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If you are in debt and can’t see a way out of it, you are probably wondering: Can I go to jail for debt in the United States? In this article, we will tell you everything you need to know about it. Keep reading. 

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Can I really go to jail for debt in the United States in 2021?

Not being able to pay your debts may be causing you a lot of anxiety, anguish and worry. Questions like “What can happen if I don’t pay my debts? Can I go to jail because of debts?” can worry you sick. In this article we will take a case-by-case look at what happens with debt default and what types of debt can lead to a jail sentence. But first, let’s take a look at what debtors’ prisons are all about. 

Do debtors’ prisons still exist?

Until the mid-19th century in the United States, debtor’s prisons were a reality. They were used by moneylenders to incarcerate poor people who were not current on their accounts. Can you imagine if today there were debtors’ only prisons?

Let’s look at what has happened to debtors’ prisons:

  • In the 19th century, in the year 1833 specifically, debt jail was eliminated at the federal level by a Supreme Court decision;
  • However, there are still states in the United States where creditors use the threat of jail time to intimidate debtors and force them to pay their debts. 
  • How does it work? You don’t go to jail for the debt itself, but for contempt of court order. 
  • What the collection companies or creditors do is sue the debtor for not paying their debts. And then, when the debtor fails to appear in court, the judge issues a bench warrant for their arrest. 
debtor prison

This has become a growing practice in some U.S. states such as Ohio, Missouri, Minnesota, Illinois and Pennsylvania. The American Civil Liberties Union (ACLU) even denounced a “criminalization of poverty” and pointed out that thousands of people are sent to prison each year for this reason. 

What types of debt can I go to jail for in the United States? 

1. Civil debts

We said it a few lines above. Currently, the possibility of jail time for debtors has resurfaced. In some states, where jail is still used as a method to make people pay, debtors may end up going to jail. But, they do not go for their debts precisely, but because they fail to show up in court when creditors or lenders demand it. 

Note: Check our blog post “Sued for debt” for more information on the topic.

What is a civil debt?

Before we understand a little more about how debtors may or may not end up in jail, we will analyze what we mean when we talk about civil debt. 

  • Civil debt is debt that is incurred as an individual, personally. 
  • It is, in short, a contract between private parties. Between you and the institution or financial entity that granted you the credit or service you owe.
  • Some civil debts are: personal loans, payroll, mortgages, credit cards, non-payment of rent, medical bills, the highway bill or utility bill.

In the United States, under federal law, unpaid civil debt is not punishable by imprisonment. In fact, federal and state consumer collection laws prohibit debt collectors from threatening criminal prosecution if you refuse to pay a debt. And, to ensure this is enforced, there is the Fair Debt Collection Practices Act (FDCPA).

If you have a civil debt you will probably be pursued by collection companies and creditors. They will order you to pay. You may be fined, have your assets, wages or even tax refunds garnished. Even if the debt is for a very large amount, that creditor or lender cannot put you in jail for not paying the debt. 

Note: If you want to go deeper into civil debts, I recommend our article: what happens if I don’t pay a promissory note. And if you think you are in debt, but don’t know at what level, read How to know if I have debts in the United States.

2. Student loans

Many people take on hundreds of thousands of dollars in student loans and then find themselves in over their heads when it comes time to pay. When asked if you can go to jail for not paying back a student loan, the answer is no. The student loan is considered a civil debt. And, as such, when you default on your payment, you are in breach of the private contract you made with that creditor. 

Considering that you are refusing to repay the student loan, creditors will use other ways to collect the debt. 

Some of these paths are: 

  • They will seek repayment of the debt from the U.S. Department of Justice.
  • Try to collect the debt through litigation.
  • You may be sued for not paying your student debts. In that case, it is advisable to always appear in court, as contempt of a summons can result in arrest.

3. Child Support

While there is a possibility that the creditor or lender will sue you for unpaid civil debts in the hopes that you will stay away, and thus the court will order your arrest, with child support the process is very different. With this type of debt, jail time is possible.

