One of the things I struggle to understand is why the law makes eviction the preferred way for landlords and tenants to settle debts relating to unpaid rent. While courts have the ability to order payment plans, in many cases that is not the default option and requires intervention with a lawyer by the tenant’s part and agreement by the landlord, and in most states can’t happen until an eviction proceeding is brought.

When you think about it, an eviction is a rather bad way to settle an unpaid debt. Essentially by evicting a person or a business, both sides are losers. After an eviction, landlords loose the ability to collect back rent, while tenants lose their home or business location. An eviction is a clean-slate action – while a renter’s credit and rental history is dinged for seven years – they aren’t held responsible in most cases for making up the unpaid rent.

In some countries, debt is handled differently. Tenants who are facing economic hardship, like job loss due to the pandemic aren’t forever precluded from paying back their owed rent – as most will eventually obtain meaningful employment or have access to retirement savings or social security. The law could be changed to allow for landlords to seek garnishment of future wages or seizure of bank assets, rather then going through an eviction process and forcing a family or business to move out.

While this would potentially lead to landlords having to wait longer to get paid back rent, the flip side is such a policy would be a lot more humane and allow those having economic trouble to stay in their homes. The rent wouldn’t be lost or written off, instead it would be paid back over time like any other ordinary loan. The government could underwrite these loans, using it’s extraordinary powers to ensure they are collected from tenants – by withholding tax refunds, seizing bank accounts or garnishing wages. Tenants wouldn’t loose their home – they’d just loose future earnings.

A great part of the American tradition is the ability to walk away from a debt when economic conditions sour. The idea is that people who get themselves in trouble economically, shouldn’t have it holding back their future. Bankruptcy law in particular allows individuals and businesses to walk away from most debts, when they aren’t able to pay – with both sides loosing a bit. But bankruptcy is something done by a creditor, not a lender.