Personal finance: Is there such a thing as a debtor’s prison?

Leslie Tayne | Credit.com

Show Caption Hide Caption Americans now have the highest credit-card debt ever Americans credit card debt has just hit a disturbing record of $1.02 trillion according to the federal reserve.

In this modern world that we live in, consumers are protected and have certain rights when it comes to debt collection.

The practices of debt collection agencies have to abide by rules through the Fair Debt Collection Practices Act (FDCPA) as enforced by the Federal Trade Commission (FTC). According to the FTC, consumers are to be safeguarded from abusive, harassing or unfair debt collection practices.

But, the question is, “Does this act protect consumers from being arrested for the failure to pay back their debts and sent to a debtor’s prison?” The short answer is yes, but there are some instances related to debt in which people have been sent to jail.

Debtor’s Prisons were abolished in the US in 1833, and thankfully so. Before the abolishment, being arrested for outstanding debt was a catch-22 situation. Since there were no work-release programs in place at that time, there was no opportunity for the debtors to make good on their outstanding debt. To make matters worse and put more debt strain on the debtor, they would be responsible for paying prison fees as well. So, without the financial help of friends or family, there would literally be no way to escape their sentence.

Consumers’ debt rights have come a long way, but why are people still being arrested if the debtor’s prison was abolished so long ago? Here are some answers that can shed some light.

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What could put you at risk for arrest

While arrests can be made in a debt situation, it’s not the debt itself that will get you arrested; it’s the violation of the court order that can land you in jail. Depending on the court and jurisdiction, it may be required of the debtor to appear in court. If you are summoned to appear and ignore that summons, a warrant may be issued for your arrest for failure to appear in court. It’s very important to ensure that you don’t ignore any correspondence from the courts and are compliant in regards to being sued for debt and the appearances you are expected to make.

If you don’t know what to do, don’t procrastinate and push it aside. Ignoring a summons to appear in court will not go away. You have the option to represent yourself. However, you may want to consult an attorney that understands the laws on what debt collectors can and cannot do by law as well as your legal rights as a debtor. Depending on your state, there are some other specific restrictions on what creditors and debt collectors can and cannot do when trying to collect a debt.

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Many types of debt collection practices are prohibited

Should you have any debt that is in the process of collection, it’s important to educate yourself on the types of debt collection practices that are prohibited. In addition to being prohibited from harassment, debt collectors may not:

Use any threats of violence or harm

Publish a list of consumers who refuse to pay their debts (except to a credit bureau such as Experian, Equifax, and Transunion)

Use obscene or profane language when trying to collect on the debt; or

Repeatedly use the telephone to annoy and harass a debtor.

Take or threaten to take your property unless this can be done legally(meaning the debt is secured and tied to an item that can be repossessed);

Threaten to sue, garnish your wages and freeze your bank account if they have no intention of doing so.

Knowing what debt collectors are legally allowed to can be overwhelming. Consider consulting an attorney in your county to help you find out what you need to know to keep yourself protected.

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