Only Real Debtor’s Prison Is Your Mind
This is a terrifying headline: “JAILED FOR $280: THE RETURN OF DEBTOR’S PRISONS”
Is it true? Here’s the story: A woman got a bill for $280 from the hospital; she spoke to a person in billing and said, “This is an error”; the person in billing agreed that it was an error and said, “Don’t pay it”; she didn’t pay it; it got sent to collections, who presumably tried to get her to pay it; having been told not to pay it, she didn’t pay it; the collections agency sent her a summons for failure to pay; still working off the the original direction of, “don’t pay it,” she continued to not pay it, and ignored the summons; state troopers came to her house, arrested her, and took her to jail.
So, yes, she didn’t pay a debt and ended up in jail … but she went to jail for ignoring the court summons, not having a debt.
Hidden at the bottom of the article:
Under the law, debtors aren’t arrested for nonpayment, but rather for failing to respond to court hearings, pay legal fines, or otherwise showing “contempt of court” in connection with a creditor lawsuit.
Elie Mystal at Above the Law explains:
Don’t be afraid of these collectors. Be afraid of judges. Respond to the summons, make your court date, and make a deal. Not even Georgia puts people in jail for simple inability to pay their debts.
But in a 2010 report “In for a Penny: The Rise of America’s New Debtors’ Prisons,” the ACLU begs to differ:
[The report] shows how, day after day, indigent defendants are imprisoned for failing to pay legal debts they can never hope to manage. In many cases, poor men and women end up jailed or threatened with jail though they have no lawyer representing them. These sentences are illegal, create hardships for men and women who already struggle with re-entering society after being released from prison or jail, and waste resources in an often fruitless effort to extract payments from defendants who may be homeless, unemployed, or simply too poor to pay.
So there ARE debtor’s prisons, but they just look like regular prisons and are only for poor people who can’t pay for their public defenders/cost of incarceraton/court fees/etc. You can go to jail for owing a debt! But only if it’s to the government, and you don’t ignore it.
So the lesson is, there are three things never to be ignored:
1. collections agencies
2. courts
3. the IRS
And also: pay your bills, especially to the government.
Photo Credit: flickr/toolmantim
Oh my god. This is my biggest fear. Half my student loans are private and were referred to collections (hit a few roadbumps after college, meh). I can’t tell you how many times a collector called my house and threatened to sue me. Every time I read about people blithely saying ‘what just don’t pay your private loans’ I get twitchy and think about the worst case scenario. Phew. :sips tea:
@Username: YES. Me too. With student loans, but also with the massive pile of hospital bills I acquired last year when I ended up in the ER and then hospitalized for a week without health insurance. I owe them SO MUCH MONEY, it’s insane, and clearly I can’t pay them, and I have actual nightmares where I get hauled off to court for it.
In short, this story scares me.
So I have been there with the hospital bills, and what you must, must, must do is: call them. Say: “I cannot pay this.” They will put you on some kind of payment plan or cut your bill or something. But once it goes to collections or they take it to the court, it gets a lot harder to do this. (But still possible! Pick up the phone today etc.) (Well, except hold please if they’re already in collections, I’m going to check what you should do if a collections agency is after you, brb).
@moreteawesley
I obsessively check my Mint account after reading these kinds of stories. Sometimes it’s calming (as in Yes, everything is OK, the debtors haven’t gutted my IRA yet) other times it makes me freak out a bit more. Then I make a $5 student loan payment, because like, compound interest.
@moreteawesley I am in your exact situation; the original article was the most stressful thing I have read in a while. Absolutely terrifying.
@moreteawesley Your comment reminds me of this story from today, and I am sorry, but it looks like they’re doing something about it.
@Logan Sachon: I know I should do this! I have no idea if they’re in collections or what. Honestly, I do that terrible thing where you ignore mail that scares you. Responsibility! I am the worst.
@Username: I obsessively check Mint all the time even though all it ever does is show me that I am worth like -$46,000. The only asset I have is my car and it’s still outside of my house, so, I guess that’s okay.
@sockhop: I’m sorry! It is the worst. Even worse (than the worst) because it totally wouldn’t even be an issue if we lived in a place that had any kind of sensible healthcare system, but THAT’S a whole other conversation.
@Mike Dang: ACK. Jesus, that is awful. Thankfully no one made me pay them before they let me into the hospital, and also thankfully I do have insurance now so it shouldn’t happen again. But
So, are you saying that if we don’t pay our bills we go to puppy jail? Because I think I could handle that.
I work at a collections law firm. Sometimes you have to talk to a couple of people before you get someone nice [or just doesn't care] enough to get to a payment arrangement you can afford.