The New Bill Collector Tactic: Jail Time

In some states, debt collectors use tactics that might land you in jail if you don't appear for court hearings for debtor's examinations.

By , Attorney · Case Western Reserve University School of Law

You shouldn't go to prison for failing to pay civil debts. Indeed, federal and state consumer collection laws, including the Fair Debt Collection Practice Act (FDCPA), prohibit debt collectors from threatening you with criminal prosecution for failing to pay a debt.

Yet, there is a growing practice in some states by judgment creditors who use the court system to put debtors in jail if they don't pay their debts.

What Were Debtor's Prisons?

Debtor's prisons were an archaic tool used by lenders to imprison poor people who didn't repay their debts. In the United States, debtor's prisons were commonly used until about the mid-1800s. Even some of the signatories to the Declaration of Independence had bad credit and spent some time in U.S. debtor's prisons.

Beginning in the mid-1800s, many states eliminated debtor's prisons after the U.S. government outlawed imprisonment for failure to pay debts at the federal level. However, some states—roughly a third—still use jail as a method to coerce debtors to pay certain debts.

Today, you can't go to prison for failing to pay for a "civil debt" like a credit card, loan, or hospital bill. You can, however, be forced to go to jail if you don't pay your taxes or child support. The U.S. Supreme Court has outlawed the use of prison to punish indigent criminal defendants who fail to pay for court costs and fines as part of their sentence. But many state and local courts skirt around this by assessing fees, fines, and costs as part of a civil fine or "criminal justice debt," or a condition of someone's probation or parole. In that way, if you fail to pay these fines, you might go to jail.

Civil Debts and Jail Time

How can a debt collector make you go to jail? If you live in a state that allows it, when you fail to follow a court's order to appear for a hearing or make a payment, then you may be held in civil contempt of court. If you are in contempt because you failed to follow an order, the court can issue a warrant for your arrest (called a "capias" or "body attachment," depending on the court). Once arrested, you go to jail and remain there until you post a bond. Interestingly, the bond is set in an amount that just so happens to equal the amount of the judgment that the creditor took against you.

Technically, this doesn't amount to a debtor's prison because you are going to jail not for failing to pay the debt but for failing to follow a court order. However, for the debtor, the end result is the same.

How It's Done: The Debtor's Examination

Once a creditor gets a judgment against you, it can use the court to help make you pay. For instance, a judgment creditor can get the court to issue a wage garnishment order or an order to attach your bank account. If an aggressive creditor can't find any income or assets to grab, it can file papers with the court that require you to appear for a debtor's examination. At the debtor's examination, you answer, under oath, the creditor's questions about your finances. You are also required to explain why you haven't paid that creditor.

If you don't attend the debtor's examination, either because you didn't receive notice or simply didn't want to show up, then the court can find you in civil contempt for disobeying its order to appear. From there, it proceeds to eventual jail time if you don't pay, follow the court's orders, or take other action to correct what happened.

Debtor's exams are sometimes used because creditors can use the court to issue orders that require you to do something (as opposed to orders that just affect its ability to take your property). Creditors can do this multiple times. In fact, many creditors, especially subprime and payday lenders, repeatedly request the same exam orders, sometimes as frequently as once a month, hoping that you will slip up and fail to appear for one of them.

How To Protect Yourself

Here are some things you can do to avoid jail time in this situation:

  • Do not ignore notices or orders from the court. Even if you feel that the creditor "cannot get blood from a stone," you have to take these notices and orders seriously.
  • Appear at the exams. Even if it seems like a waste of time, go to the hearings. Many times, a creditor will give up on you after a second or third time if it realizes that it really can't collect from you.
  • Consult with a local consumer attorney or your state attorney general's consumer division.
  • File for bankruptcy, if you're eligible. For some people, bankruptcy is the quickest, most effective way to stop the cycle.

Legislation to Prevent Abuses?

Some state attorneys and legislators are working to change the laws to better protect you. For instance, state law might require the creditor to provide notice before issuing jail threats or prevent the creditor from forcing you to come back to court on the same hearing unless your financial circumstances have changed so that your answers to their questions would be different.

Talk to a lawyer to learn about the laws in your state.

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