Man Arrested by U.S. Marshals For Outstanding Student Loan of $1,500

6227036996_77501c3a14_bA man was arrested recently in his Houston home by U.S. Marshalls for failure to completely pay the government for a small amount owed on a student loan.  Most student loans are backed by the U.S. government so when you don’t pay them you apparently now get to see the U.S. Marshalls at your door with guns drawn.  You don’t need to owe the U.S. government very much.  The man in question only owed $1500.

Paul Aker of Houston came outside slowly with his hands up and he was arrested by the marshals who had surrounded his home.  He said he did not have any idea why he was being arrested until he was in the car on his way to jail where the marshals revealed that he had an outstanding student loan debt.

Mr. Aker had actually paid off two student loans in the past and he believed he did not owe any more to the government.  The arresting agents asked him if he was in the habit of stealing from the U.S. government.

The U.S. Marshalls did release a statement explaining that it is their duty to serve federal process and to make arrests and they had apparently contacted Mr. Akers by phone to get him to appear in court and he refused.  It would have been a good idea for him to go to court before this unfortunate incident because he was forced to pay the government back for the cost of his arrest ($1258.60) in addition to the delinquent loan with interest.

They did “allow” him to pay off the debt in $200 monthly installments but I would ask what happens if he stops paying the monthly amount?  Do more armed agents show up at his door and arrest him again?  Most of my clients can’t afford such monthly installments and therefore they don’t continue to pay them.  Indeed in chapter 13 bankruptcies most debtors fall out of their chapter 13 plans for failure to pay.

I have written in the past about people being arrested and sent to debtor’s prison for unpaid debts but that is rare in America and it is not done at all in most states.  Debtor’s prisons were supposed to be completely outlawed in the 1800s.  The federal government appears to be the worst creditor of all to owe as their full military and police power can be turned against a person for some small student loan as we see here.  For many years similar heavy handed tactics have been reported to have been used by the IRS for unpaid back taxes.  With a private non-student debt you would not see anything like this.

Unfortunately there is not much bankruptcy can do for people with student loan debts.  Currently student loans cannot be discharged in bankruptcy (unless there is “extreme hardship”) though we attorneys are hoping that someday that law will be changed to allow people to escape these debts if they cannot pay them.  In America there is something like $1.2 trillion owed in student debts and no politician has yet done anything about it.

In the mean time I think it is a good idea to avoid these student loans wherever possible.  They last forever, they cannot be discharged in bankruptcy, and someday a tragedy could occur when an overzealous marshal pulls a trigger and possibly ends a person’s life for a few delinquent student loan dollars.

For those that already have the loans I would suggest you stay in continual contact with some representative of the government to work out whatever deal you can with them just like you would with the IRS.  If you do not you might have the misfortune of seeing armed federal agents surrounding your house who will place you under arrest and make you appear before a federal judge.  Let’s hope that someday the law will be changed and student loans will become dischargeable in bankruptcy even if the student debt has to be 10 or 20 years old before it is eligible for discharge.

Photo by a.mina from Flickr

 

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015. Call now for free credit report and analysis!

For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.

 

Can I still go to debtor’s prison if I owe money? Look out Charles Dickens, in some states unfortunately it appears that it is happening now!

(My most recent debtors prison blog is found here: http://bit.ly/I2qMO2 .

There are numerous articles posted online that describe cases where people appear to have been put in jail in some states for merely owing  monetary debts.  This can happen to debtors who either owe money to the court or to private parties.  And this has happened in spite of the fact that debtor’s prisons were outlawed federally in 1833.  Most of the states followed suit after 1833 and included clauses in their constitutions prohibiting imprisonment for owing money to someone.

In spite of these prohibitions debtor’s prisons seem to be making a comeback.  There are states where it’s possible to put someone in jail for failure to pay a debt.  I am surprised that lawyers in these states have not put together constitutional challenges to someone who was thrown in jail for such a monetary debt.

According to blog I found online people are languishing in Illinois jails, in Champagne and other counties, for owing unpaid traffic tickets.  A law professor from Notre Dame Law School quoted in the article says that we do have “de-facto” debtor’s prisons because of this practice of jailing debtor’s for merely owing money in spite of constitutional prohibitions even if the money is owed to the state.   According to this law professor this creates a situation where debtors are scrambling to come up with money by any means just to stay out of jail.

