Can A Debt Collector Sue Me
A debt collector can file a lawsuit against you in order to collect money that you owe. A collector takes this legal action in hopes of getting a judge to issue an order requiring you to pay the debt. If you’re notified that you’re supposed to appear in court to face the judgment but you ignore the order, a judge could demand that you be arrested for contempt of court.
So, not obeying a court order regarding unpaid debt could put you in handcuffs, but the debt itself can’t lead to an arrest.
Can You Be Arrested For Debt
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You can’t be arrested just because you owe money on what you might think of as consumer debt: a credit card, loan or medical bill. Legally, debt collectors can’t even threaten you with arrest. But they do have other legal recourse, such as suing you for payment.
In some rare cases, this kind of debt can lead to arrest on other charges, such as fraud, theft or defying a court order.
In Some States Debt Collectors Use Tactics That Might Land You In Jail If You Don’t Appear For Court Hearings For Debtor’s Examinations
Debtor’s prisons were an archaic tool used by lenders to imprison poor people who didn’t repay their debts. In the United States, debtor’s prisons were commonly used until about the mid-1800s. Even some of the signatories to the Declaration of Independence had bad credit and spent some time in U.S. debtor’s prisons. Beginning in the mid-1800s, many states eliminated debtor’s prisons after the U.S. government outlawed imprisonment for failure to pay debts at the federal level. However, some statesroughly a thirdstill use jail as a method to coerce debtors to pay certain debts.
Today, you can’t go to prison for failing to pay for a “civil debt” like a , loan, or hospital bill. You can, however, be forced to go to jail if you don’t pay your taxes or child support. The U.S. Supreme Court has outlawed the use of prison to punish indigent criminal defendants who fail to pay for court costs and fines as part of their sentence. But many state and local courts skirt around this by assessing fees, fines, and costs as part of a civil fine or “criminal justice debt,” or a condition of someone’s probation or parole. In that way, if you fail to pay these fines, you might go to jail.
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Send A Cease Communication Letter
You can request debt collectors cease communications or only contact you in writing. After receiving the request, the debt collector is required by the FDCPA to obey it, and may only communicate with you to inform you that the debt has been terminated or that they are taking specific action, such as a lawsuit.
If It Is Your Debt To Pay Explore Relief Options
For , even if a debt is in collections you can still go through credit counselling to see if it can be included in a debt management program. In fact, even if youre being sued already, consolidation may still work for you. Note that a debt management program has been shown to reduce qualifying debtors total monthly payments by 30-50 percent. Hardship programs for student loan debt consolidation can lower your payments to 10 percent of your income. If youre below the Federal Poverty Line, you may not have to pay anything until you have the income.
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Can A Debt Collector Contact Me And/or Sue Me After The Statute Of Limitations Has Expired
Yes, debt collectors can contact you after the statute of limitations has expired. You still owe the debt and if you dont respond, the debt collector could still sue you. However, you can present a successful defense that the statute of limitations has expired IF you show up for the court hearing. That IF is in caps because many consumers dont appear in court. Either they dont check their mail to see that a court date has been scheduled or simply ignore the summons to appear. If you dont show up in court, you lose. Case closed. A judgment will be awarded against you.
Exceptions To The Rule
Fraud
An exception to the above would be the case of outright fraud. In this case, you could be charged with the criminal offence of having committed fraud. If found guilty the related jail sentence would be for fraud, not the unpaid debt.
Unpaid child support
It is also possible, though rare, to be charged with contempt of court related to unpaid support payments. The Family Responsibility Office has several tools for enforce payment of child support including suspending your drivers license, adding a note to your credit report, seizing assets or issuing a wage garnishment or, if they choose, asking a judge to put the payor in prison.
Ignoring your debts wont make the worry go away. Its time to talk to a Licensed Insolvency Trustee about options to deal with your debt problem.
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Can You Go To Jail For Student Loan Debt
Another debt that you may have incurred is student loan debt. It is important to note that you cannot be arrested or sentenced to jail time for not paying off your student loan debt. This is because student loans are considered “civil” debts. It is the same type of debt as credit cards and medical bills, with one main difference.
Student loan servicers will work to find other avenues for collecting a past-due debt. This might include using the U.S. Department of Justice to try to collect the debt through litigation. If you are sued for student debt, then you can be sentenced to jail time if you do not appear in court.