In general, child support payments are ordered, in the first instance, by a court. Therefore, if you have failed to pay child support, you are also in violation of a judge’s order. 

The sequence would go something like this: 

  • You stop paying child support;
  • The debt grows;
  • You are disobeying the court order that you must pay child support;
  • The person receiving child support (for example, your ex-spouse) requests a court hearing to account for the unpaid debt;
  • If the judge determines that you could pay child support but did not, a jail sentence may be ordered. Jail time if you are in default of paying child support can be up to six months;
  • This can operate in different ways in each state. In some cases, the court may allow repayment of the debt so that you can make periodic payments on the debt. If so, you may be able to avoid jail time.

4. Taxes 

Along with child support, taxes are the other type of debt that if not paid can end in jail. You should know that refusing to pay income taxes is a crime. And if you are prosecuted and convicted, you can go to jail. 

jail for debt in america

Failure to pay taxes is also known as tax evasion or tax fraud and can take several forms: 

  • Not declaring income.
  • Claiming expenses for work not performed or owed.
  • Not paying taxes.

5. Debtor Examination

This is not a debt per se, but it is one way that debts can land you in jail. A debtor’s exam is requested when a creditor has obtained a judgment against you and finds no income or assets to appropriate. At that time, the creditor files documents with the court for you to appear before the judge in a debtor’s exam. 

What is a debtor’s examination? 

  • A court examination that you answer under oath. 
  • You must answer the creditor’s questions about your finances.
  • In addition, you must explain to the court why you have not paid your debt to the creditor.
  • If you fail to attend the debtor’s interrogation, the court may hold you in civil contempt for disobeying its order to appear.
  • At that time, if you fail to appear in court, you may end up in jail.
  • If you do appear, you must follow the court’s orders and take whatever steps are necessary to correct the situation.

Warning: always appear in court and follow court orders

We noted this above. Debts themselves are not punishable by imprisonment in the United States. This is especially true since 1833, when jail was banned as a method of coercing people to pay their debts. 

However, it should be clarified that it is possible to end up in jail for debts. How? 

  • If a creditor or lender sues you and you fail to appear in court, there may be a warrant for your arrest. 
  • If you fail to pay court-ordered child support, pay your taxes or fail to appear for a debtor’s’ exam, you can end up in jail for contempt of court. 
  • In conclusion, always appear in court, even though it may be embarrassing to go to court to discuss debts that you already know you owe and that are unpaid.

Can I go to jail for accumulated debts in New York?

Although it is not legal in the United States for creditors to threaten debtors with jail, in many states this has become a common practice. And, as we said a few lines earlier in this article, creditors demand an appearance before a judge and if you don’t show up, it can end in an arrest. A situation that can lead to trauma and anguish. 

jail for accumulated debt in new york

But what about accumulated debts in New York – can you go to jail? Fortunately, in New York this practice does not occur in the same way. Consumer protection laws place limits on debt collectors. Along those lines, there are laws in New York State that prohibit harassing and threatening conduct toward debtors.

Some prohibited conduct in New York State:

  • Threats of arrest or imprisonment for accumulated debt;
  • Calls from a federal agency to collect the debt;
  • Threats of reports to immigration authorities;
  • The creditor or lender insisting that the debtor committed a crime;
  • Threats of foreclosure, eviction and other actions when these are unauthorized;
  • Claiming a balance owed greater than the original balance;
  • Threats of violence;
  • Disclosing information about debts owed by family members or third parties;
  • Transferring and assigning a family member’s debt.

Note: Read more about the transfer of debts in our article If a person dies who pays his or her debts and What happens to a joint account with a deceased parent?

Process for accumulated debts in New York

  • You have unpaid debts in New York;
  • These debts are accumulating and growing;
  • Creditors have notified you and called you to pay;
  • If you do not pay in the face of these notices, the creditor may take further action. These include suing you;
  • Under Section 5250 of the New York Civil Practice Law and Rules, creditors can ask the court to send you to jail for failure to pay debts;
  • For this to happen, the creditor must prove a few things. Amongst them, the creditor must show that you are about to leave the state or that you are hiding, or that you have hidden property that you could use to pay your debts;
  • If the creditor convinces the court and there is a warrant for your arrest, you will be taken before a judge;
  • The recommendation is to always appear before the judge in the presence of an attorney. The judge may order you to post a bond.

