California governor pitches amnesty on traffic debt for poor

SACRAMENTO, Calif. — Calling California's traffic court system a "hellhole of desperation" for the poor, Gov. Jerry Brown is proposing an amnesty program for residents who can't afford to pay off spiraling fines and penalties that have resulted in 4.8 million driver's license suspensions since 2006.

The push by the Democratic governor spotlights concern among lawmakers and court administrators that California's justice system is profiting off minorities and low-income residents. It's a civil rights issue that has prompted discussions between the Brown administration and the U.S. Department of Justice, according to the governor's spokesman, Evan Westrup.

It's not clear if the Justice Department has launched an inquiry into California's court system. The department did not return requests for comment. Westrup declined to provide details on the meetings with federal officials.

Under Brown's plan, drivers with lesser infractions would pay half of what they owe, and administrative fees would be slashed from $300 to $50.

Advocates for the poor have likened California's problem to the police and municipal court structure in Ferguson, Missouri, which was criticized by the Justice Department as a revenue-generating machine following last year's fatal shooting of Michael Brown by a police officer.

"California has sadly become a pay-to-play court system," said Michael Herald, a legislative advocate for the Western Center on Law and Poverty who helped write a scathing report released last month by civil rights groups on how Californians are getting caught in a cycle of debt and having their driver's licenses suspended as a result of costly traffic tickets and court penalties.

Traffic fines have been skyrocketing in California and courts have grown reliant on fees as a result of budget cuts during the recession.

Twenty years ago, the fine for running a red light was $103. Today, it costs as much as $490 as the state has established add-on fees to support everything from court construction to emergency medical air transportation. The cost can jump to over $800 once a person fails to pay or misses a traffic court appearance.

Civil rights groups like the American Civil Liberties Union have found that some traffic courts routinely deny people a hearing unless they pay the amount owed up front. The debt also has to be paid off in order for their licenses to be reinstated.

"Everyone is entitled to their day in court and that includes the poor," said Christine Sun, associate director of ACLU of Northern California.

On Monday, California Chief Justice Tani Cantil-Sakauye directed the court system's policymaking body, the Judicial Council, to make clear that people do not have to pay off traffic court debts before they can get a hearing.

Since 2006, the state has suspended 4.8 million driver's licenses after motorists failed to pay or appear in court, according to the Department of Motor Vehicles. Of those, only about 83,000 licenses were reinstated.

Michael Armas, 31, of Oakland, said he has been unable to find a labor or construction job without his driver's license for the past year and a half because he hasn't paid minor citations such as driving while using a cellphone or an improperly displayed license plate. His tickets have spiraled into a $4,500 debt.

Armas, who is African-American and Portuguese, said he's caught in a no-win legal cycle that's hampering his efforts to win custody of his 11-year-old daughter.

"How do you expect to pay something when you have no job, and you can't get a job without your license?" Armas said.

Brown hopes to bring relief to the poor with the 18-month amnesty program that would start Oct. 1.

"It's a hellhole of desperation and I think this amnesty can be a very good thing to both bring in money, to give people a chance to kind of pay at a discount," Brown said last week.

Brown's proposal is similar to a bill by Sen. Bob Hertzberg, D-Los Angeles, which would restore a license if the driver agrees to a debt payment program based on a sliding scale. The poorest would pay as little as 20 percent of the fine.

Senate President Pro Tem Kevin de Leon, D-Los Angeles, sent letters Tuesday to the Judicial Council and a nonpartisan analyst for ideas on changing the court fee structure.

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We Need to Talk About Credit Card Debt

                  

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Americans are embarrassed by their credit card debt but don't like to talk about it.

In a national survey, 42.4 percent of Americans reported having credit card debt, and the average balance is a staggering $10,902. According to a survey by the National Foundation for Consumer Counseling, 37 percent of Americans would be more embarrassed to admit the balance on their credit cards than their age or weight.

Why are so many of us afraid to talk about the problem that is haunting so many of us? And does our inability to talk publicly about debt cause bigger problems in the long run?

I Am a Failure

Credit card debt is viewed as a failure and weakness of character. People who spend too much are accused of living beyond their means, shopping too much and indulging in a life they can't afford.

