4 Legal Loopholes That Screw You When You're Poor

What The Shit Is Going On?

If you think that being hassled about debt from 14 years ago is ridiculous, that's because it is. Every state in the U.S. has a statute of limitations on debt, ranging from three to 10 years, counted from the day you stop making payments. After that time has passed, collection agencies can't sue for the debt or do much more than shake their fists at you about it. Much like your childhood hopes and dreams, these old debts still technically exist, but they have almost no effect in the real world.

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"I'm a doctor, yes, but I'm not a ballerina doctor."

In that case, why do collectors call about it? Because they can. In many states, time-barred debt collection is completely legal, and companies can even decline to answer when they're asked if a debt has expired, perhaps by yelling, "LOOK OVER YOUR SHOULDER IT'S A REAL-LIFE MANTICORE," and then changing the subject. Of course, do some research after the collections agency calls you and you'll soon find that the collectors are effectively as impotent as a lonely man without his Peter Parker doll. But think about it: What kind of person would immediately trust that a person yelling at them about an old debt might actually have a right to that debt?

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"But that Peter Parker doll broke years ago!"

See, most time-barred debt collectors are happy to call around and find a hundred bitter, cynical people who do nothing but make farting noises into the phone at them and then take the required actions to get the collectors off their backs. It doesn't matter, because eventually they'll come across an Aunt Mildred who agrees to do the right thing and make a good faith payment. And because the statute of limitations starts from the last time you made a payment on the debt, this single payment can reset the clock entirely, meaning poor Mildred is back on the hook for the full amount and will be forced to severely limit her weekly prune-juice budget for years to come.

Turns out the mobile-home industry is shadier than the dark corner of your room where you keep your gooey spider-web collection. Almost half of all new mobile-homes in America are built and sold by the same company, Clayton Homes, which also runs the companies that provide over a third of the loans people use to buy those homes. This sneaky market dominance would be OK if Clayton was known chiefly for providing a free unicorn with every house, but instead they're famous for shit like allegedly lying about refinancing options and suddenly raising interest rates when it's too late for buyers to back out.

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They also charge customers $100 for every one of those little lawn flamingos they want to put up.

As if that stuff wasn't evil enough, mobile-home lenders are also notorious for the type of loans they give out. If you buy a house the normal way, by taking out a mortgage, you're protected by state and federal laws that stop banks from foreclosing on you for at least 120 days, and often much longer. But two-thirds of mobile-home owners end up with personal-property loans, the same type of loan you might take out to buy a car or huge mechanical dildo covered with spider-web motifs. Personal property loans don't come with the protections that mortgages do, which means that mobile-home residents can get their houses repossessed after only a month or two of missed payments.

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They don't take the lawn flamingos, though. They're not monsters.

How are mobile-home companies getting away with this stuff? It helps that mobile-home residents tend to be poorer and less educated than the average American, and thus way more vulnerable to exploitation. But I guess it serves them right for not being born into a wealthier family with better access to good schools, the fucking losers.

And it gets better. Most of the time, owing money to a private company will do nothing but fuck your credit rating. Dan's Marvel Doll Repair Store might still be calling you angrily about the bill you owe, but it's not like they can send you to jail. Private probation companies, on the other hand, are known for going to the court system and getting arrest warrants issued for the fees people owe them. It's like if Comcast was given the authority to round you up and arrest you for being late on your cable bill.

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Luckily, they'd never show up.

Twenty years later, you rise early to leave for your double-shift in the robot blood mines, still desperately trying to pay down your loan.

What The Shit Is Going On?

It wasn't always this way. Up until the '70s, student loans were dischargeable in bankruptcy, just like most other kinds of debt. Sure, you'd have a fucked-up credit rating as punishment for not paying, but at least your unwise choice to pursue a PhD thesis on why cats do that strange kneading thing with their paws wouldn't follow you around for your entire life. But in 1976, after media stories of greedy students racking up debt and then gleefully discharging it, Congress changed the rules. Student loans granted by the federal government now stick with you, even after bankruptcy. And while discharging debt unless you really, really have to is both unpleasant and a douchey thing to do, this meant that students owing federal loans would be less financially screwed if they'd just borrowed the money to buy a yacht instead.

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Tragically, these people were soon also replaced with yachting robots.

Eventually, some of the lenders who give out private student loans persuaded lawmakers to make those non-government, private student loans permanent as well. I'm sure they lobbied for this change purely because of their devotion to ethics in student-loan lending, rather than any selfish motive, but whatever the case, these private student loans now also stick around forever, unless you can prove that you can't pay because of "undue hardship." In practice, this means proving a severe disability that stops you from ever working again, so unless your degree was in Clifftop Lion Wrestling, it's probably not an option.

For loans provided by the federal government, the news is slightly better: If you make payments based on your income for a measly 25 years, any remaining debt will be forgiven. There's one catch, though: The IRS will then count that forgiven debt as income and tax you for it. It's kind of like forcing someone to sit through all four Michael Bay Transformers movies eight times in a row, and then punching them in the back of the head when they're finally allowed to leave the cinema. But hey, that's what you get for trying to better yourself without having ridiculous amounts of cash on hand to pay for college upfront, so just sit back and enjoy those robot balls.

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For more from C. Coville, check out 5 Bizarre YouTube Parody Songs That Shouldn't Exist and 5 Things Your Parents Did (They'd Be Arrested For Today).