It is common for a debt collector to file a lawsuit against you when attempting to collect on a debt. The collector will take this legal action in hopes of having a judge force you to pay the debt. After a judgment is placed against you, you may be given a notice to appear in court. If you do not do this, then you may be arrested for contempt of court.
Review Your Rights Under The Fdcpa
If a lender or debt collector is acting particularly aggressive and threatening to have you arrested, their actions may be considered unlawful. The Fair Debt Collection Practices Act makes it illegal for a debt collector to threaten you with jail time.
If you believe debt collectors are violating this act, you should take the following steps:
- Research what constitutes illegal behavior and learn what your rights are. The Consumer Financial Protection Bureau can provide you with good information.
- Document the abusive behavior, including every phone call, letter or any other points of contact. Even details such as the time of a call are important since its illegal for debt collectors to call before 8 a.m. or after 9 p.m.
- Report your complaints to either your states attorney generals office, the Federal Trade Commission or the Consumer Financial Protection Bureau.
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How It’s Done: The Debtor’s Examination
Once a creditor gets a judgment against you, it can use the court to help make you pay. For instance, a judgment creditor can get the court to issue a wage garnishment order or an order to attach your bank account. If an aggressive creditor can’t find any income or assets to grab, it can file papers with the court that require you to appear for a debtor’s examination. At the debtor’s examination, you answer, under oath, the creditor’s questions about your finances. You are also required to explain why you haven’t paid that creditor.
If you don’t attend the debtor’s examination, either because you didn’t receive notice or simply didn’t want to show up, then the court can find you in civil contempt for disobeying its order to appear. From there, it proceeds to eventual jail time if you don’t pay, follow the court’s orders, or take other action to correct what happened.
Debtor’s exams are sometimes used because creditors can use the court to issue orders that require you to do something . Creditors can do this multiple times. In fact, many creditors, especially subprime and payday lenders, repeatedly request the same exam orders, sometimes as frequently as once a month, hoping that you will slip up and fail to appear for one of them.
Will I Go To Jail For Not Paying My Debts
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In a Nutshell
You can’t be thrown in jail for not paying your credit cards and it’s illegal for collection agencies to threaten you with jail time over the phone. Donât be intimidated by such threats be proactive, know your rights under the FDCPA, and research your debt relief options, such as credit counseling and Chapter 7 bankruptcy.
Written byAttorney Kassandra Kuehl.
If youâre feeling overwhelmed by your debts, know that youâre not alone. According to federal data, consumer debt in the United States tops $13.86 trillion in student loans, mortgages, car loans, and credit card debt. This figure doesnât even account for unpaid medical debt, overdue child support payments, and back taxes. Americans are, as a general rule, swimming in debt.
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Communicating With Credit Card Lenders
Understanding how credit cards work can be difficult especially when it comes to missed payments. Youll likely want to avoid any conflict with your credit card provider, but financial predicaments do happen. The number one thing to keep in mind is communication. A collection agency wants you to pay back whats owed more than anything else.
To this end, keep in mind that you can negotiate for reduced payments or credit card debt settlements. Being upfront about any financial issues that you are struggling with will make creditors much more likely to grant some clemency in this fashion.
Communicating with debt collectors about any issues that might arise in your case is an essential tool for avoiding court orders, wage garnishments, and a wrecked credit score. And of course, settling any debts payments with collection agencies as soon as possible will get you back on track to achieving more financial stability.
Falling behind on credit card payments can be stressful, worrisome, and draining. These feelings are only heightened when legal penalties begin popping up over unpaid debts. Court dates, fees, wage garnishment you may also be worried about serving jail time for your credit card debt.
While incarceration is not likely to happen over unpaid credit card debts, delinquent credit card debts can lead to a ruined credit score, fees and penalties, and time in civil court.
