, this theory provides a powerful tool for explaining and reinforcing legal rules ranging from the law of unconscionability to exemption statutes to consumer protection. This Article also recommends several measures to cabin this “spillover” effect, including an argument that imprisonment for civil debt violates not only state bans on debtors’ prisons, but also the federal Due Process Clause (even after Dobbs).

Keywords: debtors' prisons, unconscionability, redeemer, redemption, dobbs, due process, imprisonment for debt, poverty, contracts