When You Can (and Can’t) Be Arrested for Debt

While debt collectors can no longer have you jailed or threaten to have you arrested for not paying your debts, there are a few instances in which you can be incarcerated with debt as the underlying cause. For example, a debt collector can sue you and, if you fail to comply with court orders, you could get jail time. With that in mind, we’ll answer the question, “Can you go to jail for debt?” and in which instances that may happen.

Can you go to jail for debt?

A long time ago, it was legal for people to go to jail over unpaid debts. Fortunately, debtors’ prisons were outlawed by Congress in 1833. As a result, you can’t go to jail for owing unpaid debts anymore.

Still, there are a few cases in which unpaid or unacknowledged debts can be the underlying catalyst for your arrest, even if they aren’t the direct cause.

You ignore a court order

If you fail to make payments on your debts, your lender may sue you to recoup their investment. At that point, if you ignore the notice to appear in front of a judge, you could be found in contempt of court, which is the official term for disobeying a court order. Once that happens, the civil case can become a criminal one and a warrant may be issued for your arrest.

You fail to pay child support

You may find yourself under arrest if you fail to make child support payments. Since child support payments are court ordered, failure to follow through is also considered contempt of court.

That said, while each state has its own procedure for prosecuting those who fail to make child support payments, following through on this is rare because incarceration would limit the parent’s ability to continue making payments.

In either of the cases above, it’s important to recognize that failure to acknowledge a court order would be the reason for your arrest, not the inability to pay your bills. Contempt cases are also regulated on a state-by-state basis. As of the time of writing, every state aside from Alabama, New Mexico, North Dakota, South Dakota, West Virginia and Wyoming allows for contempt of court arrests.

You purposefully deceive the IRS to avoid paying taxes

You can also be imprisoned by the IRS if you willfully refuse to properly pay your taxes. As it stands, intentionally failing to pay your taxes can result in up to $100,000 worth of fines, up to five years in prison or both, per the U.S. federal tax code.

That said, it’s important to note that tax evasion (knowingly refusing to pay taxes) and tax fraud (intentionally lying on your tax return to limit your liability) are the two tax-related offenses that can land you in jail.

You shouldn’t worry about the possibility of being imprisoned if you make an error on your tax return, and you are, of course, allowed to use legal means to limit your tax liability. However, the IRS can take measures such as wage garnishment or seizing your assets to collect what it’s owed.

Can debt collectors threaten to arrest you if you don’t pay your debts?

Fortunately, the Fair Debt Collection Practices Act (FDCPA) makes it illegal for debt collectors to threaten you with jail time if you cannot pay your debts. If you’ve been dealing with a debt collector who’s been engaging in aggressive or threatening behaviors, here’s what you need to know.

What to do if you’re threatened by a debt collector

If you think a debt collector is using unlawful practices, here’s what you can do:

• Research your rights. Once you know what protections are afforded, you’ll be better able to determine if the behavior you’re witnessing is unlawful. The Consumer Finance Protection Bureau (CFPB) goes into detail about your rights as a borrower.
• Document the behavior. If your creditor is engaging in unlawful behavior, the next step is to document all communications. You’ll want to keep a record of the method of contact, what was said and the time all communications were received. Details such as the time are important because debt collectors are not allowed to call before 8 a.m. or after 9 p.m. in your time zone. Collection agencies also can’t contact you during work if you tell them not to.
• File a complaint. After you feel you have enough documentation, the final step is to file a formal complaint. You can file a complaint through the CFPB, the Federal Trade Commission (FTC) or your state attorney general’s office.
• Optional: Send a cease communications letter. You can request that debt collectors stop communicating with you or only communicate with you in writing. Once you make this request in writing, debt collectors can only contact you to let you know they will stop further communication, that the debt has been terminated or to inform you of any further action they’re taking against you.

Strategies debt collectors can use

Although there are limitations on what debt collectors can do, they do have a few strategies at their disposal to try and recoup the money they claim they’re owed.

• Contempt of court cases: As mentioned above, creditors can sue you. If you lose the case or don’t show up to court, the judge may file a default judgment against you, which compels you to follow any future court orders, such as repaying the debt, being subject to wage garnishment or attending any future court appearances. If you have a judgment against you and you fail to comply with those orders, you can be arrested for contempt of court.
• Debtor’s examinations: Once the creditor has a judgment against you, they can request a debtor’s examination. During the debtor’s examination, the debt collector is allowed to ask you questions about your financial situation, and they can use that information to collect on the judgment. If you don’t show up to the examination, if you refuse to answer questions or if you falsify information, you can be arrested.

How to avoid going to jail over debt

Now that you know more about the scenarios in which you can go to jail for debt, here’s what you need to know about what you can do to get a handle on your debt before things go too far.

Contact your creditors

While the idea of connecting with your creditors may feel intimidating, sometimes it can be the key to finding debt relief. Often, creditors have the power to make certain changes to your lending agreement, such as altering the due dates or minimum payment amounts. If you come to the creditor and explain your financial hardship, they may be willing to work with you to avoid default.

If you decide to go this route, it’s important to be prepared. Be ready to explain why you fell behind on your payments and ask for the changes that you need. Have a firm idea in place for how much you can feasibly afford to pay each month, and be willing to stick to it. If a creditor agrees to put you on a new payment plan, you’ll need to keep up your end of the bargain.

See a credit counselor

Credit counseling (also known as debt counseling) involves working with a trained professional to find solutions for debt management. A trained credit counselor can help you review your budget and prioritize your bills, and they can facilitate communications between you and your creditors.

You can find a nonprofit credit counselor through the National Foundation for Credit Counseling (NFCC). Once you’ve found a good match, prepare to meet with the counselor for at least 30 minutes. In addition, make sure you have relevant information ready to go, such as how much debt you have, your monthly expenses and your household income.

Seek out a debt management program

Credit counseling agencies often offer debt management plans that can help streamline your debts. In this scenario, you would make one monthly installment payment to your credit counselor, who will then distribute the funds to your creditors as needed. Credit counselors can often negotiate lowered fees, monthly payments or interest rates to make it easier to get a handle on your debts.

These programs typically last between three and five years, with the final goal being to pay off your debts in full. However, be aware that debt management plans can also come with added fees unless your household income falls below 150% of the poverty line.

Consider debt consolidation

Debt consolidation involves taking out a new loan and using the funds to pay off your existing debts. This move allows you to combine multiple debt payments into one and potentially secure a better interest rate. Debt consolidation also allows you to choose a new repayment term, giving you more control over the size of your monthly payments.

Consolidating debts is typically done by taking out a debt consolidation loan, which is a type of personal loan. However, it can also be done with a balance transfer credit card or another type of financial product, such as a home equity loan or HELOC.