This website does not administer legal or financial advice. The contents of this website are my opinions on collection agencies and how to deal with them. Nothing on this website should be interpreted as legal advice or council. No opinions on this website should be used to replace the advice of your financial advisor or your legal council.

Your word is credit

The UAE doesn’t have credit reporting agencies like Equifax (yet) because they still try and manage the country’s affairs pretending as though they live in a desert wilderness, void of any skyscrapers or pocketbook hustlers. The credit industry, if you want to call it that, doesn’t believe it’s their business to hover over your credit report. These reporting agencies are impersonal and are not part of a legitimate business contract between two human beings… hence they do not exist. You can literally get personal loans for up to $68,000 with nothing more than your word and a blank check.

The rising personal wealth, real estate boom, and bubbling petroleum brooks, will often lead average consumers in the UAE to bite off more debt than they can chew. In the UAE, like much of the Arab world, you are expected to honor your word. Who they hell do these Arabs think they are? We certainly don’t need any of that type of attitude floating around here in the U.S.. Yes you are expected to honor your word, and with it, you can have access to much more credit than you should logically have. In this regard, the United States and the UAE are similar.

Their system of personal checks

In the UAE, if your check bounces they will put you in jail. Credit is extended to you in a series of IOU’s. For example, if I want to buy a car for $10,000 and make payments for two years then I will have to write 24 checks – in advance! I will give the creditor 24 checks in the amount of $416.66 and dated in advance for each month I would be making payments. The bank then deposits each check in the month for which it was written.

It is illegal to write a blank check in the UAE… or at least to have such a blank check, signed by you to be cashed. Therefore when taking out large personal loans, the bank will require you to hand them a signed check with a blank amount. Their logic is simple enough: fail to pay them and they cash the check – which leads to your arrest and imprisonment. They may simply make you serve 3 months for the charge of writing a blank check. But if you cannot pay the loan, or find someone to pay it for you, the prison may become your new home. In fact, as I write this article 30-40% of those imprisoned in Dubai’s central jail, are there for not having paid their debt.

A good portion of the law enforcement’s time is wrapped up chasing defaulting debtors. In the UAE there is no such thing as filing for bankruptcy.

Here’s how the imprisonment would play out

You’re new in town, and hoping to impress the only three single (of age) female immigrants left in Dubai. You borrow $50,000 for some new duds and a used BMW. You’ve got a good-paying job building skyscrapers which provides a much needed shadow for those baking in the sun over at the debtor’s prison. Well times get tight because you blew too much money impressing the one remaining single female (the other two were deported because they had hepatitis) and your boss, who frequently abuses foreign infidel workers (like you), drops your pay so he can afford a new vacation to America… where he’ll cheat on his four wives.

The creditors begin calling you - and since you don’t have the money to make your monthly payments you ignore their calls. Finally the creditor, tired of trying to convince you to pay the debt, files suit against you. You ignore the court summons because you are broke, so the court puts out a warrant for your arrest. The debtor is arrested and sits in jail until the debt is paid. The debtor could also have ended up in jail, if the tired bill collector, submitted your blank check to the bank. Either way you are arrested and sitting in jail until the debt is paid. You cannot get out of jail so you can work and repay the debt. You will remain in jail until a relative, charity group, wealthy businessman or even a member of the ruling family pays the debt. It’s a good thing you built that skyscraper for the shade is oh so cool.

Planning on leaving the UAE with defaulted debt to escape payment? I wouldn’t go back because they’ll blacklist your passport and arrest you at the airport upon reentry. Straight to jail with your sorry butt! In fact the entire Middle East can be a problem for you since neighboring countries may extradite you back to the Dubai creditors. Debt in the UAE never dies, it never goes away.

If you want folks to honor their word the UAE’s debt prison may seem a logical course of action. I think it certainly makes people think twice before using credit, and that I believe is a very good thing. The largest problem for all of us, including those in the UAE, is the reverence a bustling economy places on the availability of credit. We need to save and pay cash, not splurge and use credit. An artificial economy which relies heavily on the relaxed availability of credit… has the side effect of creating a debt prison for those attempting to chisel out an existence in an impelling world.

