Available at: https://digitalcommons.law.seattleu.edu/sulr/vol49/iss1/4/
Abstract:
Debt oppression began before the United States became a country. Settlers enslaved Africans and Indigenous people, treating them as property that they could buy and sell for their economic and personal benefit. When enslavement became illegal, new economic systems and laws that included sharecropping, Black Codes, and Jim Crow kept Black people in servitude. Laws that prohibited enslaved people from owning property or selling goods to white people evolved into restrictions on Black people’s occupations and market participation, both formal and informal. When Black entrepreneurs overcame these obstacles and built wealth within Black business enclaves, white people enforced their racist norms through violence. Segregated access to credit and different credit terms and conditions in retail, housing, and government loans played a large part in maintaining racial wealth gaps throughout the twentieth century. This system is a vestige of slavery that violates the Thirteenth Amendment. And the laws and policies that uphold a segregated credit system that harms Black, Indigenous, and Latine consumers violate the Fourteenth Amendment’s Equal Protection clause. These constitutional violations require strong remedies that include an amnesty on past debts, rehabilitative reparations, and a reimagining and restructuring of our credit system. This article documents the early roots of the United States’ use of debt as a tool of oppression and is the first in a three-part series.
Summary:
Andrea Freeman argues that the United States has deployed debt as a system of racial domination from colonization to Emancipation. The article digs deeply into how credit was weaponized against Indigenous and Black people—not incidentally, but as a core instrument of the American administrative state.
1. Debt as a Colonial Tool
Freeman traces how French, Spanish, and later U.S. traders extended “credit” to Indigenous nations in ways designed to induce dependency, provoke conflict, and ultimately justify land seizures. The French incited violence over trivial unpaid accounts; Spanish missionaries used coerced labor in “missions” where Native Californians accrued debts they could never pay; and then President Jefferson institutionalized the practice.
Freeman’s discussion of Jefferson’s confidential 1803 letter (the infamous “run them into debt” plan) is particularly damning: the United States would sell goods below cost, encourage Native “leaders” to go into arrears, and then accept land cessions as payment. Within decades, millions of acres shifted from Indigenous control to the U.S. under the guise of settling trading debts.
2. Enslavement and the Criminalization of Black Debt
Under slavery, African Americans were treated as involuntary debtors, forced to “repay” their value through uncompensated labor. After the Civil War, this logic persisted:
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Convict leasing,
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Sharecropping,
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Black Codes, and
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Fabricated “debts” to planters
all operated as systems of quasi-bankruptcy without discharge, trapping Black people in perpetual obligation with no exit.
3. Debt in Modern Indigenous Communities
Freeman shows that today’s financial deserts on reservations are a lineal descendant of Jefferson’s policy. She recounts modern debt spirals triggered not by wrongdoing but by bureaucratic failures, such as Indigenous patients being sent to non-IHS hospitals and then improperly billed—ending in collections, damaged credit scores, and blocked homeownership.
These effects are intensified by:
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fragmented land titles under the Dawes Act,
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BIA trust restrictions, and
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reliance on fringe lenders charging triple-digit APRs.
4. Constitutional Argument
Freeman’s polemic turn: because racially-stratified debt is a direct vestige of slavery and colonization, she argues it violates both the Thirteenth Amendment (as a badge and incident of slavery) and the Fourteenth Amendment (as intentional systemic discrimination). She calls for bold remedies: debt amnesty, reparative programs, and structural redesign of the credit system.
Commentary:
Freeman’s article may resonate with many bankruptcy practitioners—not as abstract history, but as an excavation of the very soil from which our modern consumer-credit system sprouted.
If Professor Rafael Pardo has spent the past decade showing that bankruptcy is never merely a neutral commercial doctrine, Freeman demonstrates that consumer credit itself was engineered through racial subordination, and that bankruptcy is the belated, imperfect attempt to mop up the damage.
Connecting to the Articles by Rafael Pardo:
Earlier blogs on Pardo’s work set up the intellectual scaffolding for Freeman’s argument:
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Rethinking Antebellum Bankruptcy (2024): Pardo’s careful reconstruction of how early bankruptcy policy grew out of selective legal protections for white commercial interests, not egalitarian relief.
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On Bankruptcy’s Promethean Gap: Building Enslaving Capacity into the Antebellum Administrative State (2021): Pardo’s thesis that federal bankruptcy administration was built to exclude enslaved people—law’s “gift of fire” extended only to white debtors, while others remained permanently liable.
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Bankrupt Slaves (2017): Pardo’s key insight: enslaved people were simultaneously property and persons, meaning they lived in a legal universe where debt was omnipresent, yet discharge impossible.
Freeman’s article can be read as a prequel to all three—tracing the genealogies of debt before the earliest American bankruptcy laws even existed.
Why This Matters for Consumer Bankruptcy Today
Freeman’s historical narrative is not nostalgia—it is an indictment of ongoing systems we see every day in Chapter 7 and 13 practice:
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medical debt disproportionately hitting Native and Black families;
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auto loan markups and “dealer reserves” that feel like modern-day trading posts;
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credit card penalty-rate spirals targeting “revolvers” (a term whose etymology would look familiar to 19th-century convict-lease financiers);
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consumer shaming for “financial irresponsibility” that echoes Jefferson’s manufactured debt narratives.
In other words: where others have documented bankruptcy law's selective mercy, Freeman and Pardo diagnosed the credit market’s history of discriminatory cruelty.
And her constitutional argument—however polemical in tone—is remarkably coherent with modern bankruptcy practice: Chapter 13 dockets are full of “debtors” whose debts arise not from choices but from structural coercion.
To read a copy of the transcript, please see:
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