Can You Go To Jail If You Don’t Pay A Debt?

Being in debt is never fun. You carry a weight on your shoulders, and are bound by the obligations that you must fulfill. It stinks, but at least there are some protections for people who aren’t able to pay, and rules that govern how debts can be collected. In the past, debtors were not given as much leeway. In fact they were treated quite harshly. They were often sent to debtor’s prison:

During Europe’s Middle Ages, debtors, both men and women, were locked up together in a single large cell, until their families paid their debt. Debt prisoners often died of disease contracted from other debt prisoners. Conditions included starvation and abuse from other prisoners. If the father of a family was imprisoned for debt, the family business often suffered while the mother and children fell into poverty. Unable to pay the debt, the father often remained in debtors’ prison for many years. Some debt prisoners were released to become serfs or indentured servants (debt bondage) until they paid off their debt in labor.

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Debtor’s prisons continued to be used in the United States and United Kingdom into the 1800s, at which time both countries outlawed the practice of putting people in jail for their debts.  It was outlawed in the United States in 1833, and abolished in the UK in 1869.

You might be surprised to find out, however, that some countries to this day still use the practice.  Debtors in the United Arab Emirates, including Dubai, can be imprisoned for failing to pay their debts.

You Can Go To Jail For Your Debt – Even Today

While many people think being imprisoned for your debt in the U.S. is a thing of the past, they aren’t completely correct.

I was reading my local paper in Minnesota this past week when I discovered a series of articles talking about people who have been sent to jail for their debts.  While they have technically been sent to jail in many of these cases because they missed a court date related to their debt, or because they missed a court mandated debt payment, the fact remains that they were incarcerated in part because they have debt.

It’s not a crime to owe money, and debtors’ prisons were abolished in the United States in the 19th century. But people are routinely being thrown in jail for failing to pay debts. In Minnesota, which has some of the most creditor-friendly laws in the country, the use of arrest warrants against debtors has jumped 60 percent over the past four years, with 845 cases in 2009, a Star Tribune analysis of state court data has found.

Not every warrant results in an arrest, but in Minnesota many debtors spend up to 48 hours in cells with criminals. Consumer attorneys say such arrests are increasing in many states, including Arkansas, Arizona and Washington, driven by a bad economy, high consumer debt and a growing industry that buys bad debts and employs every means available to collect.

Whether a debtor is locked up depends largely on where the person lives, because enforcement is inconsistent from state to state, and even county to county.

While you’re probably OK if you follow up on court dates, and make your court ordered payments, if you miss a payment or a court date you could be in trouble.

Haekyung Nielsen, 27, of Bloomington, said police showed up at her house on a civil warrant two weeks after she gave birth through Caesarean section. A debt buyer had sent her court papers for an old credit-card debt while she was in the hospital; Nielsen said she did not have time to respond.

Her baby boy, Tyler, lay in the crib as she begged the officer not to take her away.

“Thank God, the police had mercy and left me and my baby alone,” said Nielsen, who later paid the debt. “But to send someone to arrest me two weeks after a massive surgery that takes most women eight weeks to recover from was just unbelievable.”

While I’m all for personal responsibility, and for following through on your debt obligations, some of the tactics being used by these debt collecters, and being followed up on by the law enforcement officials do seem a bit draconian. In some senses it seems like the debt collectors (credit sharks in suits as Dave Ramsey calls them) have taken over.

“The law enforcement system has unwittingly become a tool of the debt collectors,” said Michael Kinkley, an attorney in Spokane, Wash., who has represented arrested debtors. “The debt collectors are abusing the system and intimidating people, and law enforcement is going along with it.”

How often are debtors arrested across the country? No one can say. No national statistics are kept, and the practice is largely unnoticed outside legal circles. “My suspicion is the debt collection industry does not want the world to know these arrests are happening, because the practice would be widely condemned,” said Robert Hobbs, deputy director of the National Consumer Law Center in Boston.

Now if people are able to pay their debts, and are instead choosing to ignore their obligations and not pay, that’s one thing. If, however, they aren’t able to pay because of medical issues or other problems, why would you put them in jail?

Bail Is Often The Same Amount As The Debt

One thing people are finding once they’ve been put in jail is that their bail payment is set at the exact same amount of their debt owed.  When they post bail their money goes directly to the debt collector.

Hennepin County automatically sets bail at the judgment amount or $2,500, whichever is less. This policy was adopted four years ago in response to the high volume of debtor default cases, say court officials.

