Can You Go To Jail For Credit Card Debt?
- You can't be sent to jail for credit card debt.
- Creditors could sue you in civil court to collect unpaid credit card balances.
- Defaulting on court-ordered obligations could lead to jail time.
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Finding yourself with a pile of credit card bills to pay isn't exactly pleasant. And if you're not able to keep up with what you owe, you might be wondering if you could land in jail for those debts.
The good news is that you can't go to jail for unpaid credit card debt. In fact, your creditors can't even threaten you with jail time under the Fair Debt Collection Practices Act (FDCPA).
That doesn't mean, however, that you can't face other legal and financial consequences for unpaid credit card debts. You could still be sued, so it's important to know your rights when dealing with past due credit card bills.
Debtors jail and credit card debt: Does it exist?
Can you go to jail for credit card debt today? No, but once upon a time, you could have been thrown in debtors' prison for unpaid debts.
Debtors' prison is believed to be a medieval European invention that eventually found its way to the colonies and remained a part of the U.S. legal system up until the 1800s. They were officially banned under federal law in 1833. In 1983, the Supreme Court deemed debtors' prisons a violation of the 14th amendment.
However, the FDCPA outlines what can happen if you fail to pay credit card debt. Specifically:
How debt collectors can contact you
When they can contact you
What they can say when contacting you in regard to unpaid credit card debt
Debt collectors are not allowed to harass or threaten you over debt. That includes a prohibition against threatening you with jail time or any type of legal action they do not otherwise intend to take. However, you're not completely shielded against other types of collection actions.
Can you be sued for credit card debt? And when can that happen?
Creditors can sue you for unpaid credit card debt in small claims court. A creditor might decide to sue you if they've made repeated requests for payment with no success.
The window for filing a lawsuit against you depends on where you live. Each state has a different statute of limitations on credit card debt. The statute of limitations defines the time frame in which a creditor can sue. When the clock starts ticking can also depend on state law.
Statutes of limitations are very complicated. Be careful not to restart the statute of limitations by making a partial payment. Also, if sued, it is important to make an affirmative defense. When in doubt, asking an attorney for legal advice is good practice.
For example, your state might specify that a creditor has three years from the date of your last payment to sue. So if you made your last payment on April 30, 2022, they'd have until April 30, 2025 to file a lawsuit. Once that date passes, however, the debt would be time-barred and they'd no longer be able to sue.
In Georgia, for example, the creditor has six years to sue you. In California, however, the creditor only has four years to sue you. The starting date is usually the payment due date that you missed. It could also be the date of your last transaction, or the date of your late payment. So if you make a partial payment you might start the legal clock all over again.
If you have unpaid credit card debt, do a quick online search to find out the statute of limitations in your state.
What happens when the creditor wins a judgment against you?
Once a creditor obtains a judgment, they can:
Ask the court to garnish your wages, if your state allows wage garnishments for credit card debt.
Place a lien against your home or other real property you own.
Levy your bank accounts.
You might be able to avoid a bank account levy if your account only contains protected funds, such as Social Security benefits or other government benefits that you receive via direct deposit.
Getting around a wage garnishment can be more challenging if there are no restrictions on garnishments in your state. And the only way to remove a lien is to pay off the debt, which could be an obstacle if you plan to sell your home.
For those reasons, it's important to try and manage credit card debt before you get to the point where a creditor sues. For example, you might consider a debt management plan or seek out professional debt negotiation services, either of which could head off a creditor lawsuit.
What kinds of debt can you go to jail for?
While you can't be jailed for credit card debt, there are other situations where you could be locked up for unpaid debts. Generally, there are three categories of debt that you can be jailed for if you fail to pay:
Court-ordered debts, such as lawsuit settlements, judgments or restitution.
Child support or alimony payments that are subject to a court order.
Federal and state tax debt, if you're found guilty of tax fraud or tax evasion.
Now, there are a few things to know about each of these scenarios.
First, you typically aren't jailed automatically for failing to pay court-ordered debts, unless you're found to be in contempt of court or have violated probation or parole. Even then, the court may consider your ability to pay when determining whether jail time is appropriate.
Child support or alimony
In the case of court-ordered child support or alimony, you might be subject to a wage garnishment first before jail time is even an option. If you repeatedly ignore orders to pay or you can't afford to pay, you could be held in contempt and jailed until you're caught up on back payments. You might also have to pay fines and court fees on top of what you owe.
Failing to pay taxes could result in jail time at the state level or prison time at the federal level if you're criminally charged with tax evasion or fraud. You'd first need to be convicted or plead guilty to the charges before any jail or prison sentence could be handed down. Again, you might have to pay court fines and fees as well as the taxes owed.
What should you do if you are threatened by a debt collector?
If a debt collector contacts you, it's important to first ask them to validate the debt in writing. The FDCPA requires debt collectors to verify that a debt they're trying to collect actually belongs to you. You can also request in writing that the debt collector stop contacting you.
When a debt collector moves on from merely contacting you to outright harassing or threatening you, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). You can report them to your state attorney general's office as well, and file a complaint with the Better Business Bureau.
If a debt collector persists with harassment, you have the right to sue if you believe they're violating your rights under the FDCPA. Should you win your lawsuit, you could collect a judgment from the debt collector.
Keeping good records of all communications with debt collectors is key to winning your case. If you're being harassed by a collection agency, it's a good idea to note each time they contact you and what was said. You can also print out emails or make copies of any letters exchanged between you to back up your claims.
What happens if you don't pay a credit card off?
If you don't pay your credit card off and carry a balance month to month, you'll likely pay interest and finance charges. If you stop paying your card altogether, the credit card company could contact you to ask for payment. They could assign your account to a debt collection agency and in a worst-case scenario, you might be sued for the debt.
What legal action can credit card companies take?
Credit card companies can sue you for unpaid credit card balances. If they're able to win a judgment against you, they can take additional action to garnish your wages, place a lien against your property or levy your bank accounts.
What happens to credit card debt if you go to jail?
You can't go to jail for credit card debt. If you go to jail for another reason, your credit card debt doesn't go away. You'll still need to pay those bills, along with any other financial obligations you have, to avoid being sued.