Can a debt collector sue me?

Yes, yes and yes. We said it before. And now we will explain it in more detail, read on.

  • A debt collector files a lawsuit against you with the goal of making you pay the money you owe;
  • This collector does this so that a judge will issue an order requiring you to pay the debt;
  • You are notified by the court telling you that you must go to an appearance to face the judgment;
  • If you ignore the order, the judge may demand that you be arrested for contempt of a court order;
  • In that sense, keep in mind never to disobey a court order when it comes to a debt. While you cannot go to jail for owing money, debt can land you in prison.

What is the statute of limitations?

The statute of limitations is the amount of time debt collectors have to sue the debtor once debts become past due. While there is a Federal Fair Debt Collection Practices Act that governs the statute of limitations, there are also state laws that may make your situation different depending on where you live.

In general, the statute of limitations for a debt is three to six years. An unpaid debt that is time-barred under the statute of limitations will still appear on your credit report. And this, by the way, can affect your credit score for up to seven years, which is how long the debt will continue to appear on the document.

Note: Check here on how to improve your credit score.

What can I do if I can’t pay my debts?

Not having the money to pay your debts can be very distressing. But, keep in mind that there are always alternatives and solutions. One is to consolidate debt, while another option is to file for bankruptcy. While filing for bankruptcy has consequences, it also allows you to restart your financial situation. This gives you a fresh start as a consumer.

Note: What is better if I can’t pay my debts, consolidate the debt or file for bankruptcy? Also read about asset protection in case you want to take one of these options.

Debt Consolidation

Consolidating debt can help you sort out your financial situation and, in a sense, start with a clean slate. Debt consolidation combines all of your debts into one payment. This allows you to reduce the interest rates you pay on each loan. You will be able to get rid of your debts faster. 

Filing for bankruptcy

If you are seriously considering the option, I recommend that you look at the process and what you need to do to file for bankruptcy in New York.

Below, review the main types of bankruptcy that are protected by law:

  • Chapter 7 bankruptcy: this is the bankruptcy that is known as “liquidation.” It refers to the fact that you, as the debtor, give up all of your property in excess of what is exempt. 
  • Chapter 11 bankruptcy: This is also known as “reorganization”. It is used primarily by businesses and individual debtors who have very large debts. 
  • Chapter 13 Bankruptcy: This is known as the “wage-earner plan”. It is a reorganization that allows you, if you have regular income, to devise a plan to pay part or all of your debts. This plan has a term of 3 or 5 years. 

Note: Read more about the types of bankruptcies that exist in the United States and the difference between Chapter 7 and Chapter 13. Find out if you can buy a house after bankruptcy or the process of buying a car after bankruptcy. Discuss whether after filing bankruptcy you can apply for a personal loan or refinance your home.

Why hire the attorneys at Ortiz & Ortiz?

Having debts and not having a way to pay can be a very stressful situation. However, you should know that there are options and ways to get out of it. You can consolidate your debt or file for bankruptcy, among other alternatives. 

If you have not paid your debts and are afraid of going to jail for non-payment, I hope this guide has helped you. And remember that in the United States, unpaid debts are not punishable by jail time. What is a serious offense is contempt of court or failure to appear in court. Therefore, always go to court if you are asked to do so.  

Do not hesitate to contact us! It is important that this process be handled by an experienced attorney who can advise you at all times. Our estate planning attorney in New York can review your case and analyze your options: 

  • First of all, they will make a study of your current financial situation.
  • Our lawyers will answer all your questions, especially those you have about whether you can go to jail for debt.
  • You will see, together with the lawyer, what debts you have and what are your most feasible options.
  • In that line, our lawyers will guide you on what steps to take. Whether it is to protect you from creditors, consolidate the debt, file for bankruptcy, etc.

For these and other services contact us today.