In short, no, it’s not possible for a lender to put you behind bars for not paying your pay day loan debts. Since 1850, the U.S. has legally banned placing the debtor in prison for failing to make payments. You can only put behind bars, when you have been convicted of criminal behavior. As the U.S. government has a vested interest in making debt a desirable circumstance, debt cant be regarded as a criminal offence. However, your creditors can take you to civil court and obtain a judgment against you, stating that you owe the debt. As per the court order, the collector can start a wage garnishment process or can place liens against your assets. Nevertheless, the collectors usually don’t go to the extent of wage garnishment or lien placement because these are time consuming and expensive process.
Exceptions
However, though debtors’ prisons are illegal across the country, sometimes debtors have to serve jail time as a result of their debt. Thanks to some of the aggressive collection agencies, which employ some unusually harsh tactics to force people to pay their unpaid debts, debtors could be taken right to jail for failure to appear in Court on time. To know more explicitly whether unpaid pay day loan debt can force you to jail, read ahead.
Reasons
However, before we get into the details, one need to understand under what circumstances people even get to the point of wondering questions like “can pay day loan debt put me into jail?” Consumers usually take out a pay day loan during emergency financial crisis. During this time they hardly pay attention to the fact that they have only two weeks to repay the loan amount along with interest. When it comes to repayment, left with no other option, they borrow another payday loan, so that they can evade the crisis for the time being. The cycle continues and after rolling backs their balance a number of times they simply cannot afford to borrow any more loans. As the last resort, consumers stop contacting the lenders and start ignoring the debts, in the hope that it will go away.
Consequences
However, no matter what happens the pay day loan companies can not take any legal action against the debtors for unpaid bills. They might threaten you that they will put you behind bars, considering you a check fraud but the actual truth is they mostly utter these threats in the hopes of retrieving the owed amount.
Legal action
Finally, creditors might not sue you for not paying your bills, but they can employ some other tricks to recover the amount owed. The lenders can take you to court over the matter, as they are permitted to collect delinquent loans using all of the legal remedies, such as filing a judgment or civil court action. As mentioned before, depending on the court judgment, payday loan lenders could garnish your wages or compel you to liquidate your assets to pay the loan back but can not put you in prison in any way.
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These articles are for the benefit of our readers including those from other states besides Indiana, and might not pertain to, or reflect the laws of Indiana or the practice areas of The Garrison Law Firm.