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Drowning in Debt: ArabianBusiness.com

**Disclaimer – Debtprison.net does not administer legal or financial advice. The contents of this website are my opinions on collection agencies and how to deal with them. Nothing on this website should be interpreted as legal advice or council. No opinions on this website should be used to replace the advice of your financial advisor or your legal council.

In research for this article I interviewed my Aunt, whom was a Child Support Enforcement Officer.  Since 1985 she was an Employee of the State of Mississippi  but her position is funded by a Federal Program which insures that parents receiving government aid are financially assisted by the state mandated wage garnishment, of the non custodial parent.  These were time limited positions for child support enforcement.

Polybabydadic

The majority of her time was spent in determining paternity.  This is how it works.  The mother gives a name, or five names (in some cases), and child support enforcement sets off to locate the potential fathers.  Once an address is obtained for these men, a letter is sent instructing them to come to the appropriate location for a paternity test.  Sometimes married men (or their wives), received these letters.  Once in the office the potential father could accept paternal responsibilities.  This was a rare occurrence. Normally the potential father would ‘deny’ that he is the father.

DNA Testing

DNA testing used to require the withdrawing of blood, but more recently ‘swabbing‘ has been used.  The baby, mother, and potential are all swabbed to obtain a sample of their DNA.  The DNA is then sent off to a laboratory and analyzed.  The mothers DNA ‘markers’ are noted and then subtracted from the DNA of the baby.  The remaining DNA should be a match with the real father.

Once Paternity is established, the father’s wages were assessed. There were guidelines for how much a father will pay.  It’s based on a percentage of his income per child.  If the father doesn’t have a job then the judge would set the child support based on a minimum wage job, at 40 hours per week.

Divorces

Mississippi passed a law in the 1990’s (which is often ignored) which states that all divorces involving children must have a child support withholding order.  A form would then be filled out by a Child Support Enforcement Officer and mailed to the employer of the non custodial parent. This was a wage garnishment form designed to help the government insure that babies in Mississippi are being taken care of.  Also, if the custodial parent is on some form of government assistance like Medicaid or Welfare, there is a state law which mandates the withholding order. This one is strictly enforced.

Licenses

Besides not being able to obtain a hunting or fishing license.  You could also be denied a Drivers License when you stand in line for one of these.  My Aunt relayed a story about a certain lawyer that would never pay his child support. The only way they could get him to pay was to threaten to remove his license to practice law. The Child Support Officer could use the same threats with a medical doctor.  The ability to disrupt the lives of the  non custodial parent seems to have no boundaries.

What if you leave the state?

Leaving the state won’t help you avoid paying child support.  You may prolong it, but you can’t avoid it by skipping the state. Thanks to the Uniform Reciprocal Enforcement and Support Act, your arrest warrant for failure to pay child support follows you anywhere in the United States.  For example, one of the arrest warrants my Aunt had issued resulted in a man being arrested in California.  He was driving a tractor trailer loaded with produce. Although this was a routine traffic stop, once the man’s license was entered into the police computer, his warrant for failure to pay child support in Mississippi popped up.  He was arrested and his employer’s produce sat in the hot California sun, spoiling before making it to market.

How you are tracked

The government tracks its citizens thanks to a few interconnected circumstances.  This tracking is made possible by your Social Security Number, which is really how the government sees its citizens.  Using your Social Security Number to obtain employment, results in a W-2 being issued to the I.R.S..  Large companies have to report this information every three months. Smaller companies may only report this information at the end of the year.  Thanks to the Homeland Security Act, this process most likely alerts them as well.  But the end result is that a Child Support Officer knows where you are, and if they’re aggressive, you’ll be arrested.

Time in jail

Time in jail is only pursued if the Child Support Officer has a father or mother who refuses to cooperate.  You won’t go to jail if you are trying to pay your child support (actually paying, not just talking about paying).  Once the Officer feels that they have wasted enough time trying to get you to pay, they have a warrant issued to bring you before a judge.  Sometimes they may just lure you to the court with a subpoena, without mentioning that you’re going to be arrested when you arrive.  My Aunt relayed a heart breaking story of having to place a mother in jail who wouldn’t keep a job and pay her child support.  Since the split with her previous husband this woman had given birth to another child.  Inside the courtroom, the mother was placed in handcuffs and escorted to jail, leaving her one year old behind crying.