An article in the Saint Petersburg Times points out that it costs the jails $53 per day (in Florida) to incarcerate these people who often don’t owe much money.  So the taxpayers pay for the jailing, the judge, and the whole judicial system that wastes time and money trying to collect from these destitute people.  In Florida they have an ominous sounding “Collections Court” that handles these cases and about a third of Florida counties have these courts.  Even in the counties without these courts people are still being jailed for owing money.

According to the Times article it costs the system $62,085 to bring in $80,450 in debt.  Those languishing in jail for these unpaid tickets are certainly poor and often minority but anyone without means can get caught up in this travesty of justice.  How is it still a possibility that you could go to jail for owing money?  Were debtors prisons not outlawed in the 1800s?  Didn’t Charles Dickens inform us 200 years ago about the foolishness of this practice?

The Times article points out that you can be jailed for violating a court order or for failing to make court ordered payments.  So technically they are not being jailed for owing money but it amounts to the same thing.  Jail time is usually given to people who owe spousal and child support but legal experts argue that it is all illegal.

Now there is more and more disturbing chatter on the internet about debtors being jailed for owing a purely private company money.  There are horror stories emerging about arrests made and persons jailed for owing money to private parties.  On such woman was arrested one day, handcuffed, put in a very cold police car, brought to jail and no one told her why for some time while the contents of her purse were unceremoniously dumped in a plastic bag.  She spent a cold night in jail keeping her hands under her armpits for warmth until 16 hours later when she was informed that she missed a court hearing concerning some private debt.

In that case she had missed a court hearing but in Indiana a man faced jail for just failing to pay a purely private debt.  His incarceration had nothing to do with violating a court order.   According to an online article in the Minnesota StarTibune a lawyer challenged the constitutionality of a debtor being threatened with jail for owing a debt.  The appellate judges agreed with the lawyer and he won the case because debtor’s prisons were made illegal in Indiana in the 1850s.

The article in the Star Tribune points out that there is an inconsistency with who is locked up when, and for how much debt, and that all of these things vary from state to state and county to county.  It also makes mention that no one knows how often this happens as no statistics are kept of these incidents.  One man in Illinois was locked up by a judge “indefinitely” for owing $300 to a lumber yard.

Now it seems that the collection agents are influencing the legal system more and more to be more creditor friendly.   Some would say that the collectors are subverting the legal system and using the threat of jail and jail time extract money from people who cannot afford to pay anything towards these privately held debts.

The good news is though that bankruptcy can remove most debts from your balance sheet.  After a bankruptcy discharge you legally no longer owe the debts anymore so no creditor can try to collect on them or try to get you put in jail if you don’t.  Your legal obligation to pay these debts is eliminated.  With debt collectors gaining in power and money and influence this is a very good thing.

In California I know that the courts can threaten jail if you do not attend the court ordered “debtor’s exam”.  This is where a creditor can ask you all sorts of personal questions about your assets and your financial situation.  The courts cannot jail you if you do not pay the creditor in California but they threaten to jail you if you don’t show up for the court ordered exam.

I filed a case for a client the day before his debtor’s exam and he brought his bankruptcy case number to the debtor’s exam.  The other attorney did not know what to do but the judge threw the whole case out right there and told her to go to bankruptcy court for any money.  My client had nothing and the creditor had no reason to declare his debts non-dischargeable so that is the last we ever saw of the creditor.  My client got his discharge without a problem.  Bankruptcy is indeed a powerful mechanism to defeat over-zealous creditors.

You almost always don’t have to argue whether you owe a debt after bankruptcy and you don’t have to argue whether any punishment is constitutional.  I wrote another blog about debtor’s prisons here: http://bit.ly/JmsMFt .

I am a bankruptcy lawyer practicing bankruptcy law in San Diego California.   For more information related to debt, bankruptcy, or debtor’s prison please visit my websites at www.farquharlaw.com and www.freshstartsandiego.com.  Or call me directly for a free consultation at (619) 702-5015.  Call now for free credit report and analysis!  For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

Debtors prison end run in California and elsewhere. Beware “Contempt of Court” and the Debtors exam.

