Can You Go to Jail for Money Debts?
Debtors' prison might seem like a centuries-bygone relic, but even in modern times, not paying your bills still can land you in jail. Although the United States, like most countries, has repealed laws that imprison debtors, creditors still have the right to sue you for repayment. If you fail to manage such lawsuits properly, you could find that your financial troubles have morphed into legal troubles.
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Considerations
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You could face arrest or even jail time depending on the circumstances of your debt. Certain debts are court-ordered, such as child support, alimony or payment plans from creditors--a credit card company, for example--that come as a result of a lawsuit. Missing payments, therefore, in essence is disobeying a court order, putting you in contempt of court. If you do not show the court cause of why you are in contempt, such as disclosing your assets to show you cannot make the payment, you could be arrested. The Minneapolis Star-Tribune article "In Jail for Being in Debt" reports that in 2009, courts issued arrest warrants against 845 debtors in Minnesota alone, and some owed as little as $85.
Prevention
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Bankruptcy legal advice blog Caveat Emptor suggests consulting a consumer lawyer the moment you get any sort of legal summons or complaint from a creditor. Ignoring these complaints can escalate into you running afoul of the law even if you never set foot in a courtroom. Your creditor will win the suit by default if you ignore the complaint, which results in a court judgment against you to pay back the debt. It's at this point that failing to pay back the debt becomes the offense of contempt that could land you in jail. If you respond to and show that you are trying to comply with all court orders, however, you will avoid jail even if you are unable to pay off your debts. Your credit rating, not your freedom, will take the hit.
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Global View
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As of January 2011, certain countries still jail people directly for debts, so check local laws on debt when working abroad. Dubai in the United Arab Emirates, for example, imprisons people who cannot pay their bills, which in 2009 led to an exodus of laid -off foreign workers who suddenly found themselves unable to foot their mortgages or pricey car payments, according to the New York Times article "Laid-Off Foreigners Flee as Dubai Spirals Down." The China Economic Review in 2009 also reported that China planned to begin more rigorously enforcing laws already on the books that penalize debtors with "malicious intent," such as people who run up huge credit card bills with no ability to pay them, with jail time.
History
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Imprisonment for debt used to be much more widespread, particularly in countries that developed under English common law, according to Boston bankruptcy firm Joshua Spirn & Associates. Debtors' prisons began to vanish from the Western world in the 19th century. The U.S. largely ended the practice of arresting debtors in the 1830s, and the United Kingdom outlawed debtors' prisons in 1869.
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References
- Joshua Spirn and Associates: The Precursor to Bankruptcy: Debtors' Prisons
- The U.S. National Archives: Charles Dickens and the Debtors' Prison
- Money Reasons: We Have It Easy, Remembering Debtor's Prison
- Minneapolis Star-Tribune: In Jail for Being in Debt
- Caveat Emptor: How to Avoid Ending Up in Jail for Debt
- The Consumerist: Don't End Up in Jail for Debt
Resources
- Photo Credit latticed prison window image by Stasys Eidiejus from Fotolia.com
