Listen to “Civic” host Laura Wenus discuss these issues with some of the people in this story by listening to the podcast version below.

Thousands of San Franciscans who borrowed money to pay their rent during the pandemic are stuck with this debt, making them worse than those who let the bills expire.

Federal relief funds only cover unpaid housing expenses. This makes tenants vulnerable if they make good faith efforts to pay these costs by taking on thousands of dollars in debt to credit card companies, payday lenders, relatives or friends, especially if they later seek different accommodation. State law prohibits landlords from denying someone housing because of unpaid rent or related debt, but not other types of debt accumulated during the pandemic.

“If they have to be evicted and have a bad credit score, how are they going to get housing? Said Hannah Appel, associate professor of anthropology at the University of California at Los Angeles and co-founder of the Collective debt, a national organization that campaigns for the cancellation of various types of debt.

As of mid-September, 2,429 San Francisco households – more than one in three applicants – reported having incurred this debt, often referred to as “ghost debt,” in their rental assistance applications through the mayor for housing and community development, who managed a rent assistance program in parallel with that of the state. The local program started slowing down in september, although the state program continues to accept applications.

The repercussions could be painful and lingering for people in this situation. “Our concern has always been for this to become a long-term problem as student debt and medical debt already are,” said Shanti Singh, legislative and communications director at Tenants together, a coalition of statewide tenant rights organizations.

Singh said she had not heard of any policy proposals to tackle shadow debt.

$ 5,000 to $ 10,000 in household “ghost debt”

Of those with fictitious debt, 830 reported having credit card debt; 265 took out payday loans; and 1,334 have incurred “other” types of debt, according to the mayor’s office.

The states rent relief program covers rent and utility bills. He cannot pay off shadow debt directly, but he can pay up to three months of future rent. With this cushion, beneficiaries can use other income to repay their debt, said Russ Heimerich, spokesperson for the program.

The actual number of affected San Francisco tenants could be much higher. The city tally omits applicants for the state program – which does not track shadow debt – as well as people who have not applied for any of the programs.

The mayor’s office did not provide the total or average fictitious debt of households.

But many Latino households say they have taken on between $ 5,000 and $ 10,000 in debt to cover rent, said Miguel Velasco, manager of the workforce development program for the city. Mission Economic Development Agency. He and his staff, who help residents apply for rent assistance, said their clients took out the loans because landlords were pushing them to pay. The average rent aid in San Francisco is $ 11,174.

A livelihood collapses overnight

Mr. Tang, 41, is one of the many residents who have to figure out how to bear the burden. Tang is Chinese and has asked the public press not to use his full name due to the stigma of members of his community associated with high debt levels, he said.

Financial problems began in March 2020, when San Francisco Mayor London Breed ordered the shutdown of non-essential businesses to slow the spread of COVID-19. Tang owned a restaurant which, although deemed “essential”, saw its foot traffic disappear overnight when offices in the surrounding financial district became empty shells.

“Some days we didn’t have any orders at all,” Tang said. “I mean, zero orders. It is so scary.

It has reduced its wait staff from 10 people per shift to just one. During the pandemic, the business could earn less than $ 1,000 in any given month, well below its commercial rent of $ 14,000.

Tang’s income was gone and he was not entitled to unemployment benefits. In June 2020, he was three months behind on the rent for his apartment. His owner frequently reminded him of what he owed, and Tang felt compelled to find the money.

The government didn’t start any programs to cover this kind of debt for San Francisco tenants until March 2021. So, in June 2020, Tang had a reasonable expectation that he would end up footing the bill.

He paid his landlord with a $ 4,000 interest-free loan from a close friend.

The restaurant never bounced back and Tang closed it permanently in September of this year. He now owes his homeowner about $ 13,600. He applied for rent assistance in June and is still awaiting a government decision, but even if it is approved he will have to figure out how to pay his friend back.

“I can’t work in my restaurant,” Tang said, “but I can do Amazon delivery. I can do Door Dash.

Asians and Pacific Islanders most affected statewide

Many members of the Chinese-American community have taken on fictitious debt mainly out of a sense of duty, said Rita Lui, housing advisor at the Chinatown Community Development Center.

“The whole Chinese community shares the same value: they don’t like to owe anything” to the owner, said Lui. “They feel very uncomfortable, uncomfortable and like they haven’t done their responsibility to pay the rent.”

This may help explain why, statewide, renters in Asia and the Pacific Islands have racked up the most phantom debt per household, according to a July report from the University of Pennsylvania, which is partnering with the State of California to evaluate its rent relief program. The report is based on surveys of more than 16,000 program participants.

More than half of those polled have taken on debt to cover their rent, according to the report. Of those who did, 90% borrowed from friends or family. Asian and Pacific Islander households borrowed an average of $ 4,582, nearly a third more than white households and double the amount borrowed by black households.

For many, the unknowns led to borrowing

Despite multiple eviction protections, there were many good reasons for San Francisco tenants to incur parallel debts in the rent payment process.

In the first year of the pandemic, before federally funded relief programs began to operate, people like Tang believed there was no way to avoid payments. Even after the programs started, many tenants did not know them, said José Cartagena, senior director of the program for the homeless and non-profit housing services. San Francisco Catholic Charities.

“If I had known, I wouldn’t have paid,” Cartagena recalls, telling customers.

Some undocumented migrants have taken on debt in the hope of avoiding any interaction with the justice system, said Laura Hernandez, acting director of housing assistance at the Collaboration in defense against evictions. The statewide moratorium on evictions, which ended on September 30, had protected tenants facing COVID-19-related hardship from eviction if they paid at least 25% of their rent. the previous year to Oct. 1 – but homeowners can apply for the rest in small claims court starting in November.

“They think, ‘I’m going to go to court, get charged with something, they’ll know I’m here, so I’ll be kicked out,'” Hernandez said. “So I’m going to pay off these payday loans. “

Other tenants took on debt to avoid eviction when the moratorium was about to expire in January and again in June, said Singh, of Tenants Together.

“There was so much uncertainty until the very last minute about when Newsom and the legislature would extend the protections,” Singh said. She remembered a tenant who asked her about the likelihood of an extension and wondered whether to immediately pay her landlord the amount needed to stay housed.

“She said, well, I could pay the 25% but I should be maxing out all my credit cards. What should I do? ”Singh asked around, then advised the tenant not to go into debt as an extension would likely take place. Lucky for her, he did.

“Some debts should probably never be repaid”

Phantom debt is just the last layer in a mountain of debt that has been growing for decades, Debt Collective’s Appeal said. After hitting a low in 2013, U.S. consumer debt hit a record $ 15 trillion in the second quarter of this year, according to Federal Reserve Bank of New York data.

The pandemic caused job losses across the country, exacerbating financial holes in which many households found themselves. This was especially true for low-income people of color in service jobs. In the San Francisco metro area, which includes San Mateo County, employment in the leisure and hospitality industry, which includes hotels and restaurants, grew from 139,000 jobs in March 2020 to 62,900 the next month. Employment rebounded to approximately 104,100 jobs by August, but has not yet fully recovered.

But the pandemic has also changed something else. “We learned that word ‘moratorium’,” Appel said.

“Suddenly this idea, this moral idea that the debts have to be paid or else all these systems are going to collapse around you – the government is just putting a pause on it,” she said. “This message was unthinkable, before COVID.”

It was a demonstration that, even on a large scale, the terms of debts can change for the public good. Appel said it may be fodder for political organizers calling for debt cancellation.

“Debt payments can stop,” she said. “And no doubt, often, they should stop. Some debts probably should never be repaid. Some debts are destructive.