How to Avoid Ending Up in Jail for Your Debt
August 24th, 2016 by Bunch & Brock
Debtors’ prison. Taken separately, those words are only slightly less depressing than when taken together. The jailing of people who were unable to pay their financial obligations was not federally eliminated in the U.S. until 1833 – and some states did not outlaw it until 1849. Today, being in debt is not a crime, but there are matters that must be addressed so you don’t end up in the clink.
When you first miss a payment, the initial reminders from your creditor are polite. Two missed payments trigger frequent phone calls and a drop in your credit score. Three missed payments incorporate words like “urgent” and “collection action.” At around the six-month mark of nonpayment, the creditor will charge off the account and transfer it to their collection department or sell it to a collection agency. The cycle of phone calls and letters then repeats. You may receive an offer to settle the debt at a lesser amount, which is an easy way to solve the problem … IF you have the money.
If you don’t pay your debts by this point and if you have a job, it is likely that you will be sued. If a collection action is filed and you lose, the creditor can attempt to garnish your wages. So, you can be taken to court to collect a debt, but jail is punishment only if you have committed fraud, if you don’t pay court-ordered child support, or if you refuse to pay your taxes despite being able to do so. Imprisonment for contempt may also be a possibility if the judge thinks you can pay but are simply refusing to comply with the court’s order to do so.
It’s important to remember that it’s not the owing of the money that lands people in jail — it’s the failure to follow an order issued by a court. A great many people who find themselves facing jail time because of debt got into that position by ignoring an order of the court, such as a subpoena to appear for a deposition (which is how a creditor forces a debtor to disclose information about assets, income & jobs) or any other lawful order of the court. By failing to read the letters that keep coming, it’s easy to overlook a legal summons and complaint, which means the creditor can win the case by default. That judgment against you can then be used to asked the court to compel you to disclose how much money you have; this is known as an “asset discovery deposition.” Ignoring that order can prompt another one telling you to appear in court and explain yourself. And, ignoring that order to appear before the court can result in a bench warrant for your arrest.
It can be difficult to deal with owing debt, but ignoring the situation can actually make an already bad situation much worse. While you can close your eyes to a summons and complaint with less consequence, ignoring the court appearance order to explain why you disobeyed the disclosure order is further disobedience and can result in contempt of court. If an arrest warrant is issued for your failure to appear, you can be arrested when you are doing something as mundane as getting pulled over for a speeding ticket.
You do not need to worry about going to jail if you have not been sued on a debt. If you have been sued, hire a lawyer who can help you through the process. And don’t ignore any court order, no matter how stressful it may be to deal with your mail. There are worse things that can happen, like landing behind the jail bars.
The Kentucky debt relief attorneys at Bunch & Brock can provide the necessary counsel and guidance for your situation. We know it can be hard to get out of debt, and we have helped many people who were struggling with the very same issues. Let us put our knowledge and experience to work for you. We encourage you to contact our office by calling 859-254-5522 or filling out this online form.