Many people have emailed me asking if they could go to prison for not paying their credit card debt. It seems that some collection agencies are trying to intimidate debtors with the threat of arrest and imprisonment. A collection agency representative might comment “if you don’t start making payments on this we can take you to court and put you in jail.” There’s a lot of information on this subject and I will attempt to organize it in an intelligent manner. The correct answer to this question is - it depends! If you have any questions after reading this article please leave a comment at the bottom of this page.
See also all of my articles on Collection Agencies.
See also DebtPrison related article How to deal with Collection Agencies.
Failing to make payments on debt is not considered a crime in the United States. The U.S. hasn’t utilized a debtor’s prison since the 1850′s. Some countries will still place a debtor in prison for failing to make payments. However, the U.S. government has a vested interest in making debt a desirable circumstance, therefore debt is not criminalized. In order to go to prison you must be convicted of criminal behavior. Laws regarding these issues will vary state to state. See also DebtPrison related article How to settle your debts on your own.
Here are your options with debt you’re defaulting on:
1. Settle your debt (but you’ll need some cash).
2. File bankruptcy (an often nightmare).
3. Ignore it and possibly go to jail for contempt of a court order (very rare).
4. Start paying it back in full.
If you need immediate advice on bankruptcy or debt settlement, then please call 877-231-4384. This is a toll-free number. A representative will help evaluate your financial problems for free and can even connect you with a local attorney. You can also fill out our free bankruptcy evaluation form by clicking here.
What will most likely happen
It’s always been my understanding that your creditor can take you to civil court and obtain a judgment against you saying that you owe the debt. Through the judgment the collector can then garnish your wages or even get liens against your assets. But getting to this point of wage garnishment or liens against assets is time consuming and usually never occurs. That’s because the collector has to go through a process that I’ll explain later in the article.
Going to jail for contempt wasn’t something that I thought could occur, but then I’ve read some comments from my readers below. I’m assuming there’s more to the cases than just the average default. It seems that in some rare cases an arrest warrant can be issued for contempt of court. I think this is somehow related to your not showing up in court, but from what I’ve read these arrest warrants are very uncommon.
This was stated by Sherri below in the comments “They tried to take me to court in 2000 ish. I tried to set up a payment plan and the guy told me he would not allow a payment plan and wanted me to ask friends and family to pay the bill. This week I got a letter in from the sheriffs dept stating it was a warrant for arrest. The attached paperwork was showing a court date for 12/20/07. In which I NEVER received any paperwork stating I had a court date in Dec.”
And this was stated by Deb “I owe around 3,000 in credit debt, and a sheriff keeps banging on my door leaving me a note from the sheriffs dept, what the hell is this all about? And can they arrest me in my own home?”
I have no way of knowing specifically what occurred in the two above mentioned cases that led to the Sheriff’s Dept. getting involved. In general, the negative outcomes (negative credit reporting, wage garnishment, liens, or jail) often depends on the amount of money involved and the aggressiveness of the creditor. The more money involved (almost always in excess of $1,000) the more likely the creditor or collection agency will pursue legal action.
Usually the process follows these guidelines:
You have defaulted on your payments. Your creditors collection division calls you daily to try and talk you into making a payment. After a year or two they give up on the phone calls and letters. They can’t get you to pay so they (this could now be a collection agency, not the original creditor) sue you in civil court. This can happen even if you are in a debt settlement program. It’s a lot of trouble and expense for them to sue you, so normally they won’t bother unless they figure they can get some money out of you.
Keep in mind that there are rules that collection agencies must follow according to the Fair Debt Collection Practices Act. If they don’t follow the rules you can actually hire an attorney and file suit against them! For example, if they have your phone number, they are not allowed to call your family, friends, or employer (if you request them not to). Also, you can write a cease and desist letter which instructs them to only communicate with you via U.S. snail mail.
