Tuesday, September 27, 2022

Can I Go To Jail For Credit Card Debt

Don't Miss

Don’t Willfully Violate Court Orders

Can I Go to Jail for Not Paying Credit Card Debt?

One main reason you can go to jail for debt is for willfully violating a court order. When it comes to debt, this might include your child’s other parent suing you for child support payments or a debt collector suing you for unpaid debt.

In some states, you may be allowed to make periodic payments on a debt. This means that you can pay a portion of your debt and then pledge to continue those payments. If you choose to do this arrangement you will most likely avoid going to jail. Jail is the last resort in an attempt to force you to make the payments. If you continue to refuse these payments, you may see yourself looking at jail time in a debt jail state.

What Happens To Your Unpaid Debt

If youre 30 days late in paying your credit card debt, your creditor will take steps to remind you of your dues. These may be through phone, letter, or email. If youre 60 days late, you may face higher interest rates due to penalties incurred for late payments. If you still cant pay your credit card debt after 90 days, your account may be suspended and creditors will ask you to settle your balance in full.

Once your account has been charged off by the credit card company , your account will be passed on or sold to a debt buyer or debt collection agency. Charge-offs usually happen after 180 days of non-payment. Debt collectors will then pursue you to get back the money you owe.

What Can You Do To Avoid Jail

You wont have problems with debt collectors contacting you all the time if you pay your credit card debt responsibly. You should at least meet the required minimum payment every month. This wont do much in terms of reducing your debt since your outstanding balance will incur interest, but this can prevent you from having delinquent accounts.

What happens if you dont even pay the minimum sum on your credit card debt? The debt collector can sue you. If legal action was taken against you, never ignore the lawsuit. Debt collectors may ask the court to issue a warrant for your arrest if you fail to follow a court order. Once this happens, the charges against you will be for ignoring the court order and not because you failed to pay your credit card debt.

To avoid all these, you need to do the following:

  • Never ignore court notices and orders.
  • Attend the hearings.
  • Find credit counselors who can help determine the best way to deal with your credit card debt. They may even assist in negotiating with your creditors to create a debt management plan.
  • Talk to a local consumer attorney.

Filing for bankruptcy can also provide you with relief from credit card debt although this should be taken only as a last resort as there are other negative implications of bankruptcy.

Also Check: What Credit Score Is Needed For Allegiant Credit Card

What Kinds Of Debt Can You Go To Jail For

There are a couple of instances where it may be possible to serve time as a result of not paying your debts, such as if you’ve failed to pay your federal taxes or make child support payments.

Deliberately not paying or underpaying federal taxes can lead to a prison sentence, but only if you’ve been charged with and convicted of a tax-related crime such as filing a fraudulent tax return or not filing a tax return at all. If you do file a return but aren’t able to pay your taxes, the federal government won’t throw you in prison.

Failure to pay child support also can put you behind bars. Under federal law, you could be sentenced to as much as six months or two years in prison for dodging child support payments, depending on the circumstances. In addition, state laws may let a judge send someone to jail for disobeying a court order to pay child support.

Strategy : A Debtors Examination

Will I Go to Jail for Not Paying My Credit Card Debt ...

A debtors examination is a special court procedure that can take place only after the judge has ruled against you. At the examination, you must answer the creditors questions about your finances under oath. The purpose is for the creditor to understand what is the best way to make you pay.;

The lender or collection agency can use the examination as a loophole to get the judge to find you in contempt of court and to get you locked up. This can happen if you:

  • dont appear at the examination. Note that in some states, such as California, you must be served notice in person ten days before the exam, to avoid that you miss the notice by accident;
  • refuse to answer the questions ;
  • deliberately provide false answers.
  • If you cant make it to the exam for some reason, call the creditors attorney in advance and ask for a rescheduling. If they refuse, file a written motion with the court.;

    NOLO notes that the states where its particularly common for debt collectors to try and get you arrested using these two techniques are Illinois, Minnesota, Missouri, Ohio, and Pennsylvania. Sometimes lenders even request an examination multiple times, hoping that you will fail to appear at least at one of them.; Once arrested, youll be released only after you post a bond, which is usually equal to the amount you owe to the creditor.;

    Also Check: How To Check Your Visa Credit Card Balance

    Consequences Of Missing One Or More Credit Card Payments

    After one missed payment, you will be charged a late payment fee up to $40. If you miss subsequent payments within a six-month period, you’ll be charged up to $40. This fee is added to your balance and starts accumulating interest based on your APR. Some card issuers will waive late payment fees for your first violation or if you contact them and explain why you failed to make a payment.

