Can You Go To Jail For Unpaid Credit Card Debt?

Can You Go To Jail For Unpaid Credit Card Debt?

Being buried beneath a mountain of overdue credit card bills comes with a variety of consequences; stress, fear, and mental health worries all included-  but being locked up isn’t something you need to worry about.

If creditors contact you and threaten you with imprisonment or suggest that you could go to jail, they are deceiving you and violating federal law.

Can You Go To Jail For Unpaid Credit Card Debt

History

Debtors’ prisons were historically a popular type of punishment in America for unpaid debts.

Debtors’ prisons fell out of favor as other ways of collecting unpaid debts (such as bankruptcy proceedings) became increasingly popular throughout the early nineteenth century, until they were officially prohibited by the federal government in 1833.

Unfortunately, prohibiting debtors’ prisons did not totally prevent debt collectors from threatening people with jail time.

Because creditors continued to make outrageous and deceptive allegations in order to terrify people into paying their debts off sooner, the United States government stepped in once more, adopting the Fair Debt Collection Practices Act in 1977.

This act restricts what debt collectors can and cannot say to you in order to encourage you to pay your credit card debt, including the use of threats of jail time. This act is still in force today to protect consumers.

The consequences of credit card debt

While debt collectors cannot jail you for failing to pay your credit card bill, creditors can still use the legal system to ensure they get their money back. Suing you for money is the most typical legal recourse.

If you are sued for unpaid credit card debt, do not dismiss the action. Failure to respond to a lawsuit or appear in court will result in a default judgment against you.

Because you did not establish a case in your defense, the judge grants the creditor who is suing you everything they seek for in the lawsuit in a default judgment.

As part of a default judgment, debt collectors are usually entitled to withhold your income, levy your bank account, or take action against your personal property to pay the bill.

Rather than ignoring a lawsuit, think about hiring a lawyer to represent you. They will assist you in responding, keeping track of documentation, and ensuring that you are handled fairly. Lawyers can sometimes get your case dismissed or settled for a cheaper sum.

Some creditors take advantage of this judgment and ask the court to have you jailed for refusing to cooperate, which is the only way you may end up in jail for your credit card debt.

If this occurs, the charges against you will be for failing to comply with a court order to pay your obligation, rather than for owing the amount itself. In some areas, this slight distinction is sufficient for debt collectors to avoid the Fair Debt Collection Practices Act.

Help with credit card debt

The most effective approach to prevent debt collectors from knocking on your door and possibly seizing your belongings is to pay off your credit card debt as soon as possible.

At the very least, you should make the minimum payment on your credit card on time each month. While paying the minimum will not get you out of credit card debt, it will protect you from falling behind on your payments.

Getting out of credit card debt is a difficult effort, but it is well worth it. You will be able to unwind without fear of getting sued or losing your things. Here are a few solutions to get you out of credit card debt and back on track.

A credit counselor can examine your financial status and speak with your creditors to help you create a debt management plan.

You make one fixed monthly payment to the credit counseling organization, which then distributes your payment to all of your creditors under a debt management plan.

Consolidating your credit card debt might lower your interest rate and provide you with a more manageable monthly payment.

If you have big balances on many credit cards, a debt consolidation plan will combine them into one loan with a fixed monthly payment that is easier to handle.

Working directly with your lender can help you lower your interest rate, the total amount owed, and payment arrangements for your credit card debt.

While your creditors will pressure you to repay the total amount borrowed plus interest, they would prefer to receive any payment — even if it is less than the amount owed — rather than nothing at all.

Calling your credit card company may allow you to modify your debt and repayment alternatives to better match what you can afford to pay each month.

Bankruptcy is a drastic alternative for resolving credit card debt. There are two sorts of bankruptcy, each of which addresses your debt in a different way.

Your credit card debt is discharged in a chapter 7 bankruptcy, but you may have to sell your goods to pay your creditors. Your debt is reorganized and renegotiated in a chapter 13 bankruptcy to be paid over the next three to five years.

Bankruptcy has a long-term impact on your credit — 10 years for chapter 7 and seven years for chapter 13 — and should only be used as a last resort to get out of credit card debt.

Conclusion

If you fall behind on your credit card payments, you may receive harassing calls from debt collectors, face a civil lawsuit, declare bankruptcy, and have your credit ruined- but you will not go to jail. 

Even if you get out of heavy credit card debt, it will take years to repair your credit and qualify for the best credit cards and personal loan rates.

Commit to paying your balance on time and in full every month from now on. Developing this discipline will make it much easier for you to pay off your present debt and avoid future debt.

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