debt
What are the general rights people have in developed countries regarding debt repayment?
<p>If you have some kind of official debt I believe it usually goes to a collection agency.</p>
<p>I was curious if there are general principles or rights on an international level about the extent to which you are obligated to repay debts.</p>
<p>For example: is there a certain amount of debt, a certain time elapsed, or a certain kind of/condition on debt, that gives someone (a person, a collection agency, the government) the ability to force repayment? Like is it ever possible for a bank to be asked to transfer funds regardless of the account holder’s decision? Are there any laws / limits about how high of an interest rate a crediting “entity” can claim your debt is accruing? Is it possible to go to prison for not repaying debt?</p>

<blockquote>
<p>I was curious if there are general principles or rights on an
international level about the extent to which you are obligated to
repay debts.</p>
</blockquote>
<p>There is very little law at the international level about the extent to which you are obligated to repay debts. These laws are almost entirely at the national or subnational level.</p>
<p>Typically, the only intentional law components to debt collection are:</p>
<p>(1) treaties allowing people who have had courts award them money judgments in lawsuits against debtors for certain kinds of unpaid debts to enforce those money judgments in another country which is a party to the treaty,. on the same basis that a money judgment from its own courts could be enforced,</p>
<p>(2) treaties requiring courts in the countries that are parties to the treaty to cooperate with each other to help courts in the other countries gather evidence, and</p>
<p>(3) treaties honoring certain kinds of international arbitration agreements, which are private agreements between people to allow a private decision maker rather than a court to resolve disputes between people who have entered into a contract with each other like a contract to borrow money.</p>
<p>Usually, international law doesn't address the basics of the law governing debtors and creditors, which is left to national and subnational laws.</p>
<p>In the U.S., the lion's share of the relevant laws for the rights of debtors and creditors are state laws and not federal laws.</p>
<blockquote>
<p>What are the general rights people have in developed countries
regarding debt repayment? . . .</p>
</blockquote>
<p>Almost all developed countries have a great many laws regarding debt repayment, the rights of creditors, and the rights of debtors. They vary quite a bit from country to country, however, and often even in different parts of the same country.</p>
<p>Most developed countries also have laws, called bankruptcy laws, that allow debts to be forgiven because someone just isn't capable of repaying the debts, in order to give them a fresh start.</p>
<p>Most developed countries also have laws about what lenders have to prove and what court actions they have to take to collect debts, and about what tactics lenders can use to collect debts other than going to court.</p>
<blockquote>
<p>For example: is there a certain amount of debt, a certain time
elapsed, or a certain kind of/condition on debt, that gives someone (a
person, a collection agency, the government) the ability to force
repayment?</p>
</blockquote>
<p>Normally, when someone doesn't pay their debts when they come due, the lender can file a lawsuit against the person who owes the debt called a debtor to collect that debt. If that happens and a court agrees that a debt hasn't been paid when due, then the court imposes a judgment against the debtor and for the benefit of the lender for a certain amount of money, which gives the lender the ability to force repayment of the debt from the debtor's property and income.</p>
<p>When there is &quot;collateral&quot; to secure repayment of a debt (like a car for a car loan, or a house for a mortgage used to buy the house), in some cases, the lender can take the collateral without going to court to cause the debt to be repaid. The process is called &quot;repossession&quot; or a &quot;repo&quot; for short. There are laws about when this can be done.</p>
<p>But, if the collateral is real estate, and the loan is what is called a mortgage or a deed of trust, usually there is a lengthy legal process called a foreclosure that the lender has to go through to get the property from the borrower to help repay their loan that hasn't been paid as agreed.</p>
<p>If you owe a debt for rent that is not paid when it is due, the person who is renting property to you can take the property back and make you give it up. When the property is real estate, this is called an eviction.</p>
<blockquote>
<p>Like is it ever possible for a bank to be asked to transfer funds
regardless of the account holder’s decision?</p>
</blockquote>
<p>When a judgment is entered by a court against someone who owes a debt, this gives the lender the power to require a bank to transfer money from the debtor's bank account to the lender. In common law countries (those with legal systems historically based upon English law), this power granted to the lender is exercised using a document called a writ of garnishment.</p>
<blockquote>
<p>Are there any laws / limits about how high of an interest rate a
crediting “entity” can claim your debt is accruing?</p>
</blockquote>
<p>Most developed countries have limits on how high of an interest rate a crediting entity can claim your debt is accruing. Usually, this is set forth in a contract between the borrower and the lender. Often there is one rate that applies when the loan is being paid as agreed and a second higher default interest rate that applies when payments have been missed on a loan.</p>
<p>But, there is usually a maximum interest rate, which is set by law, that the loan can't exceed. This maximum interest rate varies based upon the kind of loan it is and the place where the loan was entered into. These laws are called <strong>usury</strong> laws.</p>
<p>Where I live, in Colorado, the maximum interest rate is 45% of the amount owed per year. For some kinds of &quot;consumer debts&quot; in Colorado, however, the usury limit on maximum interest rates is much lower.</p>