    You will be charged interest on the purchases for the billing cycle, which is the case whenever you carry a balance meaning you fail to pay the full amount owed.

    Number of missed credit card payments Consequences
    • Substantial damage to credit score
    • Debt sold to collection agency
    • Lawsuit

    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.

    Don’t Miss: Can I Get My Credit Card Debt Forgiven

    Contempt Of Court May Land You In Jail

    So, you cant be arrested if you dont pay your personal debts. You can, however, be arrested for failing to comply with a court order in some states. Thats called contempt of court and its sometimes used by debt collectors to put you in jail.

    Before a debt collector can ask the court to garnish your wages or otherwise compel you to pay, you may have to go through a debtors examination. Note that this examination can only happen once your creditor already has a judgment against you.

    In the debtors examination, youll have to describe your financial state under oath so your creditor and the court can determine the best way to collect the debt. Typically, you will tell the court about any assets you have, including your income or any real estate that you own as well as how much debt you owe and to whom you owe the payment. You will also be asked about your employment status, where you work and how much you make.; The meeting may be held in court or at an office and only lasts about 15-30 minutes. Once you have completed the examination you are free to go.

    The court will formally order you to appear for this examination. If you dont, youve defied the order and may be held in contempt of court. The court can then put out a warrant for your arrest. Youre not technically going to jail because of the debt, but because of the contempt.

    What Are The Legal Repercussions Of Unpaid Debt

    Can I go to jail for not paying credit cards?

    So can credit card debt land you in jail? The short answer is no. The Fair Debt Collection Practice Act;prohibits debt collectors from threatening you with criminal prosecution and jail time. However, that doesnt mean you cant go to jail.

    Even though you cant be charged with a criminal act for not paying your debts, debt collectors can take you to civil court and get a judgment in their favor. This judgment means that you must pay your debt as agreed or have your wages garnished until its paid.

    Heres where things can get messy especially depending on where you live and how litigious your creditor may be. If you miss a payment or fail to follow the steps outlined in the judgment, you could be held in contempt of court, which potentially could end with you being sent to jail. Following arrest, you would remain in jail until you can post bond, which is often the same amount as the judgment against you.

    Read more: Why You Can’t Afford to Ignore Unpaid Debts

    Don’t Miss: How To Withdraw Money From Credit Card

    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.

    Thank you for your application!

    For immediate assistance, please call:

    How Prison Can Destroy Your Credit Score

    Your time in prison doesnt show up on your credit report, but if you dont pay attention to the factors that contribute to your credit score, that score will be destroyed while you are behind bars.

    The biggest factor of a credit score is payment history. Like I said earlier, it is essential for your financial health to set up a joint bank account with a trusted family member or friend before going to prison, so they can keep making minimum payments for you while you are locked up.

    If you dont pay attention to your finances and just allow all of your accounts to go delinquent, your credit score will be harshly affected by the derogatory marks. Marks for unpaid loans and credit cards can take years to bounce back from, and the longer they go unpaid the worse it gets. Repossessions and foreclosures are the kiss of credit death, but if you dont have any money, theres really nothing you can do about it.

    Most of these negative marks on your credit will sit on your report for seven years, and that leads to many people filing for bankruptcy when they are released.

    If you are able to financially plan for prison sentence, it can help you avoid major trouble in the future. Of course, not everyone is going to have the option of being proactive with their money. And, all you can do when you get out is start rebuilding.

    How bad was your debt when you walked out of prison? Let us know in the comments below.

    Also Check: How To Transfer Money Off Credit Card

    Another Reason Why Its Better To Be Alive Now Instead Of In The 1800s

    Nobody wants to go to jail, and certainly people whove never committed a serious offense dont want to be locked up with harden criminals because they skipped out on paying a . Thats what makes this such a tempting threat for collectors to use because it puts the fear of prison in people and gets them to pay.