Some judges say the practice distorts the purpose of bail, which is to make sure people show up in court.

“It’s certainly an efficient way to collect debts, but it’s also highly distasteful,” said Hennepin County District Judge Jack Nordby. “The amount of bail should have nothing to do with the amount of the debt.”

If friends or family post a debtor’s bail, they can expect to kiss the money goodbye, because it often ends up with creditors, who routinely ask judges for the bail payment.

This does seem to be a bit shady – basically the law enforcement and judicial systems are being used as an extension of the debt collection agencies.   I’m sure the debt collectors will abuse this system since they’ve never been known for their fair debt collection practices.

How To Stay Out Of Jail For Your Debt

So how can you ensure that you’ll never end up on the wrong side of a jail cell door – especially if you have debt?

  • Don’t avoid bill collectors or warrants.
  • Make sure to read any documents you get from bill collectors or the courts.
  • If you get a summons and complaint, you are being sued. You must show up in court.
  • Respond promptly to a summons either denying or admitting to the debt.
  • Show up for all court hearings.

So to stay out of jail, follow up on your debts, and if you are being sued or given a court date – show up!  If you don’t you could end up losing by default, and have a warrant sworn out for your arrest.

What do you think about the ways that debt collectors are now using the law enforcement and judicial system to collect debts for them?  Do you think it is right? Should debtors be afforded more protections, or are they getting what they deserve? Should new laws be passed? Tell us your thoughts in the comments.

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Last Edited: 14th June 2010

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  1. says

    I am very much for personal accountability.

    I had the opportunity to intern at a prison. Although there was a very small percentage of this, I did meet people that were put on probation or had criminal charges against them for not being able to pay off fees to the courts. However, I stress that this is a small percentage of the prison population.

    I have also found that crimes relating to money have increased. Such as people writing multiple bad checks, stealing money or assuming identities. Of course, murders for life insurance policies happen too.

    There are several problems with this. First, the people that do need help don’t get much, if at all, financial education in corrections. Also, now they’re labeled as a criminal by society. This will make it harder for them to get an education or to get a job. Isn’t that just making crime rates increase?

  2. says

    Wow… wasn’t aware that people went to jail for debt in the past.

    I’m all for personal responsiblity as well. Otherwise people can take on debt without intentions of paying it off and abusing the system.

    In the story about police coming to the woman’s house after she gave birth, it does seem harsh and insentitive that they came two weeks after her child was born. However, it also says that the debt was old credit card debt. This makes we wonder how old the debt was, and why she didn’t pay them on time?

    • says

      I think the story plays up the whole “pregnant and being arrested” angle, but you’re right. She probably has had the debt a whole lot longer than she should have, and probably didn’t pay it. On the other hand, I’m still not a big fan of these debt collection agencies, and the methods they’re using to collect debts.

  3. says

    Peter, great article.

    You in know is some countries they take this very seriously, a lot more seriously than we do in North America. Not saying at that Saudi Arabia is the beacon on law or freedom, but they even prosecute you for bouncing a check. 3 Years in jail. Yikes.

    But to the point you raise. Problem for small lenders is that they may not have ability to assess the person they are lending to, and have no means to collecting on defaulted debt. The big lenders, I think they make enough to compensate for what they lose, they write it all up against profits anyway and they do negatively impact your FICO. They dont even go after small amounts, not worth it for them.

    Thing is, you don’t want to send people to jail for every unpaid debt, the cost of putting them in jail maybe more than what they owe in the first place.

    Related topic… seems like banks right now are in a bind, they have a lot of foreclosed homes where they have not kicked out the people in them, apparently there is a good chunk of home inventory on the side line, you put these folks in jail, you fill out the prisons.

  4. says

    With the changes to the bankruptcy laws in 2005, the return of debtors prison can’t be far behind. Getting a chapter 7 is very tough now. You can thank congress and politicians for being paid off by credit card companies to pass these changes that do nothing for the person in debt, and everything for the credit card companies.

  5. sewingirl says

    This may be true in larger municipalities, but not in more rural, cash strapped county courts. My son sold a motorcycle, the check bounced. While he was filing papers to take the guy to small claims court, the buyer disassembled the bike beyond reasonable repair. Son won the judgment, but it turned out the buyer was homeless and indigent. The judge declined to put him in jail because “you can’t get money from a bum” (paraphrased), and didn’t want to waste the counties resources keeping him jailed indefinitely. How many of those who will be jailed will stay there because they simply don’t have the resources to bond out. I would hope if they had the money they would have paid their bills in the first place.

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