In the best of times, predatory debt collection is a scourge that siphons wealth from New Yorkers, destabilizes neighborhoods and perpetuates racial and economic inequality. Amid the COVID-19 pandemic, allowing debt collectors to continue to hound New Yorkers and take their money is jeopardizing people’s lives.
Consider Veronica Richardson’s story. Richardson lives in Brooklyn with her two daughters and two grandchildren, whom she helps support. Like for so many New Yorkers right now, her hours at work have been scaled back significantly, and one of her daughters recently lost her job.
Adding insult to injury, Veronica just learned that a debt collector is garnishing her wages, though she has no idea why. Now, the debt collector is taking money she desperately needs for food, disinfecting supplies, and other essentials — and she is hardly alone.
Since COVID-19 gripped New York City last month, New Economy Project’s NYC Financial Justice Hotline has been flooded with a new spate of calls from low-income New Yorkers who are being hounded by debt collectors.
That’s why thousands of New Yorkers and groups from across the state are calling on Gov. Cuomo to institute an immediate moratorium on debt collection in New York. The governor has the authority to make it happen. He must act now.
Predatory debt collection is a vivid example of the profound racial and economic inequities that underlie the urgent public health and safety concerns we are now dealing with.
Department of Health and Mental Hygiene data show a disproportionate concentration of COVID-19 cases in neighborhoods of color, home to so many frontline workers who are putting themselves at risk to keep our city running.
These neighborhoods already face severe health and economic disparities. They are also the communities from which debt buyers systematically extract wealth, where calls from abusive debt collectors are part of everyday life.
The debt collection industry is rife with bottom-feeding companies in the business of buying old, alleged debts on the cheap, then using our courts to pry away as much money as they can from low-income New Yorkers.
The rapacious debt buyers who file these lawsuits are notorious for using deceptive and fraudulent practices to obtain automatic, or “default,” judgments against thousands of New Yorkers, which they then use to freeze people’s bank accounts or garnish their wages. As we have seen through our hotline, big banks like Capital One have also been going after New Yorkers during the crisis, jeopardizing people’s health and safety as they seize desperately needed funds.
As debt collectors continue callously to take people’s money during COVID-19, they are further endangering low-wage service workers, elderly and disabled New Yorkers, and others who are at higher risk of severe illness from COVID-19.
For Cuomo, addressing this crisis within a crisis should be easy.
First and foremost, he should stay all enforcement of money judgments against New Yorkers, whether through bank account restraints, wage garnishments, tax refund offsets or other means.
He should also suspend the accumulation of interest on judgments, and ensure that New York make all government subsidies — including federal stimulus checks — exempt from collection.
Emergency measures like these are urgently needed to protect people from COVID-19 and its punishing economic fallout. At the same time, we should not lose sight of the structural inequities underlying the crisis, from lack of health care and housing insecurity to discrimination and wealth extraction built into our financial system.
COVID-19 has painfully exposed the profound injustice at the core of so many of our economic and political institutions. We must pull together and fight, like never before, for a just economy that works for all.
In the immediate term, New York needs to call off the debt collectors, as an urgent matter of public health and safety and racial and economic justice.
Morrison is campaigns director and Ludwig is founder and co-director at New Economy Project.