Consumer Debt

A large fraction of South African consumers are highly leveraged, inadequately insured, and/or own little to no assets of value, which increases their exposure not only to idiosyncratic risk but also to severe indebtedness and/or default. This scenario can present negative ramifications that lead well beyond the confines of individual households. Thankfully, it can also be remedied by well-tailored legal debt relief mechanisms. This article reflects on the uncertainties surrounding the consumer debt relief framework of the National Credit Act in an attempt to show why it is not up to the challenge of providing meaningful relief to debt-distressed consumers. Ultimately, a comprehensive review of the current framework in favor of a discharge mechanism on simple, stated terms is proposed.

Microfinance programs targeting poor women are considered a ‘prudent’ first step for international financial institutions seeking to rebuild post conflict economies. IFIs continue to visibly support microfinance despite evidence and growing consensus that microfinance neither reduces poverty nor breaks the cycle of domestic violence. In the case of Timor-Leste, a feminist political economy approach reveals how microfinance engendered debt allows for the control, extraction, and accumulation of profits and resources by an elite class and exacerbates gender-based violence. Timorese elite classes have benefitted from microfinance during the Indonesian occupation and in today’s post-conflict regime. Extractive debt relations between elite classes and ordinary citizens are enabled by a gender order that is regulated by brideprice and characterized by gendered circuits of violence. Brideprice weds the exchange of women to the class system in which the (violent) control of women is paramount to retaining political power. Microfinance adds liquidity and high interest rates to the debt relations of brideprice helping to create the very conditions for poor women’s disempowerment in a fragile state. Thus, the success of microfinance is predicated on systems of gender inequality and gendered circuits of violence, debt, and the exchange of women

SPS IS A DEBT COLLECTOR CERTIFIED FOR PUBLICATION COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA. SPS LOSES ANOTHER FIGHT IN A CLASS ACTION LAWSUIT IN CALIFORNIA AS THE COURTS RECOGNIZE THE VIOLATION OF THE ROSENTHAL FAIR DEBT COLLECTION PRACTICES ACT ( RFDCPA ) INCLUDES AND STATES THAT ALL MORTGAGE SERVICING COMPANIES IN CALIFORNIA ARE DEBT COLLECTORS.

The paper analyses the norms on over-indebtedness (d.lgs. n. 14/2019), focusing on the means provided for the debtor to fully free himself from debts. In the new regulation, the achievement of the complete discharge of debts is strongly influenced by the behaviour of the debtor and the creditors both at the time of occurrence of the mandatory relationship and in the debts management process. One of the most relevant news is the reduction in the creditor’s rights who has negligently caused over-indebtedness of the debtor. With regard to the consumer’s over-indebtedness, it should be noted that the creditor protection in
this case does not correspond to a rigid and predetermined model, but on the contrary it depends on the overall balance of the interests at stake to be carried out time by time in respect of the peculiarities of the specific case.

Sommario 1. Le situazioni di crisi e di sovraindebitamento nel d.lgs. n. 14 del 2019. – 2. L’esdebitazione nel Codice della crisi. – 3. Esdebitazione e regole di comportamento: a) la condotta del debitore. – 4. Segue: b) il comportamento del creditore. – 5. Segue: le conseguenze della c.d. “sanzione processuale”. – 6. Regole di comportamento e responsabilità patrimoniale del consumatore.

The high numbers of over-indebtedness and of evictions in Europe since the financial crisis have highlighted the need to rethink the role that mortgage credit plays for societies. This contribution examines the social function of contract law, based on the observation that contract law is a means of allocating welfare in a political economy in which the welfare state is in retreat. The claim asserted in this article is that EU law in the field of mortgages does not fulfil its social function because it is based on a formalistic understanding of contract law. In order to close the protective gap brought about by a shift in the allocation of welfare from public provision to private markets without altering the understanding of contracts, the proposal is to follow the cooperative contract model of contracts as social cooperation. This approach allows for an assessment of fairness that acknowledges the long-term character of mortgage contracts and the ensuing need to distribute market risks between both contracting parties.

