Keywords
Consumer Debt, Consumer Protection, Debt Enforcement, Bankruptcy
Abstract
Enforcing consumer debt contracts against low- and middle-income borrowers, rather than making consumer debt markets work better, is inefficient and exacerbates consumer protection concerns. While consumer debt litigation—and enforcement of consumer debt contracts through wage and bank account garnishment—may have once strengthened nascent consumer debt markets, consumer credit scoring now effectively structures consumers’ incentives to repay their debt obligations. Debt enforcement is not necessary to encourage consumers to repay their debts and tends to drive borrowers into bankruptcy. Debt enforcement also undermines efforts to provide consumer protection in these markets by raising the stakes of any debt contract—where any default can turn into judicial orders to seize a borrower’s wages or other assets. That debt enforcement has far-reaching negative consequences for both the efficiency and fairness of consumer debt markets sparks several proposals for reform that are discussed in the final part of this Essay.
Recommended Citation
31 Fordham J. Corp. & Fin. L. 531 (2026).
Included in
Bankruptcy Law Commons, Consumer Protection Law Commons, Contracts Commons, Litigation Commons