Having an unpaid debt comes with multiple consequences. Besides drops in your credit scores and various financial implications, lenders and debt collection agencies may threaten you with jail time. But is it really possible to get to prison because of your unpaid debt? As it turns out, not really. At least you won’t face arrest or jail for simply owing a credit card or medical debt.
However, a creditor can start a lawsuit against you if you fail to pay your financial obligations. As a result, a court can send you to jail not for your unpaid debt itself but for a debt-related offense.
Implications you can face depend on your debt type and state of residence. Rules in Florida will differ from those provided for Oklahoma residents. Read on to learn more about the states where you can go to jail for debt, along with the circumstances that can lead to arrest.
Can You Go to Jail for Not Paying Debt?
Let’s make it clear: you can’t go to jail for simply owing the debt. By threatening jail time, debt collectors and creditors violate the federal Fair Debt Collection Practices Act. According to federal and state consumer collection laws, such practices are considered illegal. At the same time, there are a few conditions under which you may face jail time as a result of your unpaid debt.
The court can put out a warrant for your arrest if you were found in contempt of court associated with your debt judgment. This means that you can face arrest or jail time not for the money owing itself but for your behavior.
Types of Debt That Can’t Land You in Prison
Here are debt types that can’t land you in prison themselves:
- Credit card debt;
- Payday loans;
- Student loans;
- Account overdraft;
- Car loans;
- Mortgage;
- Rent;
- Medical bills;
- Utility bills.
However, you need to be cautious. Although civil debt itself can’t bring you to prison, there are other options for what happens if you don’t pay back a payday loan or mortgage. Keep in mind that each unpaid debt comes with financial penalties, credit score damages, or even foreclosure or repossession.
What Does Being in Contempt of Court Mean?
Being in contempt of court typically means violation of court orders. Although federal law prohibits debt collectors from threatening you with arrest or jail, they can still sue you for your unpaid debt. This way, you will get a civil court order and summons.
If you don’t appear in court, it may result in a default judgment against you. In this case, you will have to comply with the post-judgment court orders. This may include future court appearances or the debtor’s examination. If you ignore all these regulations, whether intentionally or not, this means you’re in contempt of court. In this case, the court may issue a warrant, allowing you to be jailed.
How Can I Go to Jail for Not Paying a Personal Loan?
Typically, there are two strategies that can land you in jail for not paying a personal loan debt.
Ignoring a Court Order
If your unpaid consumer debt lands you in court and you lose the judgment or simply don’t show up, the judge may require you to appear for the debtor’s examination or pay the debt within a certain time limit. If you ignore these orders, you can end up in jail.
Failing a Debtor’s Examination
A debtor’s examination is a special procedure that is performed under oath. It can only be assigned to you after the judge has made the relevant court order. During the examination, you must answer the creditor’s questions regarding your financial situation.
How can this land you in jail? This can happen if you refuse to answer the creditor’s questions, knowingly provide false answers, or fail to show up for the examination. Moreover, creditors can use various loopholes to force you to ignore questions or fail to appear at the examination. After such an arrest, you can only be released by posting a bond that is usually equal to your debt amount.
Other Cases Where You Can Be Arrested for Debt
Besides being in contempt of court in connection with your debt collection lawsuit, there are a few more cases where you can be arrested for owing money.
You Don’t Pay Child Support
If wage garnishment and other methods of child support collection are unsuccessful, judges may resort to extreme measures. In such a situation, jail time will serve as a mandatory penalty for not making your child support payments. The term of imprisonment in such cases usually doesn’t exceed 6 months. This restriction is in place to allow the parent to pay child support in the future.
You’re Convicted of Tax Crimes
Although not paying taxes itself can’t lead to jail time, there are other tax-related offenses that can. Tax evasion, filing a fraudulent tax return, and deliberate non-reporting of taxes are just a few examples.
You Have Unpaid Court Fees and Fines
Debtors with unpaid fines and court fees can go to jail if they are able to pay but deliberately don’t do this. If a debtor doesn’t have a job or other source of income, such an arrest is declared illegal by the US Supreme Court. However, practice shows that even people who don’t have the opportunity to pay fines often end up behind bars.
