Debt Shaming

When people are swallowed under a mountain of debt they cannot repay, they already feel shame, regardless of how that debt was incurred. To have others publicly shame them only adds insult to injury. It surely doesn't solve anything or make them miraculously find the money to pay everything off.

The U.S. household debt in 2016 sits at $12.25 trillion, where the average family owes over $90,000. Credit market debt to disposable income in Canada has risen 164.4 percent. That means for every dollar earned, Canadians owe $1.64.

The U.S. Department of Education has said that of the students who entered college in 2006, at least 59% didn't finish their degree within six years, and only one in three students graduate from community college. Student loan debt in the United States is at $1.2 trillion among 43 million with an average debt load of $37,172 per student. In Canada, the debt load is $28,000. You have to be out of school for at least seven years before a bankruptcy court will consider your student loan for discharge. Maybe five years if you can prove undue hardship. Hmm. For the average personal bankruptcy, doesn't financial hardship CAUSE people to file for bankruptcy? The bar is set pretty high to get this debt discharged. It also does not fall under the statute of limitations that other debt does.

The student loan business is a multi-trillion dollar industry that grows by more than $2,726 every second. Students spend the rest of their lives in wallowing debt before they can start their career. College tuition costs range $40,000 to $100,000, all for the sake of a degree, a degree that, may or may not be compatible with the real job market.

Since the 2008 recession, 50 percent of the job losses affected those aged 15 to 24. While there has been some recovery, for the most part, low wages, underemployment, and inability to save are just a handful of contributors to why someone cannot pay their debt.

So when Pulitzer Prize-nominated author Lee Siegel suggests that students who cannot pay back their loans should choose life rather than spend a lifetime of stress and hardship swallowed in oppressive student loan debt, the people with good paying jobs and careers have sharpened their pitchforks.

It is awkward when people openly debt shame others for defaulting on student or household loans.

Debt shaming does not cure or prevent debt. It is easy to judge others for their circumstances, even if they did it to themselves through bad decision making. To the people doing the finger pointing, imagine for a moment:

• if you didn't have your life together
• if you were all of a sudden laid up in the hospital without benefits or the ability to work
• if your husband just left you with three kids and all of the shared debt after he cleaned out your joint bank account
• if you were working three part-time jobs and still had to decide whether or not to buy food or pay utilities this month
• if you were flying high with everything going for you: a great income, job or business, and all of a sudden, there is nothing (that is what happened in 2008 and what happens when a single entrepreneur gets injured or sick)
• if the industry you have spent your lifetime building no longer exists in the new economy
• and yes, if you made some stupid-ass decisions that created this mess

If you don't have Mommy and Daddy or friends available or willing to bail you out and you can't find a good-paying job that will lift you up, it is all but impossible to clear off your debt. Until you experience what a good percentage of your friends and family and fellow North Americans are experiencing, then you have no room to judge. There is the extreme rare example of someone who deliberately abuses the credit system and without conscious leaves a trail of debt, only to do it again. For everyone of those people, there 95 percent more who have found themselves in over their head or fate has dealt them a lousy card.

When You Truly Can't Repay A Debt, Know Your Rights

You're one of the millions who were affected by the 2009/2010 economic fallout that suffocated the United States, and was felt by some industries in Canada. Then Canada spiraled into a recession.

Because things were great just prior to the downfall, your business was riding high. You had credit at your fingertips and things looked pretty rosy. Then all of a sudden, the shit hit the fan and you either lost your business or your job. Saddled with debt you were able to manage with the previous income, you now have no way to pay it back.

If you're over 50, well, you know the drill. Finding work that resumed the same kind of income you had has been sketchy. Maybe you found some piecemeal jobs to put food on the table and pay rent, but with very little left over to manage your bills. All your bills have gone to collections.

Some of your collectors were sympathetic to your plight, so even if you could only pay $25 every other month, it was something and it showed you were trying. Others were relentless to the point of abuse -- and some may have broken the law.

Maybe you already had a bankruptcy under your belt from decades prior and you don't have the money now to pay the larger fees required to file a second one.

No matter how hard you work to try and find the income, after downsizing, borrowing more, you can't make it work. Your only option is to ignore the debt. The collection calls continue and so does the abuse.

Years pass. Maybe you've moved or your house was foreclosed. Either way, you've had a break from the constant reminder. The calls have stopped. Then all of a sudden, a there is a knock at the door, or you learn that a bailiff wants to serve you a judgement order on a debt that is over two years old.

There is a statute of limitations

Check your province or state. In Alberta, Ontario, British Columbia, and Saskatchewan, there is a two-year statute of limitations. That means creditors are prohibited from legally suing you for unsecured debt.

Where some people screw this up is when they acknowledge the debt in writing, such as an emailed response to a creditor who decides to hound you electronically. The statute of limitations is in effect right after the last payment or acknowledgement of the debt. So if someone approaches you after two years or however long the limitation is in your area: shut up. Don't respond. Don't acknowledge. If they come to your door, don't accept the paperwork, don't even acknowledge your name. Bid them good day and shut the door.

They are not able to collect the old debt from you, even if you now have the money to pay it. Yes, it is up to the debtor to remove any of rotten credit from your report. But face it. Your credit is bad whether you pay it or not. Paying it doesn't make it miraculously disappear from your credit report.

If it seems that your debt has resurfaced and the collection process has started all over again, after the two years have expired, that probably means your debtor has illegally sold your debt to a third-party debtor.

When your debt gets to the collection stage, most states and provinces have similar legislation as to the personal conduct of a collector. In today's digital world, your debtor may even take to extremes and troll your social media accounts, publicly disclose your debt, and bully you. This is illegal.

Know your rights.