Can You Go to Prison for Debt?

It seems inconceivable now, but there was a time when there were debtor’s prisons in the U.S. for those who couldn’t pay their bills. Fortunately, you can no longer be criminally prosecuted for failing to pay what is known as a civil debt, including credit cards, loans or medical bills.

Despite the protections that consumers have from being imprisoned for civil debt thanks to the 1977 federal Fair Debt Collections Practice Act (FDCPA), a growing number of states are allowing judgment creditors to use the civil court system to go after debtors who fail to appear in court regarding not paying their bills. Not appearing can trigger court action, up to and including imprisonment.

How debt collectors pursue civil cases

Under the federal law, debt collectors cannot use abusive, unfair or deceptive practices to collect from borrowers. In some states, despite the protections in place that should shield consumers from even being threatened with criminal prosecution, bill collectors are managing to work around the laws. In roughly a third of the states in the country, there is a growing practice of creditors seeking recourse in civil courts against borrowers, according to Nolo.

Say you put $5,000 of emergency dental work on a credit card and have no way of paying it back, and the bank won’t negotiate with you. The bank as a creditor can file a civil lawsuit against you for nonpayment of debt, and seek repayment plus interest, and sometimes court costs and other fees and fines. If you fail to show up and/or have no adequate defense against the amount owed, the court issues a judgment against you and the bank becomes a judgment creditor.

These judgments allow debt collectors to garnish your wages and attach bank liens to your property. In some states, they go so far as to get arrest warrants against those individuals who failed to show up in court. If arrested, you must post bail to get out of jail. Not surprisingly, your bail is often the same amount as the creditor’s judgment against you, according to NOLO.

Rather than going to jail for failing to pay a debt, you go to jail for acting in contempt of court and not following a court order. Once the judgment is made, the creditor can use law enforcement to pursue the debt and bring you in.

Consumers are often unaware

The worst part about all of this is that many of the individuals who fail to show up in court to defend themselves have no idea that they’re supposed to go to court. This happens because many debt collectors don’t bother to notify debtors of their debt and court case, according to Reuters.

Even when people are notified, they often have no idea how to respond to the situation and may ignore it. It’s common for consumers to think they don’t have enough money to pay for a lawyer or to pay back the debt.

Tips for protecting yourself

There are some tactics you can take to avoid facing being thrown in jail over your debt. Keep the following in mind:

Don’t ignore notices regarding your debt or orders from the court. It’s important to respond, even if you’re broke. Take these notices seriously by contacting the courts as soon as you receive a summons or order. Find out what is expected of you and when and where you should appear.

According to the Federal Trade Commission, if you fail to acknowledge a lawsuit summons, you lose the ability to fight a wage garnishment as well.

Consult with a lawyer. Chances are you might not have money for a consumer attorney. If that’s the case, consult the American Bar Association’s Directory of Pro Bono Programs, which covers the U.S.

File for bankruptcy. When you’re unable to pay, the quickest way to stop the court hearings and judgments that could lead to jail time is to declare bankruptcy.

Go to court. Attend the hearings. If you show up and express your inability to pay, after a couple of tries, the debt collector may give up on you when it becomes clear you don’t have the finances to pay. They only get leverage if you don’t show up, so stay on top of the hearing dates.

Consider other options

Rather than risking jail time for unpaid debts, it’s a good idea to consider all of your options when it comes to paying what you owe.

In the case of federal student loans, check into the various repayment options that are available. For instance, there are income-driven repayment plans, as well as refinancing. Go back to school and you can defer payment until you’re done with classes. The deferral can give you a chance to catch up financially so you can resume paying your student loans.

To avoid the possibility of going to jail because of inaction on your unpaid debt, don’t ignore the problem or expect to be notified by the courts or the companies to which you owe money. Keep good records of all of your debts and make certain to check up with any companies in which you are behind in paying. Keep the companies apprised of your financial situation and work out a payment plan, if possible.

If you’re summoned to court, make sure to show up. No one is going to look after your financial situation better and more thoroughly than you.

For information on personal loans to help you pay off debt, consult SuperMoney’s Personal Loans Reviews page.

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