The shrinking middle class and the widening gap between the rich and the poor constitute significant threats to social and financial stability. One of the main impediments to upward mobility is the inability of economically disadvantaged people to use their property — in which they sometimes hold only de facto, not de jure, rights — as collateral to obtain credit. This Article argues that commercial law should recognize those de facto rights, enabling the poor to borrow to start businesses or otherwise create wealth. Recognition not only would provide benefits that exceed its costs; it also would be consistent with, if not compelled by, the innovative trend of commercial law to disentangle commercial and property law to reflect important commercial realities, rather than the arbitrary shifting of rights based on property.
Steven L. Schwarcz, Empowering the Poor: Turning De Facto Rights into Collateralized Credit, 95 Notre Dame Law Review 1-38 (2019)
Library of Congress Subject Headings
Commercial law, Property, Equality, Wealth, Credit, Security (Law)