Scenario 1 – You don’t show up and the judge rules in favor of the creditor and against you. This judgment is an acknowledgement that you owe the money. I’ve read that 80% to 90% of judgments are never collected! This is because the judgment is usually just an acknowledgement that you owe the money, and that is all. In order to collect another court date must be assigned to perform a ‘writ of execution’. If they summons you for this, and you don’t appear, they may issue a bench warrant for your arrest.
A writ of execution is a common court order granted by a court in an attempt to satisfy a judgment obtained by a plaintiff. When issuing a writ of execution, a court typically will order a sheriff or other similar official to levy property owned by a judgment debtor. Such property will often then be sold in a sheriff’s sale, and the proceeds remunerated to the plaintiff in partial or full satisfaction of the judgment. It is generally considered preferable for the sheriff simply to confiscate money from the defendant’s bank account. If the judgment debtor owns real property, the judgment creditor can record the execution to “freeze” the title until the execution is satisfied.
If you don’t show up for this one you may be arrested for contempt of court. This is the part of the process where the facts will be laid out. This is the part where they get your employment information for wage garnishment or asset info for liens. But bear in mind, most collections will not get to this point. It really just depends on how aggressive they are on your particular case. And many people are actually in a position where they cannot be collected on. Perhaps you are disabled and on limited income. Chances are they can get a judgment but will never be able to collect. There is also a federal minimum (I think this figure is 30 hours of minimum wage pay per week), which if you make below, they cannot collect. For example, if minimum wage is $5.80 per hour, times 30 hours, comes to $174/week or $702 per month. If you make that or less they cannot touch you. Money that is in IRA’s, custodial accounts, trusts, annuities, and insurance contracts are often untouchable. See also, Restrictions on Wage Garnishment for Debt Collection.
Scenario 2 – You go to defend yourself against the creditor. You explain why you do not owe the money. Or you explain that you owe the money and cannot pay it because of personal circumstances. The judge may or may not rule in favor of the creditor. If you don’t owe the money or really can’t pay – just walk into court and defend yourself, you’ll be glad you did.
Please understand that the garnishment of wages depends on many factors such as: your level of income, possibly your spouses income may be considered, and the number of dependents you have. To read about someone’s personal experience in using debt settlement companies read Tell Debt Settlement Companies to Kiss Your Ass. If this article doesn’t convince you to stay away from these companies, I don’t know what will.
Can you be arrested at airport returning to U.S.?
I’ve seen this question come up quite often. Some people moved away from the United States into another country. However, they left behind tens (or hundreds) of thousands of dollars of debt. Now they need to re-enter the U.S. for a vacation or to visit family. They are worried about an outstanding arrest warrant related to the debt. If you are concerned about this possibility try performing an information search on yourself at a site like this one. Perhaps avoiding entering the state where you used to live would be a good idea. Now if you have a warrant for fraud (related to your debt) the possibility for arrest may carry a bit more weight since this is a criminal, not civil arrest warrant. Keep reading to learn more about fraud and other issues related to debt and jail.
Fraud
Also, if you obtained debt by committing fraud you can go to jail. For example, let’s say you just moved into a new apartment. Mail for the previous tenant is still arriving at your apartment. A credit card offer comes in the mail for the previous tenant. You fill out the application, mail it in, and start using this new credit card which is in someone else’s name. This is fraud and if convicted you could serve time in prison. This happened to my cousin. He moved out of his apartment and the following tenant received his mail and ran up thousands of dollars in retail charges. He had to get a lawyer involved and it took years to get this completely removed from his credit report.
Perhaps you have ‘borrowed’ your sister’s credit card to go out and spend a couple of grand without her knowing about it. In this case you could be fined and or imprisoned for fraud. This type of conduct is also considered criminal in nature.
You could possibly be looking at prison if you ran up thousands of dollars of debt on credit cards with no intention of paying it back. Recently the federal government changed the law regarding filing bankruptcy on credit card debt. The new law makes it harder to erase the debts you owe to credit card companies. Before this law went into effect, bankruptcy courts received a record number of new filings. Broke Americans were all trying to file for bankruptcy before the new law kicked in.
