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
Absolute nonsense. There’s no way in hell that the credit companies let alone a collection agency can issue an arrest warrant. Nor will they see that you land in jail, this is a misnomer. Don’t fall victim to these callers from collection agencies claiming that you’ll go to jail, it just won’t happen. Unless you fraudulently stole the credit cards or passed them off to someone else, chances are nothing will happen. Collection agencies calling all hours, harassing you is just part of the program, it’s in the training. I used to work for a collection agency and most of these people are nothing short of telemarketers speaking from a script.
No one ever goes to jail, hardly anyone goes to court over this. It’s all a cat and mouse game. You have to understand that it’s a business and nothing more. Collection agencies have no connection with the courts and whomever tells you they do is lying through their teeth.
People who default on credit shouldn’t worry so much. You won’t go to jail, the sheriff won’t be knocking at your door nor will the customs agents haul you away for not paying your debts. You do have options however,even if you cannot pay, or have no income, you can still obtain a line of credit, whether via prepaid cards or merely opting to purchase credit reports through other means. Although somewhat of a white collar crime, it can be done. Yet, in order to understand debt collection agencies, you must realize that they are in the business of making money, kind of like bail bonds.
In this day and age where credit defaults are used as a means to hold onto a bank (just look at what’s happening around the world), cash is still king. You’re just a small, miniscule cog in an otherwise gigantic gear. Don’t sweat it, they won’t come after you.
Smart stuff, I look forward to reading more.
i took out a few payday loans now my income is not enough i had too start paying back on my student loans so im not able to pay them back…creditors keep calling me telling me that they are going too serve me with papers at work and that i will go to jail for 8 months & lose my job. CAN THIS HAPPEn
I think you’ll find this article enlightening…
http://thinkprogress.org/justice/2011/12/13/388303/the-return-of-debtors-prisons-thousands-of-americans-jailed-for-not-paying-their-bills/?mobile=nc
There is currently a bill being passed in congress that would stop how collection agencies and companies are handling people when a debt is owed.
I am currently looking for someone who has been through the ordeal of having a warrant served to them because of the debt they owe and failure to appear in court for the initial hearing.
The information would be private and confidential.
Feel free to leave a comment… I’ll try and respond as time dictates.
Barry
I have a question regarding nonpayment of credit card debt. I got a notice in the mail regarding a notice of intent to sue. It’s from a law firm that’s trying to collect the debt. I don’t deny the debt but I don’t have anything to pay them with. I have no income, since I have not been working for a year and half now and I’m not getting unemployment either. When I called them, the person I was talking with said that if I can give them $2k, then we can talk payment options. He said I can ask family and friends for the money. I know neither my friends or relatives have this kind of money sitting around.
What do you suggest I do? Should I go to court when I get the summons?
Thanks.
Hello po,
I was given few days couple days to settle a required amount before they file case against my bounce checks that I wrote.. If in case I can only settle for a partial amount not in full on the required deadline.. what will happen next? will my case still be forwarded to litigation and precedings despite the payment attempt ?
COULD YOU PLEASE HAVE SOMEONE CONTACT ME. i JUST WON A CASE AGAINST ANOTHER
PERSON AND I NEED TO KNOW EXACTLY WHAT I CAN DO TO COLLECT THE MONEY THAT HAS BEEN AWARDED TO ME BY THE COURT. PLEASE EMAIL ME. THANK YOU.
A bill collector cannot “issue” a warrant for anything. Next time he calls tell him the conversation is being recorded ask for his name, supervisors name, and their address in case they pursue further illegal collection tactics, so you’ll know which states attorney general to contact.
I get phone calls non stop at work from a loan I took out. I told them I would pay them when I had the money. I had to close my bank account cause it it fraud alert on it. The guy I talked to told me he’s going to put a warrant out for my arrest and I will go to jail for three months and lose my job. Can that really happen.
Rebecca,
A divorce decree does not ‘undo’ a signed contract that your husband had with the creditor. Technically I believe it would be his credit that would suffer. The collector can only legally come after him I believe. And then he could come after you etc, etc.
You need to go and sit down with a lawyer you trust and talk through this one. Personally I wouldn’t give them a dime unless I had to. When they repo the vehicle they usually sell it or send it to auction. In which case they make most of their money back. If they sold it and still have a gap of 17K then that’s just a big ole pile of stinking bull mess.
Get one hour of legal counseling on this one. You need it and it’ll help you sleep better at night trust me. Let me know how it goes!
Good Luck!!!
