When I first started working in the financial world of helping people with their debts I was told that doing nothing with the debts was an option, not a viable one, but an option nonetheless.
A recent article from the StarTribune in Minneapolis, Minnesota showcased what happens to people in Hennepin County, Minnesota who take that very route, ignoring debt.
The citizens showcased in this very article showed what happened to them when they ignored their debts. Nothing. Until the police came knocking.
Now debtors prison was outlawed in the United States almost 200 years ago so I believe it to be best to point out first and foremost there is no law allowing for an arrest for an unpaid debt, I repeat, there is no law allowing for an an arrest for an unpaid debt, however there is a law that you can be held in jail for a little thing known as contempt of court.
In many states including Minnesota, Arkansas, Arizona and Washington this is an increasing trend especially when a creditor issues a wage garnishment for your unpaid debt and you do not show to your court hearing to complete your two page document. And as in conjunction with common law, “those who fail to appear can be held in contempt and an arrest warrant is issued if a collector seeks one”. In those aforementioned states it has been said that this practice is “driven by a bad economy, high consumer debt and a growing industry that buys bad debts and employs every means available to collect.”
It’s not a crime to owe money, and debtors’ prisons were abolished in the United States in the 19th century. But people are routinely being thrown in jail for failing to pay debts. In Minnesota, which has some of the most creditor-friendly laws in the country, the use of arrest warrants against debtors has jumped 60 percent over the past four years, with 845 cases in 2009, a Star Tribune analysis of state court data has found.
It is unclear as to how long these people had delinquent accounts but the article did state that the debts were often five or six years old. Many creditors that commented on the situation remarked that the practice of phone calls, letters and legal actions were not enough to get people to pay their debts and many creditors resorted to a “last-ditch effort” with issuing a wage garnishment and requesting a court appearance. Granted, it’s a real shame creditors have to stoop this low to collect a debt but unfortunately with debtors ignoring their debts for sometimes six years it may resort in this very action.
Over the course of such a long period of time the amount owed may have doubled by now with fees and charges tacked on. In fact, a lot of debts cost a few cents on dollar for collection agencies but “a firm aims to collect at least twice what it paid for the debt to cover costs. Anything beyond that is profit.”
Now, not every warrant ends in an arrest but unfortunately, some of these citizens are being held in holding cells with common criminals but contempt of court is seen as an offense and they are suffering the consequences. And sadly, tax payers are footing the bill for those being held in contempt, some being held for less than the average nightly cost of staying in jail overnight. Most are being released after the document has been completed or their bail has been met. In Hennepin County, Minnesota, bail is automatically set to the total debt or $2,500, whichever is less.
In Minnesota, judges have issued arrest warrants for people who owe as little as $85 — less than half the cost of housing an inmate overnight. Debtors targeted for arrest owed a median of $3,512 in 2009, up from $2,201 five years ago.
Beverly Yang, a Land of Lincoln Legal Assistance Foundation staff attorney has represented three Illinois debtors arrested under these very circumstances. She commented that her clients are already struggling to meet financial obligations and that the arrest is “one more blow”. She also remarked that “They don’t like being in court. They don’t have cars. And if they had money to pay these collectors, they would.” Now, I’m not entirely familiar with the area of town these debtors lived in and I do not know for sure if public transpiration may have been an option but if you are summoned to court it is probably a good idea to find a way to get there. Similarly, I’m not entirely sure with the time span of these debts and how long accounts had been delinquent but if you ever find yourself unable to pay your debts, seek help immediately. Oh, and last time I checked, I didn’t think anyone truly enjoyed being in court as a defendant, no matter how much money they have.
Few debtors realize they can land in jail simply for ignoring debt-collection legal matters. Debtors also may not recognize the names of companies seeking to collect old debts. Some people are contacted by three or four firms as delinquent debts are bought and sold multiple times after the original creditor writes off the account.
‘They may think it’s a mistake. They may think it’s a scam. They may not realize how important it is to respond,’ said Mary Spector, a law professor at Southern Methodist University’s Dedman School of Law in Dallas.
Many debtors were ignoring letters they were receiving from collection agencies that their debts had been sold to, claiming they did not recognize the company and did not see it as much importance. Please, as a rule of thumb, read your mail. If you stuff those unknown letters into the kitchen drawers or throw out letters because you don’t recognize the sender, you could be creating even more of a mess. For the sake of your credit report you’ll want to make sure to keep on top of your mail; you never know what could be coming in from a collection company you are ignoring, a debt not being paid you did not realize, and your credit score plummeting after failure to pay or respond. Or in the case of many citizens a court summons, resulting in the arrest for contempt of court since you did not show.
As another general rule of thumb, if you ever receive a letter ordering you to show in court for one reason or another, go. Go or be ready to accept the consequences.
I don’t mean to sound harsh or heartless towards these people. It is a very stressful and heartbreaking time to be in debt alone, throw an arrest on top of that must be simply earth shattering. The only point I am trying to get across is that if you are sinking in your finances, burying yourself into a money pit you’re not quite sure how to get out of, doing nothing and ignoring your debts is always an option, but as you can see the debt does not disappear just because it’s disappeared from your thoughts, these things usually catch up to us.
The only point I am trying to make is that if you’re in trouble, please, ask for help before it gets out of hand.