At the time I had an acquaintance that had in fact, filed bankruptcy on debts to various creditors, worth over $60,000. We were discussing the new law and he suggested that I run up tens of thousands of dollars in credit card debt. When the bills came due I would simply file bankruptcy before the new law took effect. Many people did exactly that. If the credit card company can prove that this was your intention, then some judges would find you guilty of fraud – taking out loans that you had no intention of repaying. However, it is usually difficult to prove that someone had no intention of repaying the debt. For example, if you applied for six credit cards, maxed out the limits for a total of $15,000, and then never made a payment, you could be in serious trouble. It would be obvious that your intent was criminal.
In general if it can be proved you received money or goods by deceptive practices you may be eligible for a criminal conviction.
You could also be imprisoned for the following:
If you violate a court order (a judgment against you to pay child support).
If you are convicted of willfully failing to pay your income tax to the government.
If you are attempting to hide assets or income to avoid paying a debt for which there is a judgment against you.
Bankruptcy related acts that can result in criminal penalties include:
If you defraud tenants
If you forge a bankruptcy judges signature
If you commit perjury during the creditor’s meeting
Keep in mind that there is a difference in a judgment (civil court decision about money you owe another party), and a verdict (criminal court conviction of a crime). In a civil court case the outcome will largely depend on the judge and his interpretation of the circumstances.
Simply defaulting on your debt is not a crime
If failing to pay your debts equaled prison time then half the people you know would be in jail. Even the author of this article, although my debt is caught up now and will be soon be paid off in full. Many people have lost their jobs or had unexpected medical issues force serious changes to their financial lifestyle. Through no fault of their own a debtor may no longer be able to make the minimum payments. This is not a crime and one cannot go to jail for these reasons. Like I said earlier, collection agencies will do anything they can to convince you to send them a payment. If you have credit card debts or medical bills that you can no longer pay, you can’t go to jail. This is why we have debt settlement, bankruptcy, and ruined credit scores.
Although you can’t go to jail for failing to pay your debts, there is a list of negative consequences you may be eligible for;
Collection Agencies can call your phone several times a day.
They can even call your place of employment, asking for you or where they can find you.
They can call your neighbors and ask them if they know where you are.
They can sue you in civil court for the balance of debt you owe them.
They can win a judgment in civil court against you for the debt owed.
Through the judgment they can garnish wages from your paycheck.
Through the judgment they can garnish your banking accounts.
They can (in some states) get a lien against your assets (house) and sell it to pay off the debt.
They can report the collection information to credit bureaus which lowers one’s credit score.
So the short answer is no – you can’t go to jail for simply not paying your debts, unless you are in contempt of court (very rare). But, creditors and collection agencies can make your life a living hell. So it’s in your best interest to get this situation handled in a manner that benefits you.
Remember that some debt collectors will scare you anyway they can to force you to pay up. The best advice I can give is to educate yourself about your options. Take the time to read information across the web about debt and collection. There are a lot of articles out there – most of them are accurate and truthful. Go forth and be debt free!
Protect your family — let a bankruptcy lawyer help you explore whether Chapter 7 bankruptcy or Chapter 13 bankruptcy will offer you the most financial clarity. The first step to financial renewal is completing this free evaluation form.
Related Articles
* Restrictions on Wage Garnishment for Debt Collection
* The Fair Debt Collection Practices Act
* Get Everything in Writing: Collection Agencies and Their Lies
* Reasons not to file Bankruptcy or Settle Your Debts
* Can you go to jail for not paying your debts?
* How to settle your debts on your own
* How to deal with collection agencies
* Sample Debt Validation Letter
* Information on Credit Card Balance Transfers
* How I Escaped Credit Card Debt
* What You Should Know About Credit Cards
* How to seek bargains for food and clothes
* Steven Palazzo, Mississippi, Property Rights, and Eminent Domain
Hi
I am a student from India and currently in my graduating semester in USA. I am yet to find a job and have around USD 25k debt on my cc (Citi bank and Chase) for the college fees and other day to day expenses. In a worst case scenario where I don’t get a job and have to return to my country, is there any way these banks could track me back to my home country. Citi bank does have Indian operations, I am not sure about Chase bank.
