Although debtor's prisons, in which people who owe a significant amount of money are incarcerated, are a feature of many countries, the U.S. is not one of them. No matter how much a person owes or to who, he cannot be put in jail--the single exception being if the person owes child support payments. This means that a person who owes a payday loan older than five years cannot be jailed for it.
Payday Loan Laws
Payday loans are loans issued from a few days to a month at very high interest rate. Although the interest rate for these loans is much higher than for other kinds of loans, the laws that regulate their collection are generally the same. A debtor cannot be placed in jail for failing to pay off a payday loan debt, even under a state's "hot check" law, in which people who write bad checks can be jailed.
Credit Harassment
In some instances, creditors attempting to collect a debt will threaten the debtor with jail time if he does not pay up. Not only will the debtor not suffer jail time, but it is illegal for creditors to say this. Falsely threatening imprisonment to a debtor is a violation of the Fair Debt Collection Practices act, a federal law. Those creditors who violate this law can face a fine or even jail time themselves.
Jail for Debts
While a person cannot go to jail for failing to pay a debt itself, he can go to jail if he fails to follow the orders of a judge hearing a case related to the debt. For example, if a judge orders that a person who owes money to appear in court on a set day and the person fails to do so, the judge can issue a bench warrant for contempt of court and have the person jailed.
Statute of Limitations
Not only can a person not go to jail for owing a five-year-old debt, but in some areas he is no longer legally obligated to pay the debt. All states have statutes of limitations on how long a debt can be collected. The length of this statute varies by region. In most areas, the statute is longer than five years; however, in some it is not. If the statute has expired, the debt is no longer valid.
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