Numerous articles are appearing recently about debtors prisons and whether a debtor can be thrown in jail for owing money to private individuals.  Debtors prisons were written about by Charles Dickens they were outlawed in the 1800s in America and we all thought debtors prisons were gone for good.

It seemed like a good idea a long time ago to not put people in jail for owing money to private individuals.  It appears that they have resurfaced in some state as I blogged about here  http://bit.ly/HPAMsQ  and here http://bit.ly/JmsMFt

I also blogged about how in the California constitution people could not be jailed for owing private debts here  http://bit.ly/I9TkYh .  This California constitutional prohibition of debtors prison seems to solve the problem in this state and we can rest easy because that is just other states that jail people for debts right?  Wrong.

I received comments on my blogs that related real life situations where people had been put in jail for owing debts here in California.  I also researched the issue some more and spoke to other attorneys to see what they were facing.  It appears that in the end judges can do an end run around this prohibition on debtors prisons  They do this with the contempt of court citation and the debtors exam.

A contempt of court citation comes if a judge issues a valid order to pay a debt, and the debtor has notice o the order, and then he debtor willfully fails to comply with the order.  The the debtor can then be jailed.  This comes up most commonly in child support cases where a party is ordered to pay and does not when it has been determined that he or she has the ability to pay.  I would argue though that this is an end run around the debtors prison prohibition because child support is a debt owed to a private individual.  Your ex is not a public agency.

In a number of other states creditors like credit card companies or other creditors have gone to court and moved judges to somehow issue these orders to pay.  When the debtors failed to pay the judge jailed them for contempt.  Some didn’t even have notice as the Sheriff showed up at their door one day and carted them away to jail.  (So such for the notice requirement).  These creditors have circumvented the laws, used the court to collect their private debts, and reinstituted debtors prisons.

I have not heard of these types of creditors getting judges to give them such orders for credit card type debt yet in California but I would not put it past them to try in the future.  For now the contempt of court citations seem to be limited to child support and unpaid court fines.  I don’t expect it to stay that way forever as word gets out of what other states are doing.

But remember always that a creditor in California can get you into a debtors exams. They have similar proceedings in other states.  These debtors exams are bad things all the way around for debtors to attend.  If a debtor is summoned to attend a debtors exam by a creditor the debtor must attend and a warning appears on the summons that failure to appear will result in an arrest warrant for the debtor.  So there is the first way that debtors exams can land you in jail for a private debt by failure to appear at a debtors exam.

This is exactly what happened to a debtor in Pennsylvania according to a blog I read online.  There a debtor failed to attend a deposition session for a type of debtor’s exam at a lawyer’s office and the lawyer immediately filed motions to have the debtor arrested which he was.  This same tactic could be used here in California if a debtor misses a debtors exam.  An arrest warrant will be issued for failure to attend the debtors exam or violation of a court order or contempt.  Creditors are aggressive and they will try anything to get around the California constitution.

If a debtor attends a debtor’s exam then he or she is required to answer questions under penalty of perjury.  These questions are very intrusive and they relate to the debtors entire financial situation.  All sort of personal questions about income, assets, and bank accounts could be asked for the purpose of getting the debtor to pay the debt.  If assets and income is uncovered in these exams then it is possible that the creditors could move for some kind of court order to force payment of the debts.  Violation of that order could also land a debtor in jail.  Debtors prison again.

There is a great way to avoid debtors exam, debts, and creditors though.  That would be to file bankruptcy.  A bankruptcy filing will stay the collection procedures for all dischargeable debts and a discharge will mean that the debtor is off the hook for the debt.  I filed a bankruptcy for a client the night before his debtors exam and he went the next day and the judge through the whole case out because of the bankruptcy stay.

If bankruptcy is unavailable there is the Fair Debt Collection Practices Act (FDCPA) that establishes procedures that debt collectors must file or face sanctions.  Contact an attorney for advice on FDCPA or bankruptcy.

I am a San Diego bankruptcy attorney.  Please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com for more info. about any of these topics.  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis!  For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

Good News! You cannot be imprisoned in California for owing debts! It’s in the California Constitution!