<p>In Muslim countries, charging interest of any kind of usually prohibited, but you can basically &quot;rent&quot; money for a period of time in a way so that you can't earn rent based upon rent, the way that you can earn interest on interest. In practice, what it means is that the equivalent of &quot;compound interest&quot; which is charging interest on payments that are equivalent to interest, isn't allowed in most Muslim countries.</p>
<p>Many national or subnational laws also have a &quot;statutory rate of interest&quot; which is what a lender is entitled to if the borrower and lender haven't specifically said in their agreement what the interest rate between them will be.</p>
<p>In Colorado, where I live, that interest rate is 8% of the amount owed per year for most debts, 9% of the amount amount owed per year for other debts, and a rate that varies from month to month based upon interest rates that are charged by banks and government bondholders for certain other kinds of debts (like unpaid tax debts).</p>
<blockquote>
<p>Is it possible to go to prison for not repaying debt?</p>
</blockquote>
<p>Until sometime in the 1800s, people were routinely sent to debtor's prisons for not paying their debts. In a closely related part of the law, one of the tools that creditor's used to collect debts by incarcerating people who didn't pay was called &quot;body execution.&quot;</p>
<p>But, almost all developed countries came to see this as a stupid idea that cost the government money and prevented debtors from making the money they needed to repay their debts.</p>
<p>Today, almost all developed countries have abolished incarceration for not paying a debt in most circumstances.</p>
<p>But there are exceptions to the general rules. I list the three main exceptions below, although these rules wouldn't be the same in every developed country.</p>
<p><em>Not Paying Criminal Fines In Some Countries</em></p>
<p>In many developed countries, for example, in parts of Europe, if you fail to pay a criminal fine you can be incarcerated for not paying the debt.</p>
<p>This is not allowed in the United States, but is sometimes done anyway to people who don't have adequate legal counsel to protect their rights, especially in the case of African Americans who owe criminal fines in the rural South.</p>
<p><em>Disobeying Court Orders You Are Able To Obey Related To Debts</em></p>
<p>In the U.S., while you can't be incarcerated for failing to pay a debt that you are genuinely unable to pay, you can be incarcerated for failing to cooperate with court orders in connection with the process of creditors collecting debts from you. Knowingly disobeying a court order that you are able to obey is called &quot;contempt of court&quot;.</p>
<p>So, for example, if a court orders you to tell your creditors where all of your bank accounts and property are, for example, and you fail to answer, or lie in your responses to the creditor's questions, the court can put you in jail until you comply or can just punish you by putting you in jail for a fixed period of time because of your disobedience.</p>
<p>In the U.S., the most common situation in which someone is jailed for failing to pay a debt is when someone owes child support or spousal support (also known as alimony) and is self-employed and has an ability to pay that child support or spousal support debt, but instead refused to pay the debt.</p>
<p>Another common situation in which someone is jailed for failing to pay a debt is when they have hidden their property, or put it in a trust, or in the control of a third-party, and the judge believes that the person who owes the debt could make that property available to pay the debt, but the person who owes the debt refuses to do so.</p>
<p><em>Making Promises While Intending To Break Them</em></p>
<p>There is one more exception to the general rule that is pretty important too. If you promise to repay money and then end up not repaying it, this broken promise is usually not a crime - it doesn't count as theft. You can be sued, but you can be prosecuted and convicted of a crime for that.</p>
<p>But, if you borrow money from someone knowing already when you borrow the money that you have no intention of ever repaying it, this is usually a crime, sometimes called fraud and sometimes called theft, because your so called promise was really a lie when you made it.</p>
<p>Proving that you never intended to repay the money in the first place is usually difficult, but there are some cases where it isn't that hard.</p>
<p>For example, I had a case once where the debtor bragged to all his friends just minutes after borrowing a large sum of money (about $200,000 U.S.) about how he didn't intend to ever pay the money back and had just totally cheated the man who he borrowed the money from, and testimony from his friends about what he said at that time was eventually his downfall.</p>
<blockquote>
<p>If you have some kind of official debt I believe it usually goes to a
collection agency.</p>
</blockquote>
<p>This isn't really true. It is also a funny way to think about the matter.</p>
<p>Collection agencies provide a service similar to lawyers, to help people and entities and governments who are owed money to collect it using legal means from people who owe the money.</p>
<p>Usually collection agencies don't have any special rights different from those of ordinary people who are owed debts to collect debts for their customers. They are just more skilled and efficient at taking the legal steps to collect debts than the average person.</p>
<p>Usually, collection agencies are private businesses that charge people for whom they collect debts for their services.</p>
<p>It isn't clear what you mean by an &quot;official debt&quot; or why you think it would be different.</p>
<p>Collection agencies collect both debts that courts have officially declared in a money judgment that a debtor owes and debts that no one has brought a lawsuit to collect yet. If the person who owes the debt doesn't pay it, often collection agencies bring a lawsuit to collect the debt for the customers.</p>