And to a large extent, this is true. Credit cards make it easy to shop without thinking. If you don't have a budget, it is incredibly easy to spend just a bit more than you should. Countless studies show that spending with plastic means that we spend more. And we don't just spend more money in absolute terms. We will actually pay more for the same item. One of the more famous studies showed that, in some cases, people were willing to pay double for an item when they used a credit card. When we pull plastic out of our wallet, we are no longer savvy shoppers. Instead, we give into the temptation of the moment and build up a debt over time as a result. Spending $50 that we can't afford every week can easily turn into $10,000 of debt within four years.

But there are other reasons for Credit card debt. Two of the biggest causes of debt are job loss and medical expenses. Fifteen percent of the population still does not have health care, and a big emergency expense can generate massive medical bills. If you are not prepared financially for a job loss, debt can start to accumulate quickly.

Having credit card debt is never a reason to celebrate. So, people with credit card debt are embarrassed and remain silent.

Silence Is Costly

Credit card debt is expensive. Most store cards charge above 20 percent, regardless of your credit score. And more than 75 percent of people with credit card debt are paying an interest rate higher than 15 percent. By refusing to talk openly about our debt, we make three big mistakes:

1. We become collectively delusional about the lifestyle that we can afford to live. We continue to buy clothes and eat in restaurants that we can't afford and slowly go into debt together. We end up borrowing to keep up the appearance of success, even though 40 percent of us can't afford our lifestyle.
2. We end up paying too much on the debt that we have. Because mortgage debt is acceptable debt, people will speak openly about finding the lowest rates from the best providers. But for some reason, refinancing credit card debt is considered a sin. And we are expected to pay high interest rates as punishment for our bad decisions. Banks profit from our fear of finding a better deal.
3. We lose the chance to help other people learn from our mistakes, especially our children. Because society judges purchasing power as success, we are afraid to admit to our children, our family and our friends that we can't afford something. So we pretend, slowly digging ourselves into deeper debt.

Since I started a price comparison website called MagnifyMoney, I have been able to help many people get onto a path of becoming debt-free. And after I help someone, I always ask him or her if they are willing to tell their story publicly. In the vast majority of cases, my request is declined. Here are some of their reasons: No one knew they were in debt. They were afraid of relatives and spouses finding out. And sometimes they feared that they would be judged. If you are not in debt, chances are the person next to you is in debt. We can pretend this problem doesn't exist, or we can help each other get out of this mess.

Start the Conversation

We need to start talking more openly about our debt. And we need to be more supportive of people trying to get out of debt, in the same way that we support our friends who are training for a marathon or on a mission to lose weight. Becoming debt-free and staying debt-free is a lifestyle choice, and it would be a lot easier if we all get in on it together.

But someone needs to be brave and speak up first.

A startup in California is trying to help people refinance their high interest rate credit card debt into a lower interest rate installment loan. Its name, Payoff, also reflects its mission. Payoff has faced similar challenges as MagnifyMoney: people just do not like to talk about paying off their debt. So, they started getting members of their team to talk about their own debt stories. And they are encouraging their employees to share those stories publicly. For example, Tanya talks about getting into credit card debt because of her marriage, and then finding a way out of debt on its website. We need more people to share their stories.

You Can Get Out Of Debt

Getting out of debt is possible. And it is even more likely if friends and family offer support. If you know your friend is training for the marathon, you would not be pressuring that person to skip training and join you at the bar. Equally, if we know about a friend's commitment to live debt-free, we can stop tempting them with shopping trips or nights our in bars and restaurants.

The mechanics of getting out of debt are relatively straightforward. You can cut expenses, refinance your debt to a lower interest rate and accelerate debt repayment. But creating a community of support is harder -- and more effective.

If you don't know where to begin on your journey towards becoming debt-free, you should consider downloaded my free guide, which helps you put together a plan. And please consider sharing your story with your friends and family. Once we start talking about it, we can start solving it.

Nick Clements is the co-founder of MagnifyMoney.com, a price comparison website that helps you find the cheapest bank accounts, and the best interest rates on your savings and your debt. He spent nearly 15 years in consumer banking, and most recently he ran the largest credit card business in the U.K. You can follow him on Twitter @npclements.

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