If you don’t pay your debts in modern day America, can your creditors have you thrown in jail? 

A look back to 19th century England:
In the decades leading up to the 1850s in England, London’s jails were filled to the brim with a certain brand of incarcerated prisoner: debtors. Sent to prison – sometimes for twenty or thirty years – because they couldn’t pay their bills or repay their debts on the outside, impoverished debtors languished behind bars without any other options, often with their entire family moving into prison with them because there were no other options for support. Such Draconian measures were the offspring of an all-powerful and often cruel authoritarian class, according to accounts of the time such as written by Charles Dickens in his works.

Debtor’s prisons in early U.S. history, too?
Our history books are filled with references of the first settlers of America feeling England to escape religious persecution, as well as an oppressive class system that saw poor people throw in prison. However, you may be surprised to learn that this didn’t just go on in England. In fact, Debtor’s prisons were prevalent in the newly formed United States. The practice of having debtors jailed for non-payment was so common that even some of the men who signed the Declaration of Independence were subject to time in debtor’s prisons!

But the practice was outlawed by U.S. federal law in the mid 1850s and for more than a century, people who couldn’t (or wouldn’t) pay their bills or debts didn’t have to worry about being arrested and thrown in a jail cell….until recently.

The modern reemergence of jailing debtors:
Shockingly, about a third of U.S. states still use incarceration as a way to get debtors to pay on their debts. In some of the most egregious states, like Minnesota, the issuance of arrest warrants against debtors has jumped over 60 percent over the last four years, with roughly a thousand or more warrants per year.

So how is it that a practice that was even seen as totalitarian by Oliver Twist and lawmakers on both side of the Big Pond in the 1850s is legally allowable and readily practiced in the United States today?

Legality and the loopholes:
It’s common knowledge that if you have a debt you can’t pay, like a credit card, business loan, or other account, the creditor can sue you and get a court-ordered judgment filed. They then can try to collect from you on order of that judgment by levying bank accounts, tax returns, garnishing wages, seizing property etc.

But creditors – in particular big collection companies run by attorneys – are taking the collection process a leap further, using the judgment and legal process to coerce debtors into paying before a warrant is issued and they are locked up.

In the United States, federal law clearly states that debtors can’t be placed in jail for failure to pay civil debts, so how are creditors getting around the system? It has to do with two loopholes: the debtor’s examination, and court fees.

Debtor’s examinations:
If a creditor doesn’t successfully collect with a court-ordered judgment, they can file paperwork with the court, which then mandates that the debtor has to appear for a debtor’s examination. At this proceeding, the debtor has to lawfully disclose their financial situation under oath, including documentation and a good explanation why the creditor hasn’t been paid.

The debtor’s examination is also the tool debtors use to possibly get a warrant or jail their creditors. If someone does not show up for the debtor’s examination, no matter what the reason, the court can then find them in civil contempt.

With a civil contempt ruling, an arrest warrant can be issued (called a capias or body attachment, depending on the court) and the debtor-turned-scofflaw can be arrested and thrown in jail. The prisoner will remain incarcerated until they post bond, which happens to be exactly the amount they owe to the debtor.

Technically, they are jailed for being in contempt of court for violating an order to appear, not for paying their debt – a distinction that allows creditors and collectors to circumvent the intent of the law – and threaten their creditors.


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