List of States Where You Can Go to Jail for Debt
Despite different law regulations in many states, you can be sent to jail for contempt of court in connection with a debt in most of them. Here’s the full list of states where your unpaid debt can bring you to prison under certain conditions:
Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Washington, and Wisconsin.
Additionally, the report of the American Civil Liberties Union says there are six states that can’t order arrest or jail time, even for being in contempt of court. They include:
Alabama, New Mexico, North Dakota, South Dakota, West Virginia, and Wyoming.
Tips to Avoid Going to Prison for Debt
Even if you already have unpaid financial obligations and don’t want to get locked up for them, breathe out. Debt collectors cannot jail you for simply not paying a civil debt. Here are some rules you can follow to avoid jail time for debt-related offenses.
Attend Hearings
If you don’t show up in court after getting a civil court order and summons, your chances of going to jail increase. This is because it will be considered contempt of court. To protect yourself from implications, make it your priority to attend all court hearings and examinations.
Don’t Violate Court Orders
Court order violation is one of the most common reasons why you can go to jail for debt. If you are scheduled to pay off a debt but find it problematic, know that many states may allow you to make periodic payments. This way, you will be able to pay only a portion of your debt and avoid jail time.
Stay in Touch with Your Creditor
Even if you can’t pay the debt on time, hiding from a lender is clearly not the best strategy. In many cases, especially when it comes to consumer debt, you can avoid being sued by communicating with the lender. Instead of starting a lawsuit, they may offer various payment plans or programs designed to help you pay off your debt.
Don’t Miss Debtor’s Exams
If you need to appear at a debtor’s exam, make it your priority to do so. Also, answer questions fairly and keep in mind that you can’t ignore them.
Pay Taxes on Time
Not paying income taxes is a serious law violation and crime that may result in unpleasant consequences, including arrest or jail. Additionally, you may face a tax lien, meaning that your house or automobile will be repossessed to cover your tax debt.
Know Your Rights
If you face illegal actions against you by creditors and debt collectors, contact the Consumer Financial Protection Bureau. If you need help, contact a local attorney or a nonprofit legal aid organization for advice. At least, they will help you determine whether the collector is authorized to sue you.
What Else Can Happen If I Don’t Pay a Debt I Owe?
Even if you avoid going to jail for debt, there may be other unpleasant implications. First of all, your credit score is more likely to go down. As a result, you won’t be able to qualify for a new loan in the future and may face problems with renting a car or a house and finding a new job.
Besides credit history damage, you may also lose your property, such as a house or car, that might be repossessed to cover your debt. Additionally, you can face wage or bank account garnishment.
What Can I Do If I’m Not Able to Pay My Debts?
First of all, you need to contact your creditor. To assist you in managing your debt, they occasionally provide flexible payment plans or a range of debt relief options. Consolidating debt is another option you can turn to. It enables you to pay off all of your existing debts with a single payment. In order to make your new debt simpler to manage, you can choose a loan with longer repayment terms or lower interest rates.
Prior to filing a lawsuit, you might also resolve your financial commitments. You can save thousands of dollars by managing your debt and paying it off with the aid of services like SoloSuit.
FAQ
Can I Go to Jail for Debt?
You can not go to jail for debt you simply owe. However, there are various debt-related offenses that may land you in prison. Taxes, child support, and court fines and penalties are most likely to bring you to jail if you are caught in not paying them. However, you can also go to jail for contempt of court in connection with consumer debt.
How Can I Protect Myself from Debt Collection Threats?
The best way to protect yourself from debt collection threats is to know your rights. If you face aggressive debt collection practices, turn to a local attorney or contact the Consumer Financial Protection Bureau.
What to Do If I Can’t Appear in Court?
If you can’t appear in court, try to reschedule. Just keep in mind that it’s only possible if you have a legitimate reason for it. To request rescheduling, you or your attorney need to write a letter to the court. In most cases, judges don’t accept 99% of reasons, but there’s still 1% of acceptable excuses that may work.