Debtor's Prisons Resurge for Consumer Debt

Federal Debtor's prisons--outlawed in 1833--are making a comeback in these tough times.

Texas is one state that's cracking down on people caught speeding too many times--hitting them with "surcharges" and throwing them in jail if they don't pay up. That's according to this article on debtor's prisons, which tells the many ways you can be jailed in the United States for the crime of not having enough money.

Not paying your child support? Expect to be jailed if you don't cough up the cash. You can also be jailed for not filing your federal taxes or not paying those taxes once you've filed.

But perhaps the most surprising way that you can find yourself in prison is not paying your credit card debt. Thanks to over-zealous attorneys and collections companies hit by the financial downturn and resorting to borderline tactics, you might find yourself in the county jail without any fair warning. In many states (like Florida), all a credit card company has to do to notify you of court action is to send you a first class letter. If you don't receive that letter (say, they send it to your old address), you could find a nasty surprise next time you check your credit report--a judgment against you. That civil action could lead to an arrest warrant if you don't pay up.

Technically, you can't be arrested for not paying a debt. But you can be arrested for contempt of court--and the collection agency lawyers want this to happen, because a person sitting in jail will generally pay up a lot faster than someone sitting at home and not answering the phone. A judge may order you to pay several thousand dollars within a day--and he won't care if you have to skip a mortgage payment to do so.

Check your credit reports regularly, comply with court proceedings, and you may find yourself able to keep out of jail. But if the government--or a collections agency--thinks you have the means to pay (even if you don't), be alert for that knock on the door: it could be the sheriff's department coming to take you away.