Debtors’ Prisons Alive and Well in 2013 America - John T.Orcutt - Poor Being Jailed for Nonpayment Skip to main content

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Debtors’ Prisons Alive and Well in 2013 America


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When you hear the term “debtors’ prison,” it may bring images of ball and chain shackles or dark, dank prison cells infested with rats. While the thought of archaic jails may seem far-fetched, the institution of modern debtors’ prison is actually alive and well in 2013. More than one third of the nation’s states actually allow authorities to drag you to jail for failure to pay your debts, despite the fact that the United States abolished debtors’ prisons in the 1830’s. How is this possible?

According to numerous published reports, out of control debt collectors in Georgia, Louisiana, Michigan, Ohio, Washington, Missouri, Illinois, Alabama and list of other states are reviving debtors’ prisons, jailing people at "increasingly alarming rates" over unpaid debts. Whether it is debt for medical services, credit cards, traffic tickets, court costs or car loans, debt collectors are able to justify the jailing low-income citizens who simply cannot afford to pay.

For example, in Illinois, debt collectors use legal loopholes through publically funded courts, sheriff’s deputies and county jails to pressure financially strapped citizens to pay their debts. Interestingly enough, the people are not arrested for nonpayment of the debt, they are arrested for failing to show up at court hearings, failing to pay legal fines or “contempt of court” charges.

A recent debtors’ prison arrest in the state of Ohio landed a mother of three in jail for 10 days. She failed to pay $540 in court costs and fines after being convicted of driving on a suspended driver’s license. Unable to afford the penalties, the mother was trying to save up enough money to make a good faith payment to the court, but was dragged to jail instead. Strangely enough, it ended up costing the taxpayers almost $1,000 for officials to arrest and incarcerate the mother for 10 days. How’s that for making financial sense?

Moving on to Missouri, payday lenders are behind the debtors’ prison revival. (It should also be noted that according to Missouri’s own state constitution, it is illegal to imprison citizens for unpaid debt.) Lenders can take you to court and receive a judgment against you for unpaid debts. You are then summoned to an “examination of financial assets.” If you don’t show up to court for the exam, a warrant is issued for your arrest. Once you are picked up, you sit in jail until you receive a court date or you can afford to post bond. How strange would you find it that your bond is usually set at the amount you owe the payday lender? Interesting indeed.

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Many critics of this technique say that once the bond is posted, the judge will hand the money over to the lender. This actually turns the court system into private debt collectors for predatory lenders. Some states also apply "poverty penalties" if you are unable to pay your debts off all at one time. These penalties include late fees, payment plan fees and accrued interest. For example, Florida lets private debt collectors add 40 percent onto the original debt amount. In addition, many Florida counties use “collection courts,” where a debtor can be jailed without access to a public defender.

The good news for North Carolina debtors is that NC law does not work that way. In North Carolina, failure to appear in court for a civil case, like a debt lawsuit, does not lead to a contempt of court charge.  Instead, it leads to a default judgment against the person who did not appear. Even after a default judgment is entered, the judge can still opt to reverse the judgment and give you an opportunity to defend yourself against the debt lawsuit.

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Many victims of debtors’ prison are living on funds that are supposed to be legally protected from being garnished or used to pay outstanding debt judgments. For example, Social Security payments, unemployment insurance benefits and veterans' benefits are supposedly exempt. Instead, these people are being forced to choose between using “protected” funds to pay up or going to jail for being poor.

If you're currently in danger of defaulting on a loan or credit card, owe court costs or have delinquent debt, consult with a trusted North Carolina bankruptcy attorney immediately to find out what can be done. Filing Chapter 7 or Chapter 13 bankruptcy can keep you out of debtors’ prison and help you hold on to  the freedom you deserve.


Dedicated to helping residents of North Carolina find the best solutions to their debt problems. Don’t waste another day worrying about your debt. Call +1-919-646-2654 today to schedule a free initial consultation to discuss your bankruptcy options.

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