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Can You Go to Jail for Not Paying Your Bills?

People often, wonder, “Can I go to jail for not paying my bills?” It’s no wonder. Debt collectors have been known to use the threat of prison time in order to compel people to pay. Not only are those threats empty, but they likely represent wrongdoing by the debt collector.

In fact, if you owe a debt and a debt collector tells you that you may go to jail for not paying your bills or implies such a threat may occur, you may sue them under Federal and potentially state law depending on which state you live in.

Can You Go to Jail for Any Debt?

Yes, there two types of debt for which the failure to pay could send a person to jail:

  • Failure to pay your taxes
  • Failure to pay child support

The failure to pay your taxes is a federal crime and can result in jail time. The same goes for neglecting child support payments. Failing to do so can be considered contempt of court and result in jail time for up to six months. There may also be fines for each violation in addition to attorney’s fees and court costs.

Can You Go to Jail for Unpaid Student Loans?

No, you cannot go to jail or be arrested for not paying your student loans. Failing to pay a student loan, credit card, or hospital bill are considered “civil debts” and you cannot be arrested for not paying your student loans or civil debts.

The Department of Education offers several ways for borrowers to get back on track with payments if you fall behind on paying your student loans. According to the Department of Education website, only if all other methods are unsuccessful does the Department of Education turn debt over to the Department of Justice for collection through litigation. They are required to do so by law, but they will try all other options first to collect the payments. Ultimately, failure to repay student loans could result in wage garnishment.

Can a Debt Collector Sue Me?

Yes, a debt collector may choose to take legal action against you. If a creditor or bank takes you to court over an unpaid debt, you should make sure to respond, either through an attorney or on your own, to the lawsuit.

Sometimes creditors or debt collectors will take this action in order to get a court judgment against a person who owes a debt in hopes to collect the money they’re owed. If the person who owes the debt does is ordered to appear in court and does not show up, the judge has the right to issue an arrest warrant for failing to appear.  So, the debtor could be arrested—not for failing to pay the debt—but for failing to follow the court order. 

(See also: How Can I Tell if a Debt Collector is Legitimate?)

Is There a Statute of Limitations on Debt?

Yes, there is a statute of limitations to recover a debt that limits the period of time creditors or debt collectors have to file a lawsuit to recover. Those statutes of limitations vary from state to state with most falling between 3-6 year range, while some can be as long as 10 years. The length is determined by the state and the type of debt such in question (credit card debt and medical debt may be treated differently, for example).

The Consumer Financial Protection Bureau states that the number of years is determined by:

  • State laws
  • The type of debt you have
  • Whether the state law applicable is cited in your credit agreement

What Is a Time-Barred Debt?

time-barred debt is the legal amount of time that a creditor or debt collector has to start a lawsuit or their claim could be “barred” based on the statute of limitations for debt. If the statute of limitations on a debt passes, it is considered too old based on your state’s law. If that is the case, then you cannot be sued, however, debt collectors may still try to contact you for payment. Creditors have a certain number of years to collect a debt and also have the right to sue for the payment of that debt.

Depending on which state you live in, the statute of limitations clock can start when you fail to make a payment on a debt, or from the time when your most recent payment was made. Some states restart the clock if a partial payment was made.

The decision to pay a time-barred debt is up to you and usually, you have three options:

  1. Do not pay the debt. This could mean further actions from the creditor or debt collector.
  2. Pay a little of the debt. This could restart the clock with a debt collector.
  3. Pay off the debt. This could allow you to avoid any potential legal action and you may be able to negotiate down the total amount owed.

Does the Statute of Limitations on Debt Affect My Credit Score?

Yes, your credit scores may be impacted even if the statute of limitations on a debt passes. Any debt you owe will be reflected on your credit report. If you don’t make payments, those debts can stay on your credit report for seven years, impacting your credit score. As a result, it could be hard to get a new credit card, home loan or lease a car and if you do get approved, the interest rates could be much higher.

(See also: The Impact of Paying a Collection Account on Credit Scores)

Where Do I Report a Debt Collector Making Threats?

If you have any problems with a debt collector—such as receiving threats or other improper activity—consumers can report them to one of these three places:

  1. State Attorney General’s office
  2. Federal Trade Commission
  3. Consumer Financial Protection Bureau

The Fair Debt Collection Practices Act (FDCPA) was established to stop debt collectors from using abusive and unlawful tactics to collect debts from consumers. Several states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act and your state’s attorney general website can help you understand your rights, what actions you can take, or questions you might have such as:

  • Can a debt collector contact me anytime?
  • How can I stop a debt collector from calling me?
  • Can a debt collector contact friends or family about my debt?
  • What should I do if a debt collector sues me?

How Can I Fix My Debt?

If you need help with your debt and a debt collector has contacted you, first, make sure that the debt is yours. Sometimes collection agencies can make mistakes, or unfortunately even engage in scams.

(See also: How to Spot Phishing Scams)

If you know you owe that debt, confirm the total as well—as those details can be wrong. If it is not yours, you can let the debt collector know this. However, if you owe the debt, you should look into repayment options and create a plan to make those payments—consider a debt consolidation loan or talk to a credit counselor or attorney to help avoid future concerns.

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