Can’t Pay Your Credit Card Bill You Could Face Criminal Charges
2 min read.Neil Borate
- The takeaway here is that no debt is too small and you could be facing criminal charges against you if you fail to repay the debt
- A case under the Negotiable Instruments Act is filed when your credit card bill payment cheque bounces
Data from the recently released SBI Cards IPO prospectus reveals that the company has filed 19,201 cases under Section 138 of the Negotiable Instruments Act and 14,174 cases under Section 25 of the Payment and Settlement Act 2007. A case under Section 138, is typically filed when a cheque is dishonoured due to insufficiency of funds . A case under the Payment and Settlement Act is filed when there is a failure in electronic payments due to insufficiency of account balance . Interestingly the cumulative amounts for these cases was just 25.52 crores and 72.6 crores respectively. This implies an average case of just 13,290 and 51,220 in credit card debt under the two acts respectively. For you the takeaway here is that no debt is too small and you could be facing criminal charges against you if you fail to repay the debt.
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Can You Go To Jail For Debt
Not being able to meet payment obligations can make anyone feel anxious and worried, but in most cases, you won’t have to worry about serving jail time if you are unable to pay off your debts.
You cannot be arrested or go to jail simply for being past-due on credit card debt or student loan debt, for instance. If you’ve failed to pay taxes or child support, however, you may have reason to be concerned.
What States Laws On Statute Of Limitations Apply If I Incur The Debt In One State Then Move To Another State
First thing to do is check the agreement you signed with the credit card company. Many card agreements have a clause in them called choice of venue that dictates which state court will preside over any conflicts. Typically, card companies or debt collectors want to file the case in whatever state they have the most advantages i.e. state with the longest statute of limitations state where courts have sided with creditors but you can argue against any of them, if you have a compelling case. Bottom line here is this can be a tricky question and may require you to check with a consumer lawyer in your state.
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Is There A Statute Of Limitations For Court Judgments
Yes, but be careful waiting for it to expire. The statute of limitations on court judgments ranges from three years to 21 years , with most states somewhere around 10 years. The judgments are easily renewed so chances are that eventually you will have to confront the judgment and pay it. Be aware that states allow interest to collect on the judgments until the debt is paid off. The interest ranges from 4% above Fed to 14% .
What Happens If I Have A Court Judgment Against Me But I Still Dont Have The Money To Pay Off The Judgment
Court judgments are a bad thing and should be avoided at all costs. If the debt collector is aggressive and weve never heard of one who isnt they will go after anything you own that has value. Depending on the laws in your state, the creditor could go after your home, car, boat, property or even that 66-inch flat screen in your living room. If they can take it and sell it for the money theyre owed, they will. At the very least, they can put a lien against those assets, meaning you cant sell what you own, without settling up with the creditor first.
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Why You Should Never Pay A Debt Collector
On the other hand, paying an outstanding loan to a debt collection agency can hurt your credit score. … Any action on your credit report can negatively impact your credit score – even paying back loans. If you have an outstanding loan that’s a year or two old, it’s better for your credit report to avoid paying it.
If All Else Fails File For Bankruptcy
Particularly for things like medical debt and , filing for bankruptcy allows the courts to either arrange a repayment schedule you can afford or discharge remaining balances if you are without the means to pay what you owe. Filing means you go to court on your terms instead of the collectors terms. Once you have the court order youd be protected from further legal action relating to the same debt. The worst thing youll have to face is a ten-year negative remark on your credit.
One potential downside is that federal student loans and even private student loans cant be discharged during bankruptcy. However, discharging other debts may give you the means to make payments on your student loans so you can regain control. Otherwise, your best option may be federal loan consolidation especially if youre out of work completely or have limited income.
If you have more questions regarding whether you can go to jail for not paying debt, its understandable. Owing to the government or child support without the ability to pay can be unsettling. or you need help determining what your best path out of debt really is in your unique financial situation, we can help. Call Consolidated Credit today at to speak to a credit counsellor. Theres no charge for the consultation. You wont incur another bill that has to be paid back for getting the one-on-one advice.
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The Maximum Penalty For Not Paying Credit Card Debt
Simply refusing to pay your credit card debt wont land you in prison but it might seem that way because of the damaging effect it can have on your future. Failure to pay off your credit cards can have far-ranging repercussions on your credit report, career path and monthly payments of other bills.
Tips
If you cannot afford to make payments on your credit card debt, you could be subjecting yourself to a series of harsh financial and civil penalties. Not only can your wages be garnished, but your credit score can also be tarnished, making it difficult for you to receive loans or make a good impression on future employers.