Municipalities play a vital role in the elimination of poverty, economic development and the provision of free basic services (FBS) to poor households and investing in infrastructure for increased economic activity. The municipality only have two main sources of revenue including local government equitable share allocation, conditional grants and the municipality's own sources of revenue, which composes of property rates taxes, water and electricity charges, refuse removal, sanitation services and other sundry levies on accounts. South Africa as a country are faced with numerous challenges which hampers economic growth, some of these challenges include unemployment, low economic growth, poverty and low credit ratings to say the least. The result of this challenges South Africa experience on a Macro Economic level flow down to the provincial and local government. One responsibility of a municipality is to generate own revenue via the delivery of basic services to the communities, this however, comes with a cost. The local council is responsible for the collection of revenue when services are delivered to the community, depending on household income, type of residence as well as the geographical areas. In an article written by Sasha Peters (2013) it was stated that some of the main reasons for non-payment include aspects such as:  Inability to pay  Willingness to pay, Within these aspects it includes factors such as irregular and incorrect billing, unhappiness with service and high tariffs from the local municipality. Section 96(b) of the Local Government: Municipal Systems Act, Act no 32 of 2000, provides the municipal council must adopt, maintain and implement credit control and debt collection policy. The challenges which municipalities face in debt collection includes the rise in rates and taxes and the tariff increase on an annual basis, which in turn affects the ability of the consumers to pay for the basic services. Consumers that owe municipalities funds refuse to pay for services due to no services from the local government. Incorrect readings of water and electricity meters may also be found as a major concern for the general public.

In this paper a basic Post-Keynesian model of growth and income distribution is developed incorporating consumer and corporate borrowing. Consumer borrowing is incorporated in the short-run and corporate borrowing is introduced in the long-run. Assuming a neoliberal regime, workers borrow to fill the consumption gap, and set targets for both living standard and interest payments. Capitalists borrow to finance investment. In the long-run model two cases are examined: the consumer debt-rate of accumulation relation and the consumer debt -corporate debt- rate of accumulation relation. In both cases the stable point corresponds to high growth and low workers’ debt-capital ratio and the saddle to low growth and high workers’ debt-capital ratio. Changes on parameters affect the volume of the stability of the system.

Existing research on how increasing household debt becomes seen as normal by consumers focuses on the shifting moral meanings of debt. Examining the rapid escalation of mortgage debt in post-socialist Hungary, we propose a different approach. We use practice theory to identify credit use as 'ordinary consumption' (Gronow and Warde, 2001), undertaken not for its own sake but to enable other meaningful practices. We find that mortgage debt grew due to the co-evolution of norms of a normal life centred on the home and credit instruments that facilitated and, eventually, locked in these norms. This 'naturalization' process (Wilk 2009) did not so much shift the meaning of debt but rather stripped it of meaning, making it increasingly unreflected. The process relied on mortgage instruments that served as invisible background infrastructures providing access to credit. This invisibility, however, is not a natural characteristic of mortgages, we argue, but a contested quality, and it was achieved by particular selling devices and discourses. Our analysis stresses the politics of invisibility and highlights the commercial interests at play in relegating highly risky, foreign-currency denominated mortgages into the background. Emphasising the socio-material structuring of this process, we conclude by situating both meaning-based and unreflected naturalization processes in a common framework, as contingent qualities of credit consumption. 2

The United States “Great Recession” beginning in December 2007 was sustained by mounting economic, financial and social problems of the middle- and working-classes, while exposing contradictions between family economic wellbeing and capital accumulation. To investigate this historically-contingent contradiction, this paper develops a macro-historical concept of the family as a social institution utilizing social structure of accumulation theory. Through an institutional analysis of the political, social, and economic conditions of existence for families in the post-WWII United States, the family as an institution, once supported through a safety net of public support for the reproduction of labor power, becomes leveraged to support consumer demand through private expenditures. This relationship with the political economy leads to a historically contingent understanding of how the economic deterioration of families is linked to unprecedented levels of consumption, and a culture hedged on consumer debt.

