Can I Be Sent to Jail For Debt?
Can you be arrested for debt? That’s a question that a lot of consumers who are struggling with their mounting debt ask themselves.
To answer the question, you generally can’t be arrested for your civil debts (credit cards, loans, hospital bills, etc.). Just because you owe some money to your creditors won’t necessarily land you in jail, regardless of what type of debt it is. Creditors aren’t even legally permitted to threaten consumers with jail. But you can be sued if you’re way behind on your bill payments, which is the course that many creditors end up taking on consumers who owe a lot of money.
Click here to see what else happens when you can’t afford to make your loan payments on time.
It’s understandable for many debtors who owe creditors a lot of money to wonder if they can wind up in jail for the monies owed, especially if they’ve got predatory collections agencies contacting them all the time and using threatening language. However, in the United States, failing to pay your creditors does not justify you going to jail.
Americans carry all sorts of debt that they may have trouble paying back, including:
- Credit card debt
- Auto loans
- Payday loans
- Personal loans
- Student loans
- Cell phone bills
- Utility bills
At some point, your creditors may come after you in the form of a lawsuit if you do not repay the debt owed. But as far as jail is concerned, you have little to worry about.
You’re Protected By the Law
The law does not permit debt collectors to threaten consumers with arrest if they owe money. The government has put in place laws surrounding what creditors can say to you, as well as how they can contact you. For instance, they can’t come banging on your door or call you in the middle of the night. Doing so would be considered harassment.
For some information about revolving debt and how to deal with it, look here.
You Can Still Be Taken to Court
While it’s rare to go to jail for money owed to creditors, you can still be taken to court on a civil level. Debt collectors can use the court system to sue you for payment, which is typically the most effective way to get their money back. Every year, tons of civil suits are filed over debt.
What happens once you stop making debt payments will depend on several factors, including the following:
- The amount owed
- The amount of time that has gone by since you last paid your creditors
- Your income
- Your assets
- The state you live in
Many consumers lose these lawsuits and end up being slapped with a default judgment that can lead to a number of repercussions, such as wage garnishment to satisfy the judgment debt. A wage garnishment involves the court allowing an employer of the debtor to pay a certain percentage of the debtor’s wages to the court’s trust account.
Read this to learn how consumer debt can affect you.
If this happens, you’ll be notified by the court so you won’t be surprised when you see a lower amount on your pay-stub. That said, you can still request to have the reduction amended if you can show the court that you’re taking steps to deal with your debt issues. If more than one creditor has a judgment against you, the funds might be divided up and collected by each court order instead of dealing with all claims in sequence.
While your wages from work can be garnished if you are successfully sued, certain things cannot be touched, such as:
- Income assistance
- Social security programs
- Employment insurance
- Old age security
The above are exempt from garnishment. Having said that, the funds associated with these accounts can still be taken when they are deposited into your bank account.
If you’re in debt trouble, you can also try qualifying for a debt management program.
Creditors who successfully obtain a judgment can legally seize some of your property in order to satisfy your debt, which is referred to as an “execution order.” However, for a creditor to lawfully seize anything, you must completely own the items with no liens or loans on them. Every province in Canada has its own Execution Act that exempts specific possessions.
So, can you go to jail for credit card debt or any other civil debt? You’ll be relieved to know that the answer is no. However, if you end up being successfully sued by your debt collectors and do not follow through with the judgment, you could be faced with more legal troubles than you’d care to endure. In certain states, you can serve jail time for failing to pay your taxes or child support.
Want to read about one woman’s fight from debt to success? Check this out.
To find out more about what consequences you may face for not repaying your debt, get in touch with a Licensed Insolvency Trustee who will go over your financial situation with you and discuss the options that are available. It should be noted that this information is not to be taken as legal advice. If you are being sued for debts owed, be sure to speak with a legal and financial professional who can help you through the process.