Can a creditor threaten to put you in jail because of a late payment?

Answer 1

In the United States, the constitution forbids incarceration for owing unpaid debts. One of the rights the colonists fought for was to be free of "debtors' prisons." (In jolly ol' England, a person could be imprisoned for not paying his or her debts.) In the United States, it is a violation of federal law for a creditor to threaten such illegal action.

There are generally two exceptions to this rule. In most states, debts for unpaid child support and maintenance have been classified not as "debts," but rather as violations of court orders directing the payment of child support and maintenance. Most states allow actions for "contempt of court" for the willful failure to pay this type of support. Most states have fairly strict requirements for a support creditor to prove "contempt" as a precondition to incarceration. Generally, it is only the truly unwilling child support or maintenance obligor who will face incarceration. A related aspect is the concept of "criminal nonsupport," whereby a person can be charged with a crime, and incarcerated, for refusing to support a dependent person for whom he owes a duty of support -- almost always a child. These prosecutions are usually reserved for the most serious offenders.

The other exception involves the willful avoidance of paying federal or state income tax. Intentional and aggressive schemes to avoid the payment of tax can result in criminal prosecution, and incarceration. These cases are almost always reserved for the most serious tax scofflaws.

The constitutional proscription of "debtors' prisons" does not involve considerations for restitution in a criminal probation or parole proceeding. If a person has been ordered to repay a debt as a condition of probation or parole, the failure to do so can result in the revocation of probation or parole, and the return of the person to incarceration. In this situation, however, typical commercial creditors should not be contacting the individual. That task is left up to the probation or parole officer.

Further tips for consumer debtors: (1) Try to work out a repayment plan you can live with. Almost all creditors will do that even if they say they won't and even if they say you're not offering enough money. They don't want you to declare bankruptcy because then they'll get nothing. (2) Don't write a check for money you don't have. You may quickly find yourself facing a criminal charge (bad checks) for a matter that was originally just a civil problem (bad debts). (3) If you have a LOT of debt that you'll never get out of and your credit is bad, see a bankruptcy lawyer. BUT don't declare bankruptcy if it's just an inconvenience. (4) Federal law allows you to restrict creditor's phone calls to you. Demand in writing that they never call you anyway. Demand that they only communicate with you in writing. This will give you some breathing room and let you contact THEM to work it out, on your time and on your terms. (See #1 above.)

IF, HOWEVER, your debt involves a mortgage, see a lawyer soon. DO NOT let it get out of control and have to deal with foreclosure. Also, if your debt is secured and you can't pay per the terms, try to work it out but realize that the creditor of a secured debt has more control of the item that's securing the debt (usually a car). Generally, let the car payment and house payment people call you and work hard with them. Tell the unsecured creditors (credit cards and the like) to communicate only in writing then work out a plan on your terms. AND FINALLY, never blow off government collectors for child support, maintenance, or taxes.