Can you go to Jail for Credit Card Debt?
Credit card debt is a very serious issue, one that can lead to many sleepless nights and a great deal of stress and anxiety. If you have credit card debt, you probably have a few questions concerning how much power your creditors have over you and what they can do with that power, with the principal question being, “Can you go to jail for credit card debt?”
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In this guide, we’ll try to allay some of those concerns as we discuss whether credit card debt can lead to prison time or not.
Can You Go to Jail for Credit Card Debt?
A couple of hundred years ago, you could be sent to debtors’ prison for not paying your civil debts, which was anything relating to loans and lines of credit. These laws were abolished a long time ago, however, and theoretically, you will only be sent to jail for failing to pay child support and taxes.
But there are exceptions, and this is when things get a little more complicated, a little more immoral, and a great deal more concerning for consumers with unpaid debt.
Why you May do Jail Time for Unpaid Debt
The US Supreme Court made it illegal to send anyone to jail for unpaid civil debts, but creditors and debt collection agencies will do everything they can to skirt around those debts and unfortunately, there are a few loopholes allowing them to do so.
The power they have depends on where you live, but in some states:
- You can be sued for failing to pay your debt. A court order will be issued demanding payment of said debt and if this is ignored then a warrant may be ordered for your arrest.
- You can be ordered to appear before the courts or make payments. Failure to comply can result in an arrest warrant being filed.
- Payday lenders may claim that you were intentionally trying to defraud them if a payday loan check bounces.
Obviously, the latter doesn’t apply to credit cards, but the first two do, and any debt that goes through the court system and results in a court judgment being filed against you, leaves you at risk of imprisonment, at least in theory. In practice, however, such incidents are rare, and you have more options than you might think.
How to Avoid Jail Time
While it is, technically, possible to be held in contempt of court and face jail time for your credit card debt, it’s extremely rare. Debt collectors are not interested in sending you to jail. As bad as their intentions may seem and as ruthless as they appear, they’re in it for the money and don’t stand to profit by dragging you through the courts and watching as you squat, cough, and collect your orange jumpsuit.
You also have the Consumer Financial Protection Bureau and Federal Trade Commission on your side, with laws like the Fair Debt Collection Practices Act (FDCPA) preventing debt collectors from:
- Harassing you or your loved ones (repeat phone calls, letters, etc.,)
- Threatening you with arrest
- Misleading you (pretending to be someone else)
That’s not to say that they won’t do those things, but that they are in breach of the FDCPA if they do. What’s more, the United States has an entire industry built around debt relief, repayments, and refinancing, and there are numerous ways to escape all types of debt (student loans, medical bills, credit cards) without facing serious penalties or charges:
- Credit Counseling: A credit counselor can assess your situation and help you find an escape. They can also recommend debt management and debt consolidation programs, working with your credit card issuer to create a repayment plan that you can afford and will stick to.
- Debt Settlement: A debt specialist will negotiate with each credit card company to settle your debts for less than the balance. They often ask that you stop making monthly payments, which could put you at risk and may impact your credit report and credit score, but this is often the cheapest way to clear those debts.
- Repayments: In most cases, you can agree on an installment plan with a creditor or debt collector. That way, they get the money they need, and you have an easier avenue of escape, making it a win-win.
- Statute of Limitations: Every state has its own statute of limitations on debt, and once this period passes, you are no longer legally obligated to pay that debt. Creditors may still charge you for it and try to convince you to pay, but you don’t have to and can’t be arrested if you refuse. However, if you start paying any debt that has passed its statute of limitations, you may be legally tied to it again.
Bottom Line: Be Skeptical
Any time that a debt collector threatens you with arrest or legal action, you should be skeptical of their intentions and legitimacy. Unscrupulous debt collectors will make threats like this to scare debtors into repaying debts that they are no longer legally obliged to repay, including debts from deceased spouses and debts that have passed their statute of limitations.
Legal threats relating to unpaid debts also form part of a script used by countless con artists, especially when those debts are related to taxes. In this case, you can be arrested for unpaid tax debts, but if you’re being contacted out of the blue by someone with a blatantly foreign accent requesting payment in gift cards for a debt you didn’t even know existed, you can rest assured that it’s a scam.
If you are ever in any doubt about the legitimacy of a debt collector threat, make a note of their phone number and any information they provide you with, and seek legal advice. It may actually benefit you to tell them that you’re going to speak with your lawyer and will return their call at a later date. Be polite, remind them that you just want to know what your options are, and tell them that you will return their call promptly.
If they respond by insisting that you deal with the issue now and give you a strict and unreasonable timeframe (such as a few hours) then you’re either dealing with a con artist or a debt collector in breach of the FDCPA, in which case you can seek help from the Consumer Financial Protection Bureau or Federal Trade Commission.
If their response isn’t one of desperation and haste, then contact a legal expert or, at the very least, make sure you understand what debt they are referring to and what legal rights you have in your state of residence.