Check out my blog update on this subject here http://bit.ly/I2qMO2 .

I was looking at the articles of the constitution of California today to see if they have a free speech code.  Los Angeles is about to pass a speech limitation ordinance that should be struck down if there is such a code in the state constitution and there is such a free speech provision.  While I was reading the articles of the California constitution I noticed something else.  In Article 1 Section 10 it states that “A person may not be imprisoned in a civil action for debt or tort, …”.

This clause appears to be one that would outlaw the practice of imprisoning debtors for debts to creditors that is happening in other states.  The Wall Street Journal and other publications have written articles detailing how in some states in the mid-west judges are actually imprisoning debtors for owing money to creditors even though such practice has been outlawed since the 1800s, 140 years ago.  Nobody is sure how this debtor’s prison has returned after so much time but possibly it reflects the power and influence of these creditors that we attorneys have been warning people about for some time.

In some cases defendants were arrested at their homes, handcuffed in front of their families, and taken off to a night spent in a lonely, damp, cold jail.  Some were not told until the next morning why they were arrested and most had long forgotten about the private monetary debt that had put them there in that jail.  Each was extremely disturbed and shaken by the experience and each was taking some time to recover.

Imagine the indignity and horror to live a law abiding life and then to suddenly find oneself in jail shivering when the laws that put you there were banned over 100 years ago.  It really boggles the mind that this is happening but it is in some states.  You can read my other blogs about debtors prison here:  http://bit.ly/JmsMFt ,  and here:  http://bit.ly/HPAMsQ .

I was happy therefore to read this section in the California constitution that bans such a practice.  If the creditors ever try to imprison someone here for owing money to a creditor then an attorney can use this provision to get the victim out of jail.  I have never heard of people being jailed for monetary debts in this state but that does not mean that it won’t happen in the future and i is possible that it has happened and the facts have not been widely circulated.

Whatever the case it seems that Californians are protected form debtor’s prison by their constitution.  If you have debts you cannot pay though don’t take the chance of having a lawsuit filed against you and the creditors taking you income or property away from you.  Contact a good bankruptcy or debt attorney t see what you options are to deal with that debt so that it won’t continue to create problems for you.

I am a bankruptcy attorney practicing bankruptcy law in San Diego.  Please visit my website at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis!  For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

Has a creditor threatened you with jail if you don’t pay them? FDCPA says this is illegal!

Has a creditor threatened you with jail for non-payment of a monetary debt?  This is most probably illegal according to the Fair Debt Collection Practices Act (FDCPA).  Collectors often harass and threaten debtors with all sorts of things that they have no right to threaten.  They will often threaten jailing you if you don’t pay today!  A person just contacted me with this problem and the client was threatened by a creditor to have police show up at their work and arrest them if they did not pay today!  And this creditor did not even file a lawsuit yet!

This is clearly illegal!  With no lawsuit filed there is no judgment and with no judgment no legal right to collect on this debt.  This creditor would have to first obtain this judgment which would give them the right to collect but in California there is no going to jail for owing strictly monetary debts.  And to threaten that police will show up at someone’s work and arrest them when they cannot is a violation of FDCPA section 807(4).

In that section it clearly states that an implication that non-payment will result in arrest or imprisonment unless that action is legal and intended by the party is a violation of this law.  In my client’s case there is no arresting or jailing someone for owning monetary debts so this threat was a violation of the law.  If my client could prove it then we could win damages against this collector.  I told this person to tell the collector that they were recording the call next time and see how fast he hangs up.

Section 807(5) restates this and says that any threat to take any action that is not legal or intended is a violation of the FDCPA.  So this collector violated this section too.  My question is can we get this guy to say this clearly into the microphone so we can replay it for the judge?

So don’t take any crap off of these creditors.  I hate to hear these stories and I answer these e-mails immediately.  We live in a great country where we pride ourselves in our freedom but if these collectors can violate the law with impunity then it threatens all of us.

In a previous blog I discussed how these collectors by far receive the greatest number of complaints to the Federal Trade Commission.  They routinely harass, threaten, bother and annoy people and they are now routinely violating the law I believe.  So know your rights and don’t allow them to bamboozle you.