    Thats illegal by the way, according to the Fair Debt Collection Practices Act. Collectors cant threaten you with jail time because of failure to pay a credit card debt. And if they do, theyre the ones breaking the law. They probably wont go to jail either, but theyll get fined and you can actually be compensated.

    Still, just because collectors cant use it as a threat, is there any situation where not paying a credit card debt can actually end up in jail time?

    Can You Go To Jail For Any Debt

    Can I go to jail for not paying credit cards?

    There are actually only two types of debt that Americans can go to jail for taxes and child support.

    Tax evasion is a federal crime that can end in jail time. Not surprisingly, Uncle Sam considers it a much more egregious to dodge paying him to dodge your private debtors. So; if the broad scheme of things, this is generally one of the reasons why tax debt may cause higher stress that credit card debt.

    The other debt you can go to jail over is child support. If youre supposed to give money to support your children and youre found to be using underhanded tactics to dodge that responsibility or arent making a reasonable effort to meet it, then you can go to jail.

    Don’t Miss: Is Paypal Credit Card Good

    Legislation To Prevent Abuses

    Some state attorneys and legislators have become aware of this type of abuse and are working to change the laws to better protect you. For instance, state law might require the creditor to provide notice before issuing jail threats or prevent the creditor from forcing you to come back to court on the same hearing unless your financial circumstances have changed so that your answers to their questions would be different. Talk to a lawyer to learn about the laws in your state.

    Lenders Wont Forget That You Failed To Pay Them Back

    While its true that credit card companies will still generate profits when its all said and done, it;doesnt;mean that theyll happily write your debt off if debtors fail to pay them back. Theyll keep a record of such a delinquent payment history to either turn hopeful borrowers down for funding in the future or jack their interest rates up;through the roof!

    Read Also: How To Change Usps Address Without Credit Card

    Youre Our First Priorityevery Time

    We believe everyone should be able to make financial decisions with confidence. And while our site doesnt feature every company or financial product available on the market, were proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward and free.

    So how do we make money? Our partners compensate us. This may influence which products we review and write about , but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.Here is a list of our partners.

    Can Debt Collectors Blacklist You

    Can You be Thrown in Jail for Not Paying a Credit Card Debt?

    To be blacklisted, in the first place, is to be registered as a person who has been tagged or recognised as a risk so that he or she is denied from accessing certain privileges and services. Any time you fail to consolidate an outstanding loan, you may be blacklisted, and the effect of that is the rejection of your requests anytime you try to apply for a loan from any creditor.

    So, in a situation where you have an unpaid loan, the collection agency may want to threaten you with blacklisting because he or she knows that as the loan lingers in payment, the possibility of recovering it reduces as well. While it is prohibited under the National Credit Act to list a prescribed debt on your credit profile, you should also understand that it is against their practice for a collection agency to threaten you on blacklisting your credit profile simply to coerce you to pay.

    Also Check: What Is The Best Credit Card For Military

    What Happens To Your Debt While In Prison

    I became a personal finance nerd more than a decade ago when I discovered Dave Ramseys radio show, and little did I know how much that would benefit me when I was arrested and eventually went to prison.

    Following Daves, 7 Baby Steps, allowed me to get rid of my debt and save up some cash. If I wouldnt have had substantial savings when I was arrested, I would have sat in jail for months before going to trial because I had a $100,000 bond to pay if I wanted to get out.

    As soon as I was arrested and found out the amount of my bond, my sister cleaned out my bank accounts and called the bail bondsman. Within hours, I was out of jail and home with my family with my savings depleted.;

    After my arrest, I moved in with my family because I lost my income and my savings, so that cut out the vast majority of my monthly bills. If there was any clue that I would receive a maximum sentence for my crime, I would have done more financial preparation, but at least I didnt have any rent or utilities.

    All of this talk about money and bills leads us to todays blog post: what happens to your debt while in prison?

    In this blog post, I will cover the following topics:

    • How do you prepare financially when you know you are going to prison?
    • What happens to your bills when you go to prison?
    • How prison can destroy your credit score

    More articles

    Popular Articles