If you had asked me before today if you could get get locked up for having outstanding credit card bills, I would have said: Absolutely not. After all, debtors' prisons in the United States were abolished in the middle of the19th century. Unfortunately, however, a frightening and little-known occurrence is taking place in cities all across America: People are, in fact, being put in jail simply because they can't afford to pay their creditors.
This chilling article in the
Minneapolis Star Tribune details how common the practice is in various parts of Minnesota, and how it's also taking place throughout the rest of the country, too. For the most part, those getting thrown in jail for being in debt have two things in common: First, they obviously didn't pay their creditors as agreed. Equally important, though, they failed to show up at court hearings about their debts, which resulted in debtor warrants being issued for their arrest.
If you're being hounded by debt collectors, read my article '
5 Tips if You're Facing Court Action from a Debt Collector,' as well as another piece I wrote called '
Why You Should Answer a Summons on Debt Collection.'
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Debt Collection Horror Stories
No Way to Stop Them
AOL User ICANGELS Says:
"This company still calls my husband's work after receiving three written notices not to. Their representative also called our neighbors in her goal to embarrass us! They were calling my home up to eight times a day and hanging up on me, after I told them my husband wouldn't be home before 6:00 p.m. The problem? There's no way to stop them. They feel they are above the law and know there aren't any attorneys who will waste their time suing them."
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Debt Collection Horror Stories
Calling a Seven-Year-Old
AOL User SOCCERUTD Says:
"We had an unpaid bill because of a dispute in our retail business. Our sales rep doubled our order and then went on maternity leave, and [the company] said the only person who could fix it was her! A bill collector from Texas called over and over and I attempted to explain (the situation) to him ... The day before Thanksgiving he called and my daughter answered the phone -- she was 7 years old at the time. He said to her, 'Because of your daddy you are not going to be able to live in your house anymore and won't be able to have Thanksgiving there with your family, it is your Daddy's fault!'"
Debt Collection Horror Stories
Calling the In-Laws
AOL User Poolchick7 Says:
"These people are the worst. When they couldn't reach us about a car payment that was 10 days past due, they called our daughter's in-laws and left a message with them to have us call them back about a personal matter. We are talking about calling people whom I only see twice a year, and they somehow made a connection between my daughter, her in-laws and us. I can't think this is even legal!"
Debt Collection Horror Stories
Two Calls a Day
AOL User SBPFORD Says:
"I have been receiving calls twice a day from a collection agency. I ask them to send me a statement or something to file on insurance (medical claim), (and) they refuse. This bill is three years old and, they said, never filed on insurance. They call every morning around 9:30 and every evening about 8:30, seven days a week."
Debt Collection Horror Stories
Spiral Effect
AOL User RBettes941 Says:
"Do the credit companies and retailers realize they have created a spiraling effect on peoples credit? I have always had a score in excess of 750, and always paid my bills on time. Recently, due to my wife working on graduate school ... our debt to credit lines increased. We were at about 45% after (her) completion of school, then American Express dissolved our $25,000 credit line, which we owed nothing on. This moved our percentage of credit to debt to about 60%, and lowered our scores to less than 700. This caused other creditors to follow suit by lowering our credit lines, which then lowered our score again."
Debt Collection Horror Stories
Fake Debt Collectors
AOL User A114Sieb011 Says:
"I make six figures a year, my wife makes six figures a year, we owe no one a penny, yet I get daily calls from Palisades Collection saying to call them on a bad debt. I had, and the first thing on the recording is, 'Enter your social security number.' Yeah, right. I checked my credit report and there is no unusual activity. Palisades, quit calling you stalker."
Debt Collection Horror Stories
No Way to Stop Them
AOL User ICANGELS Says:
"This company still calls my husband's work after receiving three written notices not to. Their representative also called our neighbors in her goal to embarrass us! They were calling my home up to eight times a day and hanging up on me, after I told them my husband wouldn't be home before 6:00 p.m. The problem? There's no way to stop them. They feel they are above the law and know there aren't any attorneys who will waste their time suing them."
Debt Collection Horror Stories
Forgetting Their Promise
AOL User Gloqui5 Says:
"I got a phone call today from a credit card I couldn't pay 15 year ago. Back then I let them know that I just could not pay my balance of $300. They informed me that they would have to do a charge off, and it would show on my credit. They did, and it showed for seven years. Now 15 years later, they start calling and they want $600 or it will back on my credit. Can they do that?"
Debt Collection Horror Stories
Fake Lawsuit
AOL User Mnmkid221 Says:
"A collection company used city official names and paperwork to look as if I was being taken to court. However, when I called, the court knew nothing of the paperwork or of any lawsuit against me. It seems that the collection agency wanted me to panic at the sight of the papers and call the phone number provided on the 'official-looking papers.' Then they could terrify me and demand payment."