I am an attorney who practices bankruptcy law in California.  For more information please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com .  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis! 

If you or someone you know needs to file bankruptcy please get my FREE E-BOOK; 13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” by e-mailing me at: farquharesq@yahoo.com.

Update on debtor’s prisons: Wall Street Journal confirms they are returning. I say let my people go!

(See my most recent debtors prison blog here: http://bit.ly/I2qMO2 .

I wrote about this in a previous blog but now the Wall Street Journal has confirmed that there is indeed a widespread use of what appear to be debtor’s prisons in many states in America even though such practices were outlawed federally and in most states  in 1833.  This practice is increasing with the deepening and lengthening of this recession.  So just when people are hardest hit by job loss, high unemployment, higher commodity prices, and housing price collapse, they are also getting hit with being put in jail for owing purely private debts.

Some judges appear to be on board with this.  One is quoted in the article saying “wish I could do it more” and “It’s often the only remedy to get people into court and paying their debts”.  No matter to the judges if the debtors can’t pay because they have no money and no job.

These debtor’s prisons were outlawed almost 200 years ago for a reason.  It makes no sense to jail a person who owes money.  It costs more to jail them than could ever be collected from them.  It breaks up whole families, subjects people to the humiliation and danger of jail, and can leave them emotionally scarred for life.  If you don’t believe that this is happening now then check out the stories below.

Also a debtor’s prison can subvert the legal system.  Hundreds of years ago they were used by people to get their enemies out of the way.  The creditors knew that the people they had jailed were not going to pay but they wanted them in jail for revenge often times.  There are other motives for jailing people for debts like putting the fear of jail into everyone so they never dare to not pay any debt.

I believe that our ancestors actually knew better than we did which is why we should give them more respect.  They gave us the Constitution and they outlawed debtors prisons in 1833 for a reason.  They realized then what we have forgotten now.  In a free country debtor’s prisons are extremely harmful to the populace and they should be banned altogether and they should not be allowed to creep back into operation.  No one should ever be jailed or fear jail for owing a purely private debt.

Debt collection companies use our taxpayer-funded court and prison systems to collect their private debts.  It doesn’t matter to them how much it costs because they are not paying for it and they are just eventually getting paid from it.  If they find a friendly judge like the one above then so much the better.

And now for the horror stories.  One man in Indiana, pictured with his kids, spent two nights in jail for a $4,000 debt.  What did they tell the kids when they asked where’s daddy?  What if he is a single dad?  Another from Carbondale Illinois spent five days in jail for failing to pay a $275 debt.  In a previous blog about debtor’s prisons I talked about a woman handcuffed and carted off to jail who kept there all night while she stayed awake and shivered from the cold.  She wasn’t told until the next morning even what the charge was.  It was of course non-payment of some private debt.  Another was threatened with jail by the judge in the case “indefinitely” until he began making payments to some lumber company.

Another man in Indiana in 2009 answered a knock on his door to find the deputy sheriff there with a warrant for his arrest.  He was arrested in front of his two kids and taken to jail.  There he spent two nights and he was stripped searched and sprayed for lice.  He described it as “the scariest thing that ever happened to him”.  It turned out that he owed around $4,000 to the loan company for his truck which was probably a deficiency balance.

The most troubling thing is that he stated in the article that he did not even know he was being sued.  He was finally let out of jail after two days after he agreed to pay $1,500 to this company for the truck.  But this person it seems was not properly served and had no idea he was being sued until he was summarily thrown in jail for merely owing money to a private party.

Often the people who are thrown in jail are destitute and can’t afford rent and food let alone these debts.  Are we to let them languish in jail “indefinitely” or forever because they cannot pay?  Are we then not returning to some dark ages?

It’s far worse too if there has been some mistake.  The debt collectors say they rarely make mistakes but that is not my experience.  They easily could have the wrong person or the wrong amount as they tack on all sorts of fees.  They can also easily fail to serve a person the lawsuit so the jailed person may have no warning of what is coming.

My clients often have their debts double or triple over the years before they discharge them in bankruptcy.  You have a right to demand debt validation according to the Fair Debt Collection Practices Act but many debtors don’t demand validation and others are arrested and jailed without warning before they know what is even happening.

