Debt crisis looms as tenants turn to credit cards to stay afloat
So far, the impacts of tenant indebtedness are not immediately visible. Moratoriums on evictions underway in the city, state, and now at the federal level mean Washington has yet to see widespread images of people being evicted from their homes. Additionally, according to a year-over-year comparison of court records by Crosscut, individual bankruptcy filings were actually lower in Washington in the past six months than in the same period in 2019.
But just because the short-term pain has eased slightly, that doesn’t mean it shouldn’t happen eventually.
Scott Kinkley, who practices consumer protection law in Spokane for the nonprofit Northwest Justice Project, said he was “alarmed”, but not surprised, at the high number of tenants using credit cards .
“The first thing people worry about is a roof over their heads, food in their stomachs and utilities,” he said. “If you are desperate, you will use the credit.”
The negative repercussions of these decisions should be delayed, he said. Even if borrowers start receiving letters and phone calls from their banks or lenders, the most serious consequences may not appear for months or even years. “People who default on their credit cards usually don’t see the consequences in the form of litigation for a long time afterward,” he said.
In the meantime, renters of holes can easily go further. Interest rates will be high, and as their credit scores lose everything from housing to car payments may become more expensive.
“Everything costs more when you’re poor, and everything costs more when you’re in debt,” Kinkley said.
Dalton Chase Farr started working at the Holiday Inn in Yakima earlier this year, shortly after leaving his service at Kitsap Naval Base in Bangor. He believed that working for a hotel chain would make it easier for him to travel – to Thailand, in particular – and possibly find work along the way.
But after just three weeks and a paycheck, he was fired as Yakima County closed and tourism dried up. He is fighting for unemployment and his account with the state’s Department of Job Security says he was approved, but he still has not received anything.
During this time, he said he had accumulated a huge debt – up to $ 20,000. It is so much that even if he collects unemployment arrears, it will not cover everything. He’s still housed, but he’s worried about what happens when the COVID-related safety nets against eviction start to fall.
“I have considered bankruptcy, but that’s not what I want to do at all,” he said.