Debt Collection Horror Stories
Police Assistance
AOL User Deeannafrancis Says:
"I get a call that I am 49 days late with my payment, and it is now in collections. I told her I overlooked the December 15th bill, but I will pay it online right now. She loses it with me and screams at me that I can only pay her. I hang up, go online and make the $35.00 pmt. My phone rings again, I explain that I paid it online. After that, they put me on auto call for every 15 minutes for two days! The last phone call I got from them, I nicely asked her to hold, and I called the local police station. When I got back on the line with them, (I asked for) her name so that I could file a harrassment charge. She hung up and no one else called me."
Debt Collection Horror Stories
Hospital Scam
AOL User KMKiaski Says:
"Even though I had insurance, and it paid between $8,000 and $9,000 for a one night stay, I got bills for an additional $2,700 from the hospital much later. They said if I didn't pay it they would send it to collection, so I did. I later found out they regularly did this, charging more than the charge accepted by insurance and then frightening patients into paying that extra charge -- hey free money for them! A person I work with said the same hospital came up with several old charges years later."
Debt Collection Horror Stories
As I read the Star Tribune article, '
In Jail for Being in Debt,' my jaw literally dropped. The article profiled multiple individuals who've been arrested for unpaid debts, including three women: a 57-year-old patient care advocate who defaulted on a $6,200 credit card bill after a costly divorce, a 38-year-old restaurant cook who didn't pay a $250 credit card bill, and a 27-year-old new mom who had police show up on her doorstep when she was recovering from giving birth by cesarean section.
These women were and are not criminals. They simply could not afford to pay their bills -- like tens of millions of other Americans. It is absolutely outrageous that the legal system has now become an instrument of the overly aggressive debt-collection industry. It's bad enough that people who are truly unable to pay off old obligations get harassed by debt collectors, called at all hours of the day and night, and threatened with wage garnishments or seizure of their bank accounts. Now they have to worry about being incarcerated, too?
What about the 15 million Americans who are unemployed or the 40 million Americans who are now on public assistance? I guess they risk getting locked up as well just because they're broke?
A Call to Action
Concerned citizens everywhere should spring into action over this gross injustice. Here's what can be done:
- Call or write your senator or congressman and voice your displeasure.
- Check out the laws in your own state and inquire about whether "debtor warrants" can be issued where you live.
- Ask your local representatives to enact or change relevant laws concerning this area.
- Spread the word to those you know who might be impacted by this unfair phenomenon.
Unfortunately, in many cases, this new era of debtors' prisons is disproportionately affecting minorities and the poor. In fact, the
New York Times last year ran an op-ed piece noting that, in Gulfport, Miss., judges would routinely throw debtors -- most of whom were African Americans -- in jail when they couldn't pay their debts. That treacherous tactic allowed broke debtors to "sit off" their debts. In other words, those people had to do time as a way "pay" their debts. This onerous practice didn't stop until a lawsuit was brought against the city.
The Times called imprisoning those who can't afford to pay court-ordered judgments "
barbaric and unconstitutional." I couldn't agree more, particularly since so many individuals and families are currently facing tough economic times.
Throwing Debtors in Jail Affects Us All
There are some instances in which people flout the law and intentionally don't pay certain legally required responsibilities --- such as child support or taxes -- even when they can afford to do so. In extreme cases, these people can wind up getting imprisoned. But that's not what we're talking about. The cases highlighted by the
Star Tribune involve people who owe banks, credit card companies and other creditors such as collection agencies. Locking up individuals who are deep in debt simply because they are poor is cruel and unjust.
By the way, in case you're thinking: "Why should I care? I don't owe any money" or "Good, let them go to jail," you should be aware that this issue affects everyone, including you: As it turns out, taxpayers pay the cost for arresting and jailing debtors.
What do you think about this trend? Should local, state or federal law allow people to get put in jail for failing to pay creditors? And has this ever happened to you or anyone you know?
Lynnette Khalfani-Cox, an award-winning financial news journalist and former Wall Street Journal reporter for CNBC, has been featured in the Washington Post, USA Today, and the New York Times, as well as magazines ranging from Essence and Redbook to Black Enterprise and Smart Money. Check out her New York Times best seller
'Zero Debt: The Ultimate Guide to Financial Freedom.'
Comments: (14)
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By: Shawn on 6/16/2010 4:33PM
I'm assuming this will include those people who default on student loans...smh...they don't have the capacity to jail everyone & if the even attempt to try. The economy is going to fail even more...smh
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By: BG on 6/16/2010 7:51PM
First Ms. Lynnette, I don't know of such law that will place you in incarceration over non-payment of a consumer debt even when it seems you are financially viable. A case in point: A Georgia state school suprintendent won a million on a popular T.V show ARE YOU SMARTER THAN A 5TH GRADER.
