Percentage As You Earn (%AYE)

Finance and Finansurance of Human Investments (HI)

Alternative to Bankruptcy

  
History of Bankruptcy

Lowering cost-impact of debts to make them payable as a percentage of income instead of unworkable installments, or remaining debts in a bankruptcy has a history of a solution in early America, unlike the rest of the world. In 1932, Franklin Delano Roosevelt, 3-years into the Great Depression as a correction of money supply to hard assets, asked the campaign manager of President Herbert Hoover, his defeated opponent, William "Wild Bill" Donovan, to do a global survey of all cultures as to bankruptcy laws for reforming them. The World War I veteran, from his stock brokerage house on #1 Wall Street, proceeded to do as asked going back to the Code of Hammurabi and forward, but forgot his own American culture except for more recent statutes.

If Donovan had included American history he would have discovered how debtors’ prisons were ended in North America mostly by the 1700s, except for tax-related debt and business people that would have an option under colonial law and early American law to jail a competitor or someone they did not like, who did not pay up in time installments. 

Those legally exiled debtors in counter-productive debtors' prisons from England and France, became indentured servants, and later those labor obligations were changed to a monetarization of the debt as a percentage of income. This recognition of risky life on the frontier, weather as farmers, and changing markets for craftspeople converted these fixed debts into income-contingent debts. The immigrant finance conversion from 100% labor obligation to 7% for 7 years and later down to 3 years, created market pressure for reasonableness when misfortune fell. Some of the early witchcraft trials were motivated as theft of assets by using eminent domain and asset forfeiture even before trials. The resentment for 5 generations of the survivors towards the corrupt accusers who used early governments for personal gain, also created a caution in throwing people friends and neighbors, into debtors’ prison for months through a growing season could cause a cascade of troubles that could last a decade. With lifespans shorter, this was also viewed as a death sentence for their family as well as the debtor. 

This issue came to a head in western Massachusetts in Shay's Rebellion when the government would not honor the state's revolutionary script that veterans were paid in during the war, for taxes, and would only accept hard specie. Speculators then bought the veteran's debt, and with a new state constitution that was voted on by only the Boston 41 of 141 towns, the elitists passed laws that taxes would pay the full value of the formerly repudiated script. The taxed veterans who were being thrown into debtors’ prisons frequently, gathered their militia and closed the courts so these kinds of bankruptcy proceedings and debtor's jailings would stop. Even, Sam Adams, of Sons of Liberty leadership fame, picked the wrong side in elitism to threaten death to the rebels. Though the rebels were defeated in the field, a new constitution was written and the script was paid at a market rate which was low. Percentage-of-income debt arrangements were one way to cope with inflation and deflation giving an advantage to neither lender or borrower over long periods of time; when it was acknowledged by all the elites were going to play games with the money supply.


The PAYE Solution

PAYE Finance and Finansurance today encourage safe transactions.

Today, the automotive financing industry is teetering on the edge today, with a precipitous drop in the number of vehicles purchased due to the potential for financial devastation cause by repossession and debt which ignores the loss of the use of the purchased vehicle.  Everyone losses. 

Lenders can be PAYEd a significant amount above what an installment would be using the PAYE Finansurance model, protecting the interests of both lender and borrower by establishing a livable level of cost-impact to pay off over longer periods of time including principal, interest, time value of money, and insurance on the loan.