The Debtor
Who: The debtor borrows money, usually at interest, and pays the money back at a later time.
How is the debtor affected by our system? The debtor will pay much less interest in our system. Due to demurrage, the loan pools should overflow with capital. The debtor has two sources for loans.
The first is the loan pool. All accounts will be able to protect a certain amount of cash from demurrage via the retaining rate. This amount is then multiplied by 1 + the issuance rate to determine the amount of this retained amount that is available to loan out.
Loan officers bid cash to get the right to distribute the loans and for their efforts get prefs in the debtors who they give the loan to.
In the current system the bank only wants to make sure they get back out their capital + interest from the debtor. The debtor in our system will have much more help from the loan officer because the loan officers future lively hood will be based on the pref payments that the debtor pays. She is likely to receive help and support far beyond the value of the loan interest and if she is successful enough, may receive loan forgiveness so that the lender can maintain their high value prefs.
The second way to get a loan will be personal loans. A citizen can always transfer cash to another citizen in return for an IOU. These IOUs can even be put in the public ledger. Personal loans will need to compete with the loan pool, but thanks to the prefs system, families may choose to loan among themselves instead of passing all the future prefs to a loan officer.
What about a debtor in default? For this case we provide the clear out. Our goal here is preserve the right to the full output of the laborer. As a result, a debt collector cannot confiscate prefs that the debtor owns. They can liquidate the account and renegotiate terms. Once a clear out date is set, the debtor will have any pref payments protected that come from prefs owned before the cutoff. Thanks to prefs, it is likely that the debt collector will eventually be made whole, but in the mean time the debtor is somewhat protected.