Can You Be Jailed for Not Paying Your Debt in the United States?

There are situations in which you can, and can’t, be arrested for debt. Let’s explore.

Approximately three-quarters of American adults are in debt. There are many different types of debt in the US, but in 2021, mortgages and credit card debt made up about 43% of all consumer debt. This statistic shows that personal debt in the United States has been steadily increasing. In economics, the term “personal debt,” which is akin to “consumer debt,” is used to refer to consumers’ outstanding debt. It consists of personal debts incurred because of buying goods for consumption by oneself or by one’s household. It includes loans taken out to buy consumable items with no future value appreciation. 

If you are struggling to pay off credit card debt or other unmanageable bills, you may start receiving calls from collection agencies. Furthermore, those debt collectors might use aggressive methods, such as making threats of jail time, to intimidate you into making a payment. You might be one of the many people that are asking, “Can I go to jail if I don’t pay my bills?” 

Directly speaking, there are debts that, if not paid, can send you to jail. However, it will depend on the nature of the debt, the relevant laws in your state of residence, and the procedure of how you’re going to settle the debt. To give you a clearer understanding, this article will educate you with information about jail time and debt. 

Brief History of Debtors Prisons 

The good news is that debtors’ prisons were abolished by federal law in the US back in 1833, though many states continued the practice past the mid-century. The issue remained concerning enough that the US Supreme Court had to reaffirm the unconstitutionality of imprisoning someone for debt as recently as 1983. 

So, what’s the bad news? Unfortunately, ending up in jail due to unpaid debts still happens even today. Although much of it revolves around the recently developed “offender-funded” justice system in many states, jail time ultimately resulting from unpaid debts can happen just about anywhere in the US. 

Types of Personal Debts 

To better understand whether you can be jailed for not paying your debt in America, it is best to understand the various types of debt. This will make it clearer to you what kind of debt you are dealing with. There are three main types of personal debt: 

  • Unsecured debt: These types of debts have no collateral, meaning the borrower puts up nothing of monetary value other than their signature and their credit reputation. Without a guarantee of payment, the lender relies completely on the borrower’s ability to pay them back on the loan. Sometimes, the two parties will enter into an agreement with a written contract, obligating the borrower to pay back the loan. If they don’t, the lender can file a lawsuit against the borrower for the unpaid debts. Such judgments often result in wage garnishments and not jail time. Unsecured debts often have higher interest rates because the lender is taking on a high level of risk. Examples of this type of loan include credit card debt, medical bills, store cards, payday loans, signature loans, and membership bills.
    Unsecured debts can be revolving debts (like credit cards that allow you to continuously pay down a balance and then borrow against the credit limit) or installment debts (like a personal loan that requires a set monthly payment and has a fixed payoff date at the end of the loan). 
  • Secured debt: This type of debt is secured by collateral. A collateral or an asset is promised to the lender if the borrower does not pay back the loan. If the borrower can’t pay the loan, lenders may choose to seize assets as repayment.
    Secured debt can be revolving (such as a home equity line of credit), although most are installment loans. 

What Sort of Debts Are Punishable by Jail Time? 

There are some debts in particular that if unpaid, can lead to a legal process and jail time if you remain uncooperative with the courts. 

Child Support Debt 

Child support is a court-ordered payment; you should abide by any orders issued by the court. “Contempt of court” is a legal term that denotes disobeying a court order, and it is a common reason why those who do not pay a debt (e.g. back child support) can be sent to jail. Depending on the circumstances, violating federal law regarding child support payments could result in a sentence of six months to two years in prison. 

Tax Debt 

If you intentionally lie to the IRS to avoid paying taxes, you risk going to jail. You risk the IRS suing you if you don’t pay your taxes. You’ll be subject to some sort of fines or fee collection if you keep accruing IRS debt. 

Additionally, the IRS could file a lawsuit against you to recover any unpaid taxes if you make a mistake and are under audit. You might even deal with a tax lien, where your home or vehicle could be taken to pay off your debts. However, despite how unpleasant they may be, all of these situations would be civil proceedings. You might end up in jail if you refuse to cooperate with the civil case. 

Contempt of a Court Order Debts 

Contempt of Court Debts are debts with legal obligations that, if not paid, may result in legal action. These are debts that have legal contracts that state if you can’t pay the debt, it will be brought to court to determine how you’re going to settle the debt. Lenders can file a lawsuit against you and successfully obtain a monetary judgment before they can collect an unpaid debt that is not secured by collateral. Compared to secured debt, if you can’t pay the debt, the collateral will be the payment, thus, no need for the issue to be brought to court. 

However, you may be found in contempt of court if you receive a notice to appear in court because a lender has filed a lawsuit against you and you choose to ignore or disobey that civil court order. When that happens, the civil case may turn into a criminal case, and a warrant for your arrest may be issued. 

Rent-to-Own Leases 

While not technically a debt, payments missed on rent-to-own contracts have landed many consumers in jail over the past decade or so. Many, if not most, contracts allow for the repossession of the leased appliance, piece of furniture, or electronics the minute after the payment is missed. If you do not allow the company to remove the item, courts in most states may now consider you as having committed theft of the property. That means you can now be subject to arrest. 

Bottom Line 

Just because you’re behind on payments on your bills doesn’t mean you can be arrested for debt. No consumer debtor, including one who owes money on credit cards, medical bills, payday loans, mortgages, or student loans, should be arrested. However, your creditors have the right to sue you in civil court for an unpaid debt, which could result in an indirect debt-related arrest. In other words, while not paying a debt won’t get you arrested, it may get you a court order to pay it. If you refuse to comply with the court’s order to pay the debt, your refusal to comply with the court order may result in your arrest. 

If you receive any kind of court notice, do not disregard it — even if you are not familiar with the company that is suing you. Aside from potential legal issues, missing the appointment or failing to follow the notice’s instructions means you’ve lost the chance to argue your case, settle the debt, or work out a payment arrangement. As a result, it’s imperative to respond to a court summons and work with them to pay any fines or other payments that may be due.

Finny the Finance Bot says…

What debt can put you in jail and what debt can you not be jailed for?

In the United States, you cannot be jailed solely for having debt. Debt collection is a civil matter, and creditors must go through the court system to seek a resolution. However, if you refuse to comply with a court order related to a debt, you could face legal consequences, such as fines or even jail time in some cases.

However, there are some specific types of debt that can result in criminal charges and jail time if not paid, including:

  1. Child support: Failure to pay child support can result in wage garnishment, seizure of tax refunds, and even jail time in some cases.
  2. Taxes: The Internal Revenue Service (IRS) can take enforcement action against individuals who fail to pay their taxes, such as wage garnishment, seizure of bank accounts, and even criminal prosecution for tax evasion in some cases.
  3. Criminal fines: If you are convicted of a crime and ordered to pay a fine, failure to pay the fine can result in additional penalties, including jail time.

In general, it’s important to take steps to resolve debt and avoid legal consequences. This may include negotiating a payment plan or settlement with the government or seeking the assistance of a financial professional.

The author generated Finny the Finance Bot’s text in part with GPT-3, OpenAI’s large-scale language-generation model. Upon generating draft language, the author reviewed, edited, and revised the language to their own liking and takes ultimate responsibility for the content of this publication.

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Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
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DRS also offers the following services:
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Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

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The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).