The woman had declared insolvency to her many creditors. The creditors, aware of the winnings, lay claim to the funds. But the woman had donated the millions amongst several handicapped children's schools. This erupted a legal fight between the handicap children and the creditors. She remains the school suprintendent.
When you don't appear in court to defend your debt, the worst I think happens, is for the court to render judgement in favor of the creditors which now gives the collector legal ammunition to lay claim on your wages and in all cases makes your life miserable in doing so.
What is disheartening in all of these is seeing the court acting as if working for the debt collectors despite increasing complaints against them and dubious practices plaguing the industry.
It is a normal business practice to write off a loan. Businesses would have made their money on a loan within a couple of years after the loan is granted long before you default. Given a million of loan defaults, Banks are still reporting billions in profits. So when a loan is written off, it's written off.
To now see a handful of criminals and fraudsters organized a business in the name of Debt Collection Agency, reach out for your credit bureau information, and use this to haunt you down is what is despicable. Even before you are been served a summon, you would have received several solicitation letters from many law offices warning you that a lawsuit is coming way ahead of you knowing anything. They want to represent you. This is despicable. The credit bureaus, and the court is like working for the collection agencies.
It is alarming how in America we throw people in jail just for about any tiny offences. I recently posted bail for my good salesman. He was in a hurry to meet the Saturday's meeting. Just when he almost made it to work, a sheriff stopped him for not yielding right of way. While been led to jail for not carrying his license, the wife appeared in my office that he left it on the dresser. In Europe, they call the DMV to check if you are in fact licensed. They know you can possibly leave a wallet not only in your home but in restaurants. This is a nation that don't act on common sense.
On child support case, I have seen a very good dad who genuinely cannot meet their financial obligation but will do whatever it takes to protect their children (refer to the movie featuring Will Smith and his true son). Both he and the son had made the public restroom their home. It was a true story.
When you throw a parent like that in jail, of what parental benefit is it to the child? Money should not be an only way to measure a parent's love to a child. If a court must have any role in this, it is to enforce cohabitation, or a friendly atmosphere between parents and of course, the child in the interest of the child. American court system is in peril.
So, Ms. Lynnette, it will take more than petitioning our do-nothing congressmen. As Malcom said: "By all means necessary".
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By: Fabulous on 6/16/2010 8:29PM
People must learn to live below their means. I am a 30 year old single mother with two children (3 and 8). I have two college degrees (bachelor and master). I earn $55,000 a year and live in a $110,000 home and drive two vehicles at $27,500 (total price). Use the system don't let the system use YOU! Now they want to throw your slow paying A$$ in jail...
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By: LOL on 6/16/2010 10:04PM
Fab: You don't have to have a Masters to earn $55k/yr.
I will assume this a pre-tax income. You also have not disclosed if you have a consumer loan like credit cards.
When you factor in your tax obligation, and consumer loans, there is no way you can sustain a living with $100k+ mortgage, 2 cars you don't necessarily need, and nurturing 2 children.
But from what I have read so far, you are missing the point. Whatever happened to millions of people that are now jobless through no fault of their own could also happen to you. A couple working at a different job lost their job. The man got a lesser paying job delivering pizza. He later lost a limb in an accident. He ended up facing the dubious tactics of a debt collector. If the father of your kids will not support you, they are not talking about him. They are talking about people who found themselves in a financial predicament out of no-fault of their own. With an MBA,MSC or what have you, this should not be difficult to understand.
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By: Sheila Shivers on 6/17/2010 12:44AM
I think it is a sad commentary on this country that indivdual citizens can be thrown into jail for non-payment of a credit card bill and Wall Street Bankers are rewarded for stealing from millions. If you take nothing else from this article, please make sure you open all of your letters regarding any debt. The collection agencies are waiting for you to make the 1 slip up that may allow them to take your income, property or freedom.
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By: Fashionedbygod33 on 6/17/2010 3:04PM
Thank you Smittyt. LOL@ Fabulous. You sound ridiculous, so I am not going to get too up in arms over your comment. In any event, this is sad commentary that this would even be considered and practiced. It is beyond cruel especially in cases where people truly cannot meet their financial obligations right now. I don't think that most people want to be hounded by collection agencies, and such. It is really uncomfortable and hard times for millions of people. My heartaches over this.
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By: andre on 6/17/2010 3:25PM
@ Fabulous.
Ms. Fabulous should take lessons from BG. I do not have a college degree, and I earn an average of $60k+ a year + bonuses. Fabulous may want to consider another job because it seems you are been underpaid given your acclaimed level of education.
This is why it was difficult for you to understand simple facts of life.