A large fraction of South African consumers are highly leveraged, inadequately insured, and/or own little to no assets of value, which increases their exposure not only to idiosyncratic risk but also to severe indebtedness and/or default. This scenario can present negative ramifications that lead well beyond the confines of individual
households. Thankfully, it can also be remedied by well-tailored legal debt relief mechanisms. This article reflects on the uncertainties surrounding the consumer debt relief framework of the National Credit Act in an attempt to show why it is not up to the challenge of providing meaningful relief to debt-distressed consumers. Ultimately, a comprehensive review of the current framework in favor of a discharge mechanism on simple, stated terms is proposed.

In this paper I develop a basic Post-Keynesian – Classical model of growth and income distribution in order to reveal the channels through which financial activities may affect income distribution. By doing so, I follow Marx’s analysis in Volume III of Capital (part IV) and assume that there are three classes: industrial capitalists, financial capitalists and workers. One channel by which financial variables affect income distribution is through the debt-financed consumption while the other is through the debt-financed investment1. This model is an extension of Dutt’s (2004 [2006]) Post Keynesian-Steindlian model of growth and income distribution, in order to incorporate the class of financial capitalists who own commercial banks and are the sole providers of credit money to the working class and to the industrial capitalist class that invests to fixed capital but do not consume. The functioning and stability of the macro system is both dependent on industrial capitalists and workers’ indebtedness, with the later being closer to play a destabilizing role.

While the increased access to consumer credit has helped many families improve their welfare, the rising repayment burdens upon a background of chronically low saving rates have generated concerns that South African families are becoming ever more financially fragile and less able to meet their consumer debt repayment obligations. Using data from the Cape Area Panel Study, this article investigates whether consumer debt repayment problems are better explained by excessive spending which leaves households financially overstretched or by negative income shocks. The results indicate that households are significantly more likely to be delinquent on their financial obligations when they suffer negative events beyond their control rather than due to the size of the expenditure burden. This suggests that consumer repayment problems are likely to endure even when consumers borrow within their means. Thus, regulatory efforts to improve mechanisms for debt relief might be more meaningful than restrictions on lending.

Launched in 2014, the European Commission's project to create a Capital Markets Union (CMU) involves a return to pre-crisis ideas and mechanisms and, more specifically, a reviving of the nearly collapsed securitization market. According to the project's official rationale, good quality securitization can help the European economy out of an enduring recession and onto a path of 'growth and jobs'. Yet the current – and often very technical – discourse around securitization obscures the unequal power relations that securitization implies. A genuinely democratic debate on the CMU cannot shy away from looking into what securitization really is about: making profit out of people's debts.

In this chapter, I lay the groundwork for a critical examination of organizations engaged in businesses surrounding debt practices and financialization in contemporary societies. I draw on the literature to discuss that in the business of debt, the winners are likely to be elite borrowers and powerful financial organizations; the losers are likely to be non-elite borrowers who face various constraints as evidenced by their debt profile, have low power compared to financial organizations in the contract and in terms of influencing regulations, are bound by personal responsibility in the face of systemic problems, and suffer the disciplinary effects of debt on their overall life. Building on this background, I argue that contemporary practices of debt have an overall impact on society that is largely in conflict with moral philosophy and I illustrate this with a discussion of Rawlsian philosophy. Furthermore, I critically examine the other side of debt – debt-ownership and its expansion through securitization. I draw on Bourdieu’s idea of “illusio” to argue that the project of financial democracy via financialization as it is currently executed, while supported by the rhetoric of access and opportunity, may actually serve to strengthen the dominant positions of elite actors in society.