Once in jail, you’re stuck there until you get a job.  Now I know this sounds crazy, but my Aunt said that you couldn’t leave jail until you could prove that you had a job.  Normally family members took care of this obligation for their incarcerated loved ones.  The Child Support Officer actually does the legal writing.  They have a lawyer at their assistance that really does nothing more than just sign whatever gets placed in front of their face.  So your life of freedom is really in the hands of the Child Support Officer.

The squeaky wheel gets the oil

My Aunt said she averaged carrying around 800 ‘cases’ at any one time.  Also, she would only make appearances in court once a month.  So she would try and accomplish all she could on that day. She made it very obvious, in our conversation, that the custodial parents who were the most assertive with her, took priority over people who compained little.  So if your Ex loves the idea of harassing you, expect to hear from the Child Support Enforcement Officer often.

Oh yeah, I almost forgot, it’s of no consequence for the female to have you in court as often as she’d like.  The judge always makes the man pay the court costs.

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**Disclaimer – Debtprison.net does not administer legal or financial advice. The contents of this website are my opinions on collection agencies and how to deal with them. Nothing on this website should be interpreted as legal advice or council. No opinions on this website should be used to replace the advice of your financial advisor or your legal council.

Do I have to pay a Federal Income Tax?

You may not have to pay an Income Tax, but you do have to file an Income Statement – like IRS Form 1040 if you received any income in the prior year which is taxable. State and Federal Laws are set up to bring criminal charges against you for failing to pay income taxes. In the United States you have to file a Federal Income Tax Statement if you received earned income. So if you only receive Social Security payments, you don’t have to file an Income Tax Statement. In most states you also have to file a Resident Individual Income Tax Form, like this one.

Perhaps you’ve heard some people say that you don’t have to file an Income Tax Statement. Some people say the IRS is illegal, unconstitutional, and downright unfair. Although all of these things may be true – you will still go to jail for failing to file – if the IRS can prove that you purposely failed to pay your required tax. These would be criminal charges and you could serve time.

What you should do

If you have earned income…….file a 1040, even if you end up owing tax and can’t pay. I highly recommend turbotax, it’s online and I use the free edition – costs nothing to use and you can file electronically. If you can’t pay it’s alright, you can pay later. One of my good friends is currently behind, he owes the IRS $500.00 bucks from 2006, he hasn’t paid them yet, but is paying them back this month.

Chances are there is an IRS office located at the local Federal Building in your home town. There are IRS professionals there who can help you fill out the correct forms and set up a payment plan if needed.

Make sure you are honest

Many people get in trouble because they failed to report all of their income to the IRS in a prior year. Or perhaps you took some deductions that you legally weren’t entitled to (claiming your brother’s kids as dependents – and he’s claiming them too). If you lied on a previous Income Tax Statement it better be an honest mistake. If it appears to be a mistake the IRS may let you off with taxes and penalties. But if the IRS finds a pattern of income deception (trying to hide income) you may end up paying in more ways than one. You could serve time in prison and end up paying the tax back.

You haven’t filed in years and think they forgot about you?

Don’t make this mistake. If you ever worked for a business that filled out any paperwork when you were hired – the IRS has a record of your employment and income with this employer. Your name, like many, is flagged in the IRS database as an Income Tax Evader. Believe me they are simply giving you enough time to hang yourself. Then they come galloping in with audits, penalties, and criminal charges. Why take that chance? If you are years behind walk into your local IRS Office, sit down and have an honest discussion with them. It’s better if you come to them first.

Discuss this article, share ideas, and meet new people at Debt Prison Forums.

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* Can you go to jail for not paying your debts?

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**Disclaimer – Debtprison.net does not administer legal or financial advice. The contents of this website are my opinions on collection agencies and how to deal with them. Nothing on this website should be interpreted as legal advice or council. No opinions on this website should be used to replace the advice of your financial advisor or your legal council.

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.

5.  Leave the United States

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.  See also, DebtPrison related article Can you leave the U.S. to avoid paying your debt.

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. Please feel free to leave questions or testimonials at the forum. Go forth and be debt free!

Discuss this article, share ideas, and meet new people at Debt Prison Forums.

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