Some states’ regulators are fighting back.  Illinois is seeking to revoke the license of at least one debt collector and Kentucky is seeking to do the same.  Sometimes these companies have been granted a vast number of arrest warrants against individuals for non-payment of a private debt.  The Federal Trade Commission is also investigating but in the meantime debtors are still going to debtor’s prison with the full blessing of many judges.

In fact 5000 such arrest warrants for debts have been issued since 2010 in just nine counties that reported in the one-third of states that allow this.  But what about the nonreporting counties?  Many counties don’t report so we don’t even know how many people are languishing in illegal debtor’s prisons across the country.  It seems that the illegal arrest warrant issuing has increased substantially along with the economic crisis.

Washington state has passed a bill requiring collectors that they prove (or validate) debts before an arrest warrant can issue for that debt.  Florida is issuing special training sessions to judges so they know about the abuse that can result from this.  In McIntosh County in Oklahoma 1500 arrest warrants were issued which is up from 800 the year before.  950 received arrest warrants from Salt Lake City courts and Maricopa County Arizona issued 260 in 2010.  This problem is not going away but continues to increase.

I know from my clients that people have no more money this year than last year but the arrest rate is increasing.  And these arrests are illegal according to federal laws and according to all states.  Debtor’s prisons were outlawed so how is this happening?  These arrests need to be challenged by lawyers whenever and wherever they occur in my opinion until some precedence can be established that future debtors can rely on protect them from jail.

In California I am not currently aware of people being issued arrest warrants for owing purely personal debt but be aware of situations that could amount to debtor’s prison.  Courts always maintain that they put people in jail for violating a court order and not for owing debts and thus they get around the constitutional prohibitions.  Some creditors in some states have used this loophole to just get a judge to order payment of the debt and when payment is not made then the judge issues an arrest warrant for failing to follow a judicial order.  This amounts to the exact same thing as a debtor’s prison.

In California they have not gone there yet as far as I have seen.  Collections are still a responsibility of the creditor once a judgment for the debt has been issued by the court.  We in California are thus luckier than many other states.  But creditors can demand that debtors attend a “debtor’s exam” and the creditors can have a court issue the order.  Failure to attend one of these can result in an arrest warrant being issued and can result in a debtor being put in jail.  So be careful if a debtor’s exam is ordered if you have unpaid debts in California.  It can possibly be used by creditors as a back door way of getting you in jail for purely private debts.

Remember that filing bankruptcy results in an immediate stay being created which blocks any further collection efforts being used against you.  This would include any use of debtor’s exams and presumably it would require your release from jail for any failure to pay any debt.  It would be hard to file for bankruptcy if you are in jail so it’s better if you beat them to the punch and file before things get this bad.

I am a bankruptcy lawyer practicing bankruptcy law in San Diego California.  For more bankruptcy or debt related info. (including debtors prison) please visit my website at www.farquharlaw.com and www.freshstartsandiego.com.  Or call me directly for a free consultation at (619) 702-5015.  Call now for free credit report and analysis! 

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

Can I still go to debtor’s prison if I owe money? Look out Charles Dickens, in some states unfortunately it appears that it is happening now!

(My most recent debtors prison blog is found here: http://bit.ly/I2qMO2 .

There are numerous articles posted online that describe cases where people appear to have been put in jail in some states for merely owing  monetary debts.  This can happen to debtors who either owe money to the court or to private parties.  And this has happened in spite of the fact that debtor’s prisons were outlawed federally in 1833.  Most of the states followed suit after 1833 and included clauses in their constitutions prohibiting imprisonment for owing money to someone.

In spite of these prohibitions debtor’s prisons seem to be making a comeback.  There are states where it’s possible to put someone in jail for failure to pay a debt.  I am surprised that lawyers in these states have not put together constitutional challenges to someone who was thrown in jail for such a monetary debt.

According to blog I found online people are languishing in Illinois jails, in Champagne and other counties, for owing unpaid traffic tickets.  A law professor from Notre Dame Law School quoted in the article says that we do have “de-facto” debtor’s prisons because of this practice of jailing debtor’s for merely owing money in spite of constitutional prohibitions even if the money is owed to the state.   According to this law professor this creates a situation where debtors are scrambling to come up with money by any means just to stay out of jail.

