Can I Go to Prison for Not Paying a Debt?
The idea of loans and the practice of borrowing stretches back to antiquity and many different laws about loans, debts, debtors and creditors have been promulgated in cultures across the continents and millennia. Modern U.S. laws reflect the fact that debt as a means to create capital has been a key part of the development of the American capitalist engine, and that it is in the benefit of the state to encourage debt. Therefore, personal debt (aside from taxes, child support and alimony) is a purely civil matter in the United States, and there are no criminal penalties (i.e. jail) for not paying debts.
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History of U.S. Debt Laws
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Early United States debt and bankruptcy laws were patterned after English law, which strongly favored creditors, and debtors were routinely pilloried and put in debtors prisons until their families and friends could pay their debts. However, towards the end of the 18th century social philosophy began to change and the idea of discharging debts as a fresh start, and creditors just got to split any current assets (i.e. the general concept of modern bankruptcy) began to take hold in Europe and the U.S. It was many decades, however, before the powerfully entrenched forces of creditors could be overcome and sweeping debt and bankruptcy could be enacted. Most historians mark the Bankruptcy Act of 1898 as the watershed law, but there were several earlier bankruptcy acts that ended up being repealed.
Modern U.S. Debt Laws
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Although there was a recent revision of U.S. bankruptcy laws that reversed the trend, most legislation over the last century has gradually added to debtor's rights, both in terms of collections and bankruptcy protections. However, over the last couple of decades collections agencies have won several legal battles in state legislatures, and have begun a much more active pursuit of debtors using these new laws (more easily get judgments allowing them to seize bank accounts, garnish wages, and so forth).
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Unpaid Taxes, Child Support or Alimony Can Lead to Jail
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Keep in mind that not paying your taxes, child support or alimony is considered criminal offense, and can lead to a criminal trial and fines and/or jail time. The IRS has extraordinary powers of seizure in cases of tax debts and the criminal penalties for willful nonpayment of taxes (tax fraud) are severe. Child support and alimony laws reflect the moral priority of those obligations, as most states make no exceptions for unemployment or low income, the de facto message being you are expected to meet those obligations even before paying your rent or buying groceries.
Ignoring Legal Action Related to Debt Can Lead to Jail
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Keep in mind that in states where it legally possible, some collections agencies will go to court to obtain a judgment against you so they can garnish your wages. If you do not show up in court, you are in violation of a court order and subject to arrest.
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