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  and here

I also blogged about how in the California constitution people could not be jailed for owing private debts here .  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 or 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:

Do I need an attorney to file for bankruptcy?

The short answer is yes!  Don’t try to file a bankruptcy without one!

Your attorney will know the law first and foremost.  The attorney will know if you have too much property or income for instance as he will do a means test calculation for you as is required by the law.  I recently came in on a bankruptcy case where a bankruptcy filer should never have filed a case because this person had non-exempt income or assets.

The trustee just claimed all of those assets for the creditors as they will do when there are assets available to seize.  If an experienced bankruptcy attorney would have been consulted in the beginning then they could have advised the client not to file for bankruptcy at all in that case.

The client could have saved the filing fee, attorney’s fees, administrative fees and they could have worked out a deal to pay the debts back.  As it turned out the client had to surrender assets necessary to pay all of these costs and he had to pay the debts back in full.  It would have been much cheaper not to file bankruptcy in the first place and to make matters worse the clients assets were tied up for over a year.

Secondly you need an attorney because the attorney will know the bankruptcy procedures.  Filing for bankruptcy requires many procedural steps which are difficult for the novice to comply with.  An attorney will file the case electronically with special bankruptcy software that automatically complies with the procedural requirements of the court.  I have seen many filers in 341 hearings who didn’t know what they were doing so they made serious errors.  These errors usually result in delays and continuances and sometimes in dismissals of the bankruptcy case.

If the case is dismissed then the debts come back into play and the whole reason for filing is negated.  Now you have lost the filing fee and you will suffer other penalties like losing the automatic stay for a year.

Thirdly you need an attorney because if you hire one you should get an expert who knows the law,and  the procedure but also someone who knows the trustees.  Each bankruptcy trustee is a little different and each has slightly different requirements.  An experienced attorney will know what each one needs and what each one likes to receive in terms of supporting documentation.  This will inevitably help you through the process in the smoothest and quickest fashion.

Lastly with an attorney you get someone to accompany you through the process.  I accompany all of my clients to the 341 meeting of creditors and I am available for any questions that they might have about the process at any time.  This helps people to have fewer fears and worries about something that people naturally are very scared about.

So there are many reasons to hire an experienced bankruptcy attorney to help with your bankruptcy.  Remember too that the attorney is the only one that can represent you in court in the unlikely event that things go badly.  So if you are considering bankruptcy then hire an attorney and don’t do it yourself!

I practice bankruptcy law in San Diego California.  Please visit my website for more information on filing bankruptcy at:

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: .

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 and  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:

Will I get kicked out of my house after I file bankruptcy?

No! Not necessarily.  You will not automatically get kicked out of your house after a bankruptcy so don’t worry.  Even is chapter 7 there is a stay that covers all of your property including your house and it is created when the bankruptcy case is filed.  A bankruptcy stay prevents any action being taken against you including evictions or foreclosures.  You will therefore not be kicked out of your house after filing bankruptcy.

The problem is that a stay in a chapter 7 only lasts for the three months of the bankruptcy.  After the three months is up the bank or landlord can proceed with a foreclosure or an eviction against you.

Once the house is sold in a foreclosure you will be contacted by the new owner who will want you to move out.  You can then ask for cash for keys.  Ask for $2000 to $3000 to move out because you will have moving expenses and new rent and deposits to pay.  Negotiate with the new owner and get what you can.  They can evict you if you do not move but they would usually rather negotiate.

A Chapter 13 bankruptcy will allow you to stay in your home if you have disposable income (income above and beyond your bills) and if you can afford the payments on the home.  A chapter 13 is a debt repayment plan where you pay back some of your creditors over a three to five-year period.  A chapter 13 will allow you to make up all of your unpaid back payments (arrearages) on your house but most people realistically can’t afford to make these payments.  Also most people prefer the speed and finality of a chapter 7.

A chapter 7 bankruptcy allows you to discharge all of your unsecured medical, credit card, and personal loan debt in 90 days and then you are done with the bankruptcy and you can move on with your life debt free.  With a 13 you have to make payments for up to 5 years.  The chapter 7 will delay the sale of your home in a foreclosure for 2 months or possibly far longer as there is no way to currently predict how quickly a lender will proceed with a foreclosure.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at or  Or call my office for a free consultation about a chapter 11 bankruptcy 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