When you borrow money or receive services without paying upfront, you have a legal obligation to the creditor. If you fail to make good on that obligation by paying them back, they might ultimately need to take legal action against you.
Often, before you find yourself in court over a debt, you will have to endure collection efforts. Sometimes, the person calling you to demand that you pay a bill might try to tell you that you could go to jail if you don’t make a payment.
Can incarceration result from an unpaid debt?
The United States does not have debtors prisons. Just because you owe someone money that you cannot repay them does not give the state a reason to deprive you of your freedom. Your creditors can initiate legal action against you, but what they can achieve in court is not your imprisonment. Instead, they might be able to secure a garnishment of your wages or a lien against your property.
There are rare cases in which unpaid debt could lead to criminal prosecution. If someone engaged in fraudulent behavior, like lying on a mortgage application, before defaulting on a debt, that might eventually lead to criminal charges. However, the charges come from the fraud, not from the act of defaulting on the debt.
Those who took on debts with the intention of repaying them will not face criminal charges or incarceration for their failure to do so. You may be able to regain control over those debts by filing for personal bankruptcy and discharging the balances. Learning more about the rules surrounding debt and personal bankruptcy can help you make better financial choices.