About repaying the debt from my home country, the salaries there are very low and not comparable to what is paid in US, so repaying the debt that way seems very difficult to me.
Scenario 1: suppose I ever open an account in Indian Citi bank, is there any way I can be tracked by Citi bank?
Scenario 2: I am working for some employer in India and they send me to the US for some work, can I be tracked based on my previous history and be caught at airport or something?
Scenario 3: In another blog of yours I read that they can’t arrest you for not paying back the debt, however if I do not pay heed to the court orders, I can be arrested for the same. So, if I leave the country I have no clue of whats happening in my absence (if i have been summoned by the court). So what happens in this situation?
One of my savings bank has my Indian address and they are unwilling to take it off from the file, will that cause any problems in the future?
I am really tensed about my situation and any advise would be really appreciated.
Thanks
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i have just received a petition from the court for a credit card bill that i haven’t paid in 3 years. It says “you are summoned to comply with the demand contained in the petition or make an appearance either by filing an Answer or other pleading to said Petition within 15 day” I know is La the SoL is 3 years, its been over that butonly by a month. I can not afford any legal help because i am unemployed. In your opinion, what should i do? I got this letter 5.10.13
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I have a question about credit card debt. I am the executor for my mom. She is 89 and in good health and is not behind on any of her bills. However, she does have over $15,000.00 in credit card debt. She is not behind in any of her monthly payments. But she only has a $10,000.00 life insurance that will just cover her furneral. Upon her passing, what happens to that credit card debt. Will I be responsible? Can they attach the house? Its all paid for and its in my name. Mom put my name on the deed 3 years ago so that it would come straight to me.
I received a phone call from an UNKNOWN number this morning. They said that I had a summons to appear in fort and to call this other phone number to find out what it was for so I called it the other number to find out that it was a collection agency for a credit card bill in the around of 1,400.00 that I didn’t pay about 5 years ago when I had gone on permanent disability.I explained to the guy that I never received a summons and that I was on permanent disability , he kept trying to make deals with me (200.00 a month etc..) I told him again, I earn 900.00 a month in disability and he said that if I try to make the payment that they would drop the lawsuit against me?? I didn’t know you could be subpoenaed over the phone! I have no assets and being that my disability check is government/ state issued I was told that they cannot garnish it. Is this a scam to get me to pay? I’m supposed to call he guy back tomorrow and don’t know if I should..by the way, were not ALL deadbeats , I would love to work again, but sadly I cannot.
I was in the Air Force for six years and I can attest to you being a stand up guy.
i owe 6,000 in debt and i signed up for a sears master card when i was 18 and blew it in 3 months but was stupid because i didnt know the outcome if i didnt pay it back i put in my parents income information and now im getting phone calls and statements and i called to get a payment plan and they said they cant for another 6 months and it is just building and building… idk what to do i am having a baby i am on dshs cash assistance i still live with my parents and dshs is my source of income im scared of what to do but they said i have to pay 440 by the 1st and every other month my payments will be 180 after i pay the 440 but i can pay that because now i have a baby on the way. what do i do?
I came across this and found what you’ve written to be very interesting and informative. I also am particularly interested in the part above regarding defrauding tenants. I have a landlord who has several high dollar judgments on file in the county clerk’s office. It appears to be unsecured debt (credit cards). It’s also quite that the landlord is not dealing with the mortgage company on the property I am renting. The landlord has not come out and stated any of this. They continue to collect rents for the property. The person tries to insist on cash payments and does not give one tenant a receipt either. According to what I’ve read the tenants have to pay the rent even though they know they will be faced with having to get money together for payment on somewhere else to live and moving expenses. That is something that needs to be addressed legally. In other words, there needs to be laws on the books that the landlords need to follow as far as that goes. It’s possible that the person is still charging up possibly department store cards — maybe groceries — not sure. They likely figure they are pocketing cash from rent and not paying mortgage or credit cards. I wouldn’t be surprised if the person was charging mortgage payments and possibly property taxes knowing they were just going to let the place go to foreclosure. Is there anyone I can contact that could possibly be looking into all of that and confidentially? I have to worry about a roof over my head so I have to bite my lip with the landlord. The sight of the person makes me wanna puke considering they are taking my money knowing I won’t have a roof over my head and the judgmental comments that come out of their mouth when they owe their own creditors so much money. This person should be put in the clink.
