Debtor's prisons were a common feature of American civilization until the mid-1800s, but since that time, they have been abolished. Now, you can no longer be sent to prison for being in debt, but there are a few loopholes surrounding that rule, and if you are unable to pay some of your debts, you need to understand the laws around debt and prison.
Here are five facts everyone with debt needs to know to protect themselves and keep themselves out of jail:
1. Debt collectors cannot threaten to throw you in jail.
If you owe a debt, especially to a credit card company, you are likely to be contacted by a debt collector. These professionals often work on commission, and their earnings increase as they collect more debts. As a result, many debt collectors have been known to use coercive tactics in their collection practices.
Luckily, to protect consumers from potentially damaging collection efforts, there is a set of laws called the Fair Debt Collection Practices Act. Under the terms of the FDCPA, debt collectors cannot threaten to have you arrested or throw you in jail for a debt, and if a debt collector tells you this, they are likely breaking the law and harassing you.
Ideally, you should report the collector and the collection agency to your state attorney general, and you should contact an attorney to learn about your rights.
2. Creditors can take you to court.
Although bill collectors cannot threaten you, creditors and collectors are allowed to take you to court. If you owe a creditor, an old landlord or almost anyone else money, that individual can lodge a complaint with the courts, and the courts will send you a summons to appear.
If you fail to notice the summons and you fail to show up for court, you may be held in contempt of court. In many states, if you are in contempt of court, an arrest warrant can be issued for you. Thus, indirectly, you may be put into prison for your debt.
Once arrested, you may have to post bail to leave jail, and a court debt will be set to resolve the claim your creditor has against you.
3. You cannot receive jail time due to a court hearing with a creditor.
If a creditor takes you to court, you luckily cannot receive jail time as a result of the court hearing. However, you will likely have to explain to the court why you did not repay the debt, and you may have to answer questions about your current financial state.
Unfortunately, once the creditor takes you to court, the control is in their hands, and you cannot declare bankruptcy or take other steps to absolve your debt at that time. You simply have to take the punishment meted out by the courts, and in most cases, that involves a wage garnishment or a property seizure.
4. Judges can garnish your wages or take your assets.
If a creditor takes you to the court and the judge decides that you are responsible for the debt, the judge may issue a judgement to have your wages garnished or your assets seized. If your wages are garnished or your savings account is seized, that may make it impossible to pay other bills.
If you fail to pay child support, in particular, you may be sent to jail. In that case, you are also going to jail indirectly for consumer debt.
5. Bankruptcy can help you resolve your debts.
If you are in an overwhelming amount of debt, you should not ignore it. Although there are no more debtor's prisons, debt could indirectly land you in jail, and nobody wants that.
Instead, contact a bankruptcy attorney, such as those at Demers Gagnier Inc.. These professionals can help you file for bankruptcy, which absolves your debt obligation and ensures your creditors have no legal right to take you to court.