If you have outstanding debts and you’re behind in your payments, you might be wondering: Can you go to jail for debt?
🧐 A Little History Detour
Threatening borrowers with debtors’ prison was a popular tactic in the pre-19th century USA. Lenders could easily convince judges to toss non-paying debtors into what was essentially a workhouse.
The debtor would work and earn a small sum of money each week. Some of the debtor’s earnings would go to pay for expenses related to covering their stay; the rest of the money would go to the lender to whom the debtor owed the money. Debtors stayed in prison until they earned enough to pay off the debts.
Congress abolished debtors’ prisons in 1833.
Today, you cannot be sent to jail for a consumer debt (tax debt, alimony, and child support are another story). Despite this, some people are still finding themselves facing – and even serving – jail time for unpaid debts.
How is this possible? Let’s take a closer look at how it happens and how you can avoid it.
Back Door Tactics To Jail Consumers For Unpaid Debts
In today’s world, you cannot go to jail for failure to pay a civil debt, such as a credit card, medical bill, or payday loan.
So how do debtors still end up in jail?
Bench Warrants And Contempt Of Court Rulings
You won’t go to jail for not paying a debt. You can be jailed for disobeying a court order or even for failure to appear in some cases. Today’s debt collectors use that opening to threaten and even impose jail time through bench warrants and contempt of court rulings.
👉 Bench Warrant: A warrant issued by a judge or court ordering the arrest of a person who has failed to appear in court as directed
👉 Contempt of Court: A court order which, in the context of a trial or hearing, declares a person to have disobeyed or been disrespectful of the court’s authority.
These devices are increasingly used by debt collectors, often with the cooperation of judges, to threaten and even jail debtors.
How Debt Collectors Use Bench Warrants And Contempt Of Court Rulings To Collect Debts
Debt collectors can’t ask a court to jail a person specifically for an unpaid civil debt. They can and do use bench warrants and contempt of court orders to have borrowers arrested. Here’s how it works.
- A debt collection agency files a lawsuit against you seeking repayment of an unpaid debt.
- If you fail to appear in court to defend yourself, a summary judgment may be issued against you. A judgment may be issued with no regard for the facts of the case. The collector won’t even have to prove that you owe the debt.
- If a summary judgment is issued, you may be summoned to face post-judgment court proceedings. If you fail to appear, you may face a bench warrant or a contempt judgment.
Contempt of court is a jailable charge in many states. A judge could issue a warrant for your arrest for violating your order to appear in court.
The problem with this process is that many debt collectors don’t even have to prove that a debtor actually owes the debt when they file suit, nor do they need to have current contact information for debtors.
⚠️ Many debtors never receive a summons, either because address information is inaccurate or because the debt collectors resort to “sewer service”: deliberately failing to deliver a summons.
⚠️ Some collectors schedule repeated hearings during working hours, hoping that a debtor will fail to appear.
Debt collectors file court cases over thousands of unpaid debts every year. Many of them are relatively small: never assume that a creditor won’t sue you because your debt isn’t big enough. Increasing numbers of collection cases are filed over medical debts, including debts for ambulance services. Judges may set bail at the debt amount and turn the bail money over to the collector.
How To Avoid Going To Jail For Unpaid Debts
There are steps you can take to avoid going to jail for your unpaid debts.
1. Keep Track Of What You Owe And To Whom
Keeping track of what you owe and to whom you owe it is important if you want to avoid going to jail for debt. The easiest way to do this is to get your free copy of your credit report each year.
When you visit www.AnnualCreditReport.com they’ll give you one free copy of your credit report from each of the three major credit reporting bureaus: TransUnion, Experian, and Equifax.
Pull your annual free credit report copies and assess them thoroughly for any unpaid or collection reports. If you find a collection report or unpaid bill, work with the collection agency or the lender to resolve the debt as soon as possible. Be sure to learn how to read a credit report, and keep an eye out for errors.
Try to work out a payment arrangement or a debt settlement if the debt is legitimate. Do your best not to avoid the debt and tempt the collection agency to file a lawsuit.
2. Work To Keep On Top Of Current Debt Payments
If you have current debts, work hard to keep payments on those debts up to date. Do everything in your power to avoid getting behind on debt payments.
If for some reason you can’t make a payment, call the lender immediately and explain the situation. Work out an agreement to help you get back on track. Get the agreement terms in writing for your protection.
If you find you’re having trouble keeping up with your bills you may want to explore possible debt relief options for help. If you owe medical debts, be aware of the special rules surrounding medical debt and your options for getting help with medical debts.
3. Respond Quickly To Any Court Notices
If you do get an order to appear in court over a debt be sure to respond to the summons and attend the hearing. Although attending a court hearing can be intimidating, it will give you a chance to tell your side of the story and explain your position.
Knowing your side of the story will give the presiding judge more information. If the judge doesn’t know your side of the story, they’ve only got the debt collector’s side of the story with which to make a decision.
As many as 70% of debt collection cases end in default judgments, mainly because defendants fail to appear. Many collection agencies assume that you won’t appear and may not be prepared to actually prosecute a case. Simply showing up and demanding documentation of your debt can be enough to get a case dismissed if the collector doesn’t have the appropriate documents ready.
☝️ By attending any court hearings you get a chance to defend yourself. You can show the judge that there is another side to the story the debt collection representative will share.
4. Get Legal Representation If You Can
If you are defending yourself against a lawsuit it’s important to get legal representation if you can. A good lawyer will know whether the lawsuit filed against you is legit, and what you can do about it.
Know that while legal representation can be costly, there are ways to get affordable legal assistance. Reach out to an affordable attorney for advice and representation if possible.
Having someone on your side who knows the law can make the court process much more bearable and dramatically increases your chances of a positive outcome.
Don’t Let it Happen to You
All over the country, ordinary Americans are finding out that warrants have been issued for their arrest over debt-related cases, sometimes for cases they never knew existed. The people most likely to fall victim to these practices are often those least able to defend themselves.
This trend is an issue that requires attention on both the national and state levels. On an individual level, though, we can protect ourselves by responding proactively to any debt-related situation. Pay if you can, negotiate if you can’t. Try to deal with original creditors and avoid having accounts sent to collection agencies. If an account is in collections, try to negotiate a payment plan or settlement. If you are sued, respond at once, appear when ordered to do so, and do your best to find free or low-cost legal help. Making yourself a difficult target – and merely showing up with a lawyer may be enough to achieve that – may persuade a collector to go after someone else instead.
The best way to handle a debt lawsuit is to prevent it. If you can’t prevent it, don’t ignore it. That’s the surest route to a default judgment and potentially a warrant. It’s a hard thing to face, but defending yourself is still the best option!