Today, i was just threatened from a past online loan, the usual an Indian guy. Said tomorrow morning im getting served a subpoena , going to court and then to prison for a 400.00 loan. I called my workers comp attorney, said this is false. Ironic i have a voice mail of threats. My word of advice, never do online loans , EVER………….. also had this happen another time, was threatened to go to jail if i didnt pay my bill, indian guy again, well it never happened. Amazing what these people get away with.
Well if not paying debts are a crime. Our Government would have to lock themselves up first.
hello there i have a question i was wondering for i can go to jail for not paying for a credit card they said if i don’t pay 350.00 that they can get me for comtement of court and this is really scaring me i have 4 kids i have to take care of i never revives anything telling me i need to be in court so i really dont know whats going on they said they have been trying to get a hold of me can somebody please help me? thanks jennifer
Hi, I just wanted to let you know that when we bought our home the debt collectors came out of the woodwork. One kept sending us mail and we ignored it thinking it was just a scam. It was an honest and very costly mistake on our part. My husband said he never delt with the bank they were saying that he owed 2000.00. The mail kept coming and now he keeps threatnig he was going to take him to court and garnish his wages. So he decided just to talk with this this person and see if he could get them to stop. He calls and tells the guy he would set up a payment plan just to get him to stop sending the mail and to be sure this wast lagit. Well the guy was very rude and tells my husband he is a lawyer and that is going to garnish his wages. Long story short my husband sets up a payment plan. Then he doesn’t hear from the guy in a while and wonders why he was suppose to get something so he knows where to send the money and such but nothing came in a few months. He calls the company back asks for the guy he always dealt with and now the guy he is talking to says he is no longer in the computer so not to worry about it. Well of course you have no proof of any of this so it scares you to death. What happend is they sold it to another company and some how they ended up taking my husband to court and never let him know about the court date and garnished his wages because he never showed up. That was a long long time of not getting much income in right after buying a house we were really struggling. My husband called the court and talked to a real nice lady who couldn’t believe what happend. She said you have no choice and what is done is done and to hire an attourney would only cost you more money. She said to try and ride it out its not much longer and when we had it paid in full the creditor didn’t stop taking out he took more then what we owed. My husband was pretty worried that he was never going to stop taking out the money so he called the lady and she stopped it and said you paid your dept to him he won’t be getting any more. Apparently the money went through her and she let him know he wasn’t getting any more. He did pay back what he took that was an over payment. What we don’t understand is how did the whole court thing could go on without us getting a notice. We had no idea he was actually taking us to court and we were never notified. Now we just got another notice from a creditor and it scares me to death he still is working but I am laid off so money is very tight. If you have any advice we could use it.
First of all not everyone that don’t pay their debts are dead beats. Try making a living on a dairy farm for just one year. You have no ccntrol over what your income will be from one month to the next. Weather(drought, flood,etc.), the price of milk we are paid, the price of corn ( in our dairy feed), etc We as farmers work harder than just about anyone & it is dirtier, nastier,hot unappreciated work. Most people do not realize that without the farmer in the United States, the quality of food would not be as good or even a possibility that there would not be enough food for everyone to eat.We feed the world & we,ourselves cannot afford food, luxuries,health insurance, & can’t take care of our health because we don’t have the money to go to the doctor.No one wants to be able to pay our bille more than we do but because of circunstances beyond our control we are not able to. So be careful who you call deadbeats.
All these dead beat people make me sad. dont know what its like to work to earn a living, would just rather make a quick buck screw people over and not pay theres bills. This is SAD.
Very interesting article! I am paying back student loans but feel I am paying back too much every month. I will tone it down and pocket more cash after reading this.