An article in the Saint Petersburg Times points out that it costs the jails $53 per day (in Florida) to incarcerate these people who often don’t owe much money.  So the taxpayers pay for the jailing, the judge, and the whole judicial system that wastes time and money trying to collect from these destitute people.  In Florida they have an ominous sounding “Collections Court” that handles these cases and about a third of Florida counties have these courts.  Even in the counties without these courts people are still being jailed for owing money.

According to the Times article it costs the system $62,085 to bring in $80,450 in debt.  Those languishing in jail for these unpaid tickets are certainly poor and often minority but anyone without means can get caught up in this travesty of justice.  How is it still a possibility that you could go to jail for owing money?  Were debtors prisons not outlawed in the 1800s?  Didn’t Charles Dickens inform us 200 years ago about the foolishness of this practice?

The Times article points out that you can be jailed for violating a court order or for failing to make court ordered payments.  So technically they are not being jailed for owing money but it amounts to the same thing.  Jail time is usually given to people who owe spousal and child support but legal experts argue that it is all illegal.

Now there is more and more disturbing chatter on the internet about debtors being jailed for owing a purely private company money.  There are horror stories emerging about arrests made and persons jailed for owing money to private parties.  On such woman was arrested one day, handcuffed, put in a very cold police car, brought to jail and no one told her why for some time while the contents of her purse were unceremoniously dumped in a plastic bag.  She spent a cold night in jail keeping her hands under her armpits for warmth until 16 hours later when she was informed that she missed a court hearing concerning some private debt.

In that case she had missed a court hearing but in Indiana a man faced jail for just failing to pay a purely private debt.  His incarceration had nothing to do with violating a court order.   According to an online article in the Minnesota StarTibune a lawyer challenged the constitutionality of a debtor being threatened with jail for owing a debt.  The appellate judges agreed with the lawyer and he won the case because debtor’s prisons were made illegal in Indiana in the 1850s.

The article in the Star Tribune points out that there is an inconsistency with who is locked up when, and for how much debt, and that all of these things vary from state to state and county to county.  It also makes mention that no one knows how often this happens as no statistics are kept of these incidents.  One man in Illinois was locked up by a judge “indefinitely” for owing $300 to a lumber yard.

Now it seems that the collection agents are influencing the legal system more and more to be more creditor friendly.   Some would say that the collectors are subverting the legal system and using the threat of jail and jail time extract money from people who cannot afford to pay anything towards these privately held debts.

The good news is though that bankruptcy can remove most debts from your balance sheet.  After a bankruptcy discharge you legally no longer owe the debts anymore so no creditor can try to collect on them or try to get you put in jail if you don’t.  Your legal obligation to pay these debts is eliminated.  With debt collectors gaining in power and money and influence this is a very good thing.

In California I know that the courts can threaten jail if you do not attend the court ordered “debtor’s exam”.  This is where a creditor can ask you all sorts of personal questions about your assets and your financial situation.  The courts cannot jail you if you do not pay the creditor in California but they threaten to jail you if you don’t show up for the court ordered exam.

I filed a case for a client the day before his debtor’s exam and he brought his bankruptcy case number to the debtor’s exam.  The other attorney did not know what to do but the judge threw the whole case out right there and told her to go to bankruptcy court for any money.  My client had nothing and the creditor had no reason to declare his debts non-dischargeable so that is the last we ever saw of the creditor.  My client got his discharge without a problem.  Bankruptcy is indeed a powerful mechanism to defeat over-zealous creditors.

You almost always don’t have to argue whether you owe a debt after bankruptcy and you don’t have to argue whether any punishment is constitutional.  I wrote another blog about debtor’s prisons here: http://bit.ly/JmsMFt .

I am a bankruptcy lawyer practicing bankruptcy law in San Diego California.   For more information related to debt, bankruptcy, or debtor’s prison please visit my websites at www.farquharlaw.com and www.freshstartsandiego.com.  Or call me directly for a free consultation at (619) 702-5015.  Call now for free credit report and analysis! 

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.