The current crisis in the gulf is a typical example of BG's point. The shrimpers, the fishermen and people in the seafood industry do not make in a year what the CEO of BP, the culprit makes in a month. We have witnessed a company CEO declared a birthday party for a mistress estimated at over 3 million. We have seen financial recklesness on the part of these CEO's that got us to where we are today.
The oil spill will be an ecological disaster for years to come. Now the shrimpers, the fishermen can no longer sustain their living. This will have a domino effect on the seafood restaurants thus their employees and so forth. Now you have a shrimper who cannot make a living, a fishermen and a waitress who can no longer meet all of their financial obligations, they are jobless THROUGH NO FAULT OF THEIR OWN. They are jobless through the recklesness of BP. Mark you, the CEO of BP still remains the CEO.
Now a collection agency, many of whom are criminals and fraudsters themselves claim they bought your debt. They now used the power of the court to jail you.
A responsible parent who can no longer sustain a living out of no fault of his own is now thrown into jail for not being able to make child support payment. The BP executive whose company's recklesness caused this, is sleeping in his mansion.
So, Fabulous people like you are like the judges prevailing in our court system. A system where tyranny has taken the place of common sense.
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By: jadina on 6/18/2010 7:58AM
co-signs! and they have the nerve!!! people of this country needs to start fighting back!
these people in office (law-makers), fail to remember how & who put them there. once "we the people" realize this, things will start to change. until then, we'll continue to hear about such non-sense.
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By: WithoutaCountry on 6/18/2010 11:43AM
As an Atty this is a lie..There are no debtors courts anywhere in the US and Ms Cox should be chastised for this lie.
Credit card issuers are trying to intimidate and send fear into the lives of people. Now ask yourself..If i am in jail who takes care of my fam..The state and do they have resources NO! so now what?
Is it worth prison is this economy? i think not i believe it is a scare tactic that will be run out of court..And held at bay by the Senators in 50 state..That is if they want to be reelected?
Should u answer a summons..YES, but do your homework u do not need an atty unless you have a lot of assets as well.
Now read this..After slavery in or about 1866-69 many former slaves were re-enslaved if they failed to work for a white former slave master or were found without a job..This lead to the share cropping system..Many African men esp were terrorized during those yrs as well as murdered.
Having said that..Do not panic, where Ms Cox is right she is also part of the problem..Working for whoite folks who only have int o in intimidatimng African desc..Pay attn and if u have time go to the courts and watch to see who if anyone gets a prison sentence?
So do ur homework people do not believe anything told without facts..This is easy to do.
There is a statuee of limitations in all 50 states as it relates to when the cc comp can bring a suit.If you pull a credit report and you fin that it has been written of or closed that is the end of it
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By: ADRIAN HARRIS OF SOUTH GEORGIA GO!!!! GRAMBLING STATE UNIVERSITY GO!!! on 6/18/2010 12:09PM
HAIL!!! MASCULINE SALUTATIONS TO YOU!!! SEPIA SPECTRUM PEOPLE MAKER!!! HAIL!!! HAIL!! SEPIA PEOPLE!!! IN MY 49 YEARS OF LIVING IN THE SOUTH AND AFTER READING THIS ARTICLE, I HAVE TO DISAGREE WITH THIS WRITER. THE REASON FOR THE GETTING LOCKED UP HAD NO REASON TO DO WITH THE CREDIT CARD DEBT. IT HAD TO DO WITH THE BIG MAN, "THE JUDGE". I SEEN ONE TAKE A COPS BADGE IN 5 MINUTES. WHAM, COP FIRED. FOR WHAT EVER THE REASON, IF A JUDGE REQUIRES YOU, USUALLY BY WRITING, TO APPEAR IN COURT, THEN YOU BETTER GO OR HE WILL OR CAN LOCK YOU UP. THAT'S ALL!!! WHAT EVER THE REASON, IF YOU DON'T DO WHAT THE "JUDGE" SAYS TO DO, YOU CAN AND PROBABLY WILL GET LOCKED UP. THAT GOES FOR THE POLICE AND ALL OTHER LAW ENFORCEMENT TOO.(SHERIFF DEPT AND THE POLICE), FROM THE FBI, SECERET SERVICE, AND THE PRESIDENT OF THE UNITED STATES OF AMERICA. OH JESUS, HERE COMES THE JUDGE. "THE JUDGE RULES". A SMALL TOWN JUDGE CAN LOCK UP THE PRESIDENT OF THE UNITED STATES. HE HAS THE POWER, IF HE LIVES WITHIN HIS JURISTICTION. BYE!!! REMEMBER, " THE JUDGE IS THE POWER" NOT THE COPS. PEACE MY PEOPLE!! NAVIGATE CLEAR OF THE JUDGE. COME WHEN HE TELLS YOU. BYE!!! DON'T WORRY ABOUT THOSE DAMN COPS!!!
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