Can You Be Imprisoned for Not Paying Debt?

It can be scary to realize that you cannot repay debts, and you may wonder whether you can go to jail for being in debt. While debt collectors themselves cannot have you arrested for unpaid debt, there are some instances in which your collections could lead to jail time. 

For example, if you’re sued as a result of your debt and you don’t comply with a court order, you could face jail time — this, in addition to irreversibly damaging your credit score and confiscating your assets.

Below, we’ll answer the question, “Can you go to jail for debt?” and instances when it could happen. (Hint: The answer to this is most likely no. Arrests and subsequent jail time for debt are used as a last resort.) 

KEY TAKEAWAYS

• You cannot go to jail for not paying your debt unless in specific extreme circumstances.
• Debt collectors may file a lawsuit against you to collect the debt, and if you don’t comply with the court’s orders for information, a judge could call for your arrest.
• It’s illegal for debt collectors to arrest or threaten to arrest you for unpaid debt.
• Your right is to file a complaint with your local consumer protection agency if a debt collector threatens you with jail time for not paying the debt.
• Don’t neglect notices from debt collection agencies. If you’re having trouble figuring out how to get out of debt, contact creditors to work out a payment schedule, work with a credit counselor, or consider consolidating your debt.
• Failure to pay off your debt can negatively affect your credit history and ability to apply for other loans in the future.

Circumstances That Can Lead to Jail Time for Debt

The Fair Debt Collection Practices Act (FDCPA) makes it illegal for a debt collector to have you arrested or claim you will be charged for not paying a debt. However, some instances involving your outstanding debts could lead to imprisonment. Let’s look at them below.

Ignoring Court Orders

When you default on your loan, your creditor will turn to a debt collection agency to help them recover their money. Debt collectors will try to reach you via phone, email, and physical mail. If you don’t respond after a certain period, the creditor can sue you and attempt to use some of your assets to pay the bill.

This means that you’d need to appear in court and explain, with cause, why you haven’t complied with the court’s orders. If you don’t show up, or you cannot provide a valid reason for your non-compliance during your appearance, you could be found in contempt of court, and a warrant may be issued for your arrest for disobeying and disrespecting the court’s authority.

Not Paying Child Support

Courts monitor child support and alimony payments, and failure to pay them could place you in contempt of court. Each state has its processes for those who fail to make child support payments, but generally speaking, the support recipient (in most cases, the ex-spouse) can decide to take you to court and require a show cause hearing. 

The same scenario applies here: if you don’t satisfy the court’s orders, they may issue an arrest—not for failing to pay your debts but for disrespecting a legal body. 

If the payments owed are more than one year past due or above $5,000, the federal government may step in to levy fines and suggest jail time.

Evading the IRS to Avoid Paying Taxes

The IRS can also jail you if you intentionally do not pay your taxes. Per the U.S. federal tax code, the penalty for tax evasion or tax fraud is a crime worthy of a fine of up to $100,000 and up to five years in prison. 

Tax collection agencies will do everything they can to contact you about your taxes and may issue an investigation if their attempts to reach you are unsuccessful. The IRS can also garnish your wages and seize assets to collect what’s owed. 

Type of Debts That Don’t Lead to Jail Time

While you can go to jail for priority debt, judgments, and not paying your taxes or child support, you won’t go to prison if you cannot pay other types of collections, such as:

• Personal loans, student loans, car loans
• Credit cards
• Hospital bills

States Where You Can Go to Jail for Debt

You won’t go to jail for not paying debt outright, no matter your state. While no state will imprison you for unpaid debts, many states allow you to be arrested if you’re in contempt of court due to your debt. 

Creditors in some states may be more tenacious than others when pursuing you for debt collection. According to CFPB data, debt collectors are most aggressive in attempting to recoup lost funds in Georgia, Texas, Florida, and California.

There are only six states that will not order jail time for debts of any kind, even if you’re found in contempt of court:

• Alabama
• New Mexico
• North Dakota
• South Dakota
• West Virginia
• Wyoming

Debt Collector Threats: What’s Legal and What Crosses the Line

It’s never a good idea to disrespect a debt collector and ignore their notices. However, there are some boundaries they’re not allowed to cross, and knowing your rights during this time can help protect you from deceptive and illegal practices.

The Consumer Finance Protection Bureau (CFPB) lists communication guidelines for what debt collectors can and cannot say when attempting to collect debt.

How Debt Collectors Operate and What They Can’t Do

Debt collectors are allowed to use certain strategies to recoup the money you owe, such as:

• Provide you validating information about your debt, including the ways they intend to collect, your timeframe for disputing it 
• Send you reminders about your unpaid loans
• Sue you, paving the way for courts to file a judgment against you if you do not show up to court
• Garnish wages

Beyond that, it’s illegal for debt collectors to threaten you with jail time or an arrest. Limits to their communications also include the following:

• Contact you by phone before 8 a.m. and after 9 p.m. or when you’re at work (if you notify them beforehand)
• Use abusive language or threaten you with violence
• Contact you during your dispute until you receive a valid verification of the debt
• Discuss your debts with anyone except you, your spouse, or your attorney
• Misrepresent themselves as law enforcement agents

If you notice any of these, don’t hesitate to contact your local consumer protection agency and file a claim.

What to Do If Debt Collectors Threaten Arrest

Debt collectors don’t have the right to threaten you with arrest for not paying your debts. This is firmly stated in the Fair Debt Collection Practices Act. If you feel that a debt collector is threatening you with jail time, start documenting all communications with the creditor, including how they contacted you, what was said, and the times they reached out. 

Save any letters, and if your state allows it, record any conversations over the phone where the debt collector is threatening you. Once you collect the evidence, file a formal complaint with the Consumer Financial Protection Bureau.

Strategies to Prevent Legal Issues from Debt

Of course, it all comes down to the following: Never neglect legal notices for debt repayment or other financial responsibilities, as it can have a long-lasting impact on your financial credibility. In many cases, debt will follow you to another country. Here are some tips to avoid legal issues if you’re having a hard time with your debt:

• Get a budgeting app like Credit Karma to control your spending and dedicate a portion of your monthly income toward debt repayment.
• Negotiate with creditors for an alternative repayment plan that makes payments more manageable.
• Consult a financial advisor to determine a responsible debt relief option for your situation, such as debt consolidation, refinancing, or bankruptcy.
• Only take high-risk loans like payday if you can afford the aggressive repayment plan.

It’s okay if you’re struggling to pay off your debt — we’re all looking for ways to solve financial problems without facing legal action. Rest assured that your inability to repay your debts will never lead to jail time if you try to follow procedure. You can’t be imprisoned for not paying your debt, and that’s a fact.