If you cannot afford to pay your debts, you may face a number of severe consequences, such as being sued or having your wages garnished. As of 2010, people do not normally go to jail for failing to pay debts, and the Federal Fair Debt Collection Practices Act (FDCPA) forbids debt collectors to threaten debtors with jail time. In some states, however, a prison sentence may indirectly result from failing to pay debts. For instance, you could be put in jail for missing a court date, or failing to fill out legally required paperwork.
Lawsuit
If you fail to pay a creditor for an extended period of time, she could potentially file a lawsuit against you. When this happens, she can take you to court and get a judgment against you. A judgment is simply a statement that confirms that you do have a debt. At that point, the creditor can go back to court to get a writ of execution. This document allows the creditor to collect the debt through wage garnishment and other techniques.
Failure to Appear
If a creditor gets a writ of execution against you, it requires you to appear in court. If you do not attend the hearing, the judge in the case may issue an arrest warrant for you. This means that you could potentially be arrested for your failure to appear in court, rather than for the debt itself. If you do not fill out the proper paperwork to have your wages garnished, you could also be arrested.
Fraud
If you accumulated the debt through fraudulent actions, you could wind up in jail. For example, if you opened a credit card account in someone else's name and then did not pay the debt, you could be arrested and prosecuted for this crime. You may have to repay the debt and spend an extended amount of time in prison for these actions.
Alternatives
Instead of going to jail, you will typically have to look at some other alternatives when it comes to handling your debt. For instance, you might be able to work out a debt settlement with your creditor. This involves paying a lump sum of money to the creditor, totaling less than you owe. You could also create a debt management plan, which involves setting up a payment plan with your creditors. If the situation is very bleak, you might even consider bankruptcy, which can eliminate most or all of your debt.
Considerations
U.S. laws against debtors' prisons have been in effect since the 1800s. If you go to jail for anything related to debt, it will be for failing to appear in court. It is illegal for a debt collector to threaten you by telling you that you can go to jail for failing to pay a debt.
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