The history of debt collection

Ancient debt slavery

The earliest recording of how debt was dealt with goes back to 3000BC and the ancient civilization of Sumer who populated an area that is now modern-day south east Iraq. Chronicles explain how a debtor who was unable to pay a debt along with their family and servants became debt slaves. They were forced to work for the creditor until such time that their physical labour had repaid the debt. In some cases it could take years to repay the debt, which could even be passed on to the following generation of the debtor family. Debt slaves became common throughout many ancient civilisations; however, some of the more liberal early societies introduced forms of debt forgiveness or allowed debts to be discharged after a specific period of time. Amongst Abrahamic religions lending was discouraged and creditors were prohibited from seeking to collect debts.

How the Romans did it

Debt slavery continued for many hundreds of years and was known as debt bondage by the Greek and Roman empires. The practice was widespread and considered quite normal by the classical great empires being administered in several forms depending on the circumstances of the debt and the debtor. The poor and those who had suffered financial problems could even voluntarily choose to enter bondage as a debtor to avoid some of the more violent alternatives that could be imposed on them. Debt bondage, in the Greco-Roman era was a specific category of legal punishment, which while still harsh, could also literally be a life saver. Many considered the most severe form of debt bondage to be, indentured labour, this involved a legally signed contract between the creditor and the debtor, and while the debtor was not considered a slave, the consequences of the contract could result in a lifetime of hardship. While the debtor was free to carry out their trade and go about, well almost, their everyday business, the contract would contain many clauses steeped in the creditor’s favour. These clauses would often include two for one, or anything up to nine for one compensation, forcing the debtor to repay the debt many times over. The creditor could also insist on receiving up to 90% of the debtors earnings, forcing them in to continual poverty.

The Bailiff’s have arrived

Moving on to Europe and the late Middle Ages, laws were introduced by many countries to deal with debt collection, all mainly based on a system first used in Germany. If a debtor was incapable to settle an owed debt, the creditor could summon the culprit to Court and seek a Judgment against them. A bailiff would then be instructed to by the Court to attend the debtor’s premises and remove goods to the value of the debt before delivering said goods to the creditor. While this may sound similar to today’s Court procedures for dealing with money claims, in reality, during the Middle Ages it was very different, bailiffs would often remove (or pillage) far more than necessary to repay the debt, sometimes even forcing debtor’s to handover the deeds to their property, while little of the bounty seized was ever delivered to the creditor.