The history of debt collection

Debt collection in the Bronze Age (3300 BC – 1200 BC)

Did you know that the history of debt collection goes all the way back to the ancient civilisations in the Bronze Age? In fact, the earliest written records indicate that the practice of debt collection began as early as 3000 BC, in the ancient civilisation of Sumer (modern-day Iraq).

In Sumer, if a debtor owed a debt which they could not pay back, their creditors would subject them to a lifetime of “debt slavery”; this is where the debtor, their spouse, servants, and even their children were forced to work for the creditor until their physical labour paid off the debt.

In most cases, the debt would carry on for generations as creditors would not only insist on taking ninety per cent of the debtor’s wages, but they would also charge interest, too! However, some ancient societies did allow for “debt forgiveness” or even “debt erasure” after an extensive period of time.

Debt collection in the Roman Empire (332 BC-AD 476)

Fast forward to the Greco-Roman period, this practice of debt slavery carried on for many hundreds of years, though the Romans referred to it as “debt bondage”, and in living up to the “ruthless-Roman” stereotype, the consequences for unpaid debts went way beyond those of debt slavery.  

According to the twentieth-century American legal scholar, Max Radin, if the debtor failed to pay their creditor on time, the creditor might have sold them into foreign slavery, or even executed them. Worse yet, if there were several creditors, the debtor ‘might have been cut into pieces by them in proportion to their shares’.

It therefore comes as no surprise to learn that the majority of debtors in the Greco-Roman period would voluntarily enter debt bondage with their creditor rather than risk these ruthless alternatives.

Debt collection in Medieval England (AD 476 – 1485)

It was not until the Medieval period between AD 476 and 1485 when some European countries began introducing more civilised ways of dealing with defaulting debtors. This change of attitude was largely based on a system first used in Germany, where new legislation saw the arrival of the baljuw, that is the modern-day bailiff.

In medieval England, if a debtor was incapable of settling a debt, the creditor could take them to Court and obtain a Judgement against them. A bailiff would then be instructed by the Court to attend the debtor’s address and remove goods to the value of the debt before delivering them to the creditor.  

Although this may sound similar to today’s procedures for debt collection, the reality is that bailiffs in the Medieval period were not as civilised as our bailiffs are today. In fact, the majority of them would pillage far more than necessary to repay the debt, with very little of it ever actually being delivered to the creditor. Some bailiffs even forced the debtors to hand over the deeds to their property.

Debt collection in Victorian England (1837-1901)

Forging ahead to the Victorian era, the common form of punishment for debtors unable to pay court-ordered judgements was incarceration in the “debtors’ prisons”. Though referred to as a punishment, the concept of the debtors’ prisons was to confine the debtors and have them work until they repaid the debt. Supposedly, this would help the debtors to not only clear their indebtedness, but also improve their character.

 

Charles Dickens

Between the eighteenth and early nineteenth century, some ten thousand people were imprisoned for unpaid debt each year. Amongst these prisoners was John Dickens, father of the famous English author, Charles Dickens.

John was incarcerated in Marshalsea prison in February 1824 because he owed 40 pounds and 10 shillings to a baker called James Kerr. He was released three months later after receiving a family inheritance; Charles was just twelve years old.

It is widely suggested that John’s incarceration in Marshalsea was the reason for Charles’ recurrent themes of social and financial injustices in his novels such as The Pickwick Papers (1836) and Little Dorit (1857).

 

Wages and conditions in the debtors’ prisons

Though the introduction of debtors’ prisons was certainly the beginning of a more considerate attitude towards insolvent debtors in England, the concept was majorly flawed from the outset – especially if you were a debtor from the lower-class.

First of all, the wages received in the debtors’ prisons were barely enough to pay for food and accommodation, let alone pay off their creditor’s debt. Therefore, unless the debtor had wealthy friends and family to help them out, the amount of money they owed the creditors would only ever continue to grow. More often than not, debtors were forced to beg for money from passers-by.

When Marshalsea finally closed in 1842, two debtors were found to have been there for over thirty years.

Moreover, the conditions in which the debtors lived in the prisons largely depended on their financial circumstances; debtors from wealthier backgrounds lived in reasonable comfort, taking advantage of bars, shops, and restaurants within the prisons. Meanwhile, conditions for debtors from the lower classes were short of intolerable: their cells were cold, damp, and overcrowded with families, many of them suffering from disease and starving to death.

 

Prison wardens

However, for many of the debtors, living in such conditions was the least of their worries. In 1729, a parliamentary inquiry into the conditions of the debtors’ prisons brought to light the ‘vindictive behaviour and consistent maltreatment…’ by the prison wardens towards debtors. Following this inquiry, many of the prison wardens faced trial for extortion, gross maltreatment, and even murder.

The most notorious of these wardens was Thomas Bambridge, warden of the Fleet prison in London. In 1729, Bambridge faced trial for the murder of Robert Castell: a debtor who had died of smallpox as a consequence of being confined to the “sponging-house”. The sponging-house was a place of temporary confinement where the wardens would beat up and torture the debtors until they handed over all their money.

 

The Debtors’ Act of 1869

Despite this, debtors’ prisons remained the common form of punishment in Victorian England until The Debtors Act finally brought imprisonment for debt to an end in 1869.

Debt collection today

Nowadays, our bailiffs are a lot more civilised when it comes to debt collection. To find out how bailiffs operate today, read more here.

Sources

Max Radin, ‘Secare Partis: The Early Roman Law of Execution against a Debtor’, The American Journal of Philology, (1922), p.32

White, J, ‘Pain and Degradation in Georgian London: Life in the Marshalsea Prison’, Oxford Journals, Arts & Humanities, History Workshop Journal, Volume 68, Issue 1, pp. 69-98

Ashton, J, ‘The Fleet: Its River, Prison, and Marriages’, Nabu Press, 2010