Barry
Hi , I’m really stressing out !! My ex husband has fax me some paper work stating that a dodge Durango that was returned to the bank when my divorce was going on , well the dodge has been sold and the owning amount is 17505.00. My divorce decree states that I’m the one that is responsible for the dodge . Well the dodge is not in my name so it’s making it hard . I talked to a bankrupty lawyer and she said no I can’t file. The collection company will take a settlement for 7000.00. I don’t have that kind of money . I’m lost and don’t know where to turn to .
Steve,
People are going to jail for simply ignoring a judgment. The court issues an arrest warrant to force you into court. It’s happening in several states. It’s like the debt collectors lawyers are friends with the judges, but it does happen, it’s still rare though. Google it and you will see.
Absoloutly cannot go to jail unless you are found guilty of fraud,usually would take several very large debts accrued very quickly,if they can prove you took out these loans with no intention of paying them back.if you have ever made one payment you would be fine
Hello, thanks for your article. I have debt from two credit cards totaling just under $16,000 ($8000 each). I have paid all debt on time since I had a credit card, however, I couldn’t make payments anymore starting July 11. I have been contacted by the credit card companies and by two different collection agencies for each card. I’ve told them not to contact anyone but me and that I intend to pay the debt when I am able to. I live in another country and basic income – translated to about $250/month. The debt collectors tell me that I will continue to receive calls until I pay. (They call my Skype number so I receive it on my computer).
According to your post, they may sue me in court if I do not pay. This would probably result in me not showing up to court. And as you say, would file a bench warrant for my arrest.
My questions:
What are the chances that a warrant would be issued?
How much time before a court date is set would they notify me? Is it only by mail or is it by phone as well?
Thanks in advance!
I’m wondering, I had a note from the post office saying there was certified mail for me, and since I wasn’t expecting anything, I guessed it was from a credit card company I’m defaulted on due to the lack of funds to pay them (I lost my job unexpectedly and through no fault of my own – downsized). I never went to get the letter.
Is it possible they were notifiying me of a court date? Can they do that and then say well, you didn’t show up? Or does someone have to personally hand you something? I owe the company about $20,000 and I am now fearing a Sheriff will be at my door to arrest me.
I have an issue. A few months ago I lost my job and have NO income now. Staying with family and have just run out of my savings $. I have a Sprint cellphone account and it has 5 lines of service on it. (1 original line ive had for about 1 yr and the other 4 lines were just added 2 months ago for family members that agreed to contribute and help pay my bill ( we were hoping the bill would be less because it became a family plan when i added the lines, but that wasnt the case). The bill actually increased alot more than we expected and its WAY over the amount I can afford. Bottom line: I have a phone plan with 5 lines on it, and the bills are coming in cant be paid. The phones were iphones, so they were NOT CHEAP and I got them at 199.99 each with 2 year agreements. These phones havent been paid off since the bill wasnt what I had expected. So, what if i just let the acct go? I have no choice and im worried because when i added the 4 extra lines, they billed the $199 (x4) phone prices to my account and they have NOT been paid and its past the trial where i can return the phones. If they charge me the full prices of those phones, it will make the bill into a few thousand dollar bill after 1-2 months from now. So If i have a $4,000 cellphone bill, what will they do? Im afraid they will take legal action against me and say that I just added the 4 lines in order to get the phones and consider it FRAUD. WHAT CAN I DO!!?!?
Brenda,
You won’t get arrested. However, it might be in your best interest to explain to the law office that you have no income. Also, if possible you should speak with a lawyer of your own about this matter. Getting accurate legal advice will likely save you money in the long run. Because the amount you owe is this high… hiring legal council makes good sense.
Hi there, I’m Brenda, from Houston, tx.
I have a huge problem and I really need to know what’s going to happen if I don’t pay my debt!
Okay, so I signed a contract at a beauty school & broke the contract later on after going to school for a couple of months. What I am concerned about is that when I signed a contract it was with a Texas state ID. I did not provide any social security number or anything.
So I want to know what’s most likely to happen if I don’t pay a debt! Can I get sued? Can I get arrested?? Or Will I have to end up paying the whole amount? I owe 4,056.14. There is no way I can pay that much amount. I mean I don’t even have a job!!
I got a letter from LAW OFFICE OF JOEL CARDIS, LLC saying that, “Although the client has authorized suit, there has not been any assessment of ths matter by counsel, nor is any legal action now being taken against you. If I don’t hear from you, I’ll have to evaluate having you account reviewed by counsel.” Have no idea what they are talking about. I really need your advice plese!! Help me.