Owe Money? Be Careful, or You Might End Up in Jail

Reports of mild-mannered Americans getting arrested for being in debt are starting to pop up in states across the country. All over the Net, we've been reading about these poor saps snatched off the street — right in front of their horrified children — by glowering cops and locked up just for missing a few credit card payments.

Right, but they're not. They can't. In this country, owing money is not a criminal offense. It is in Dubai, where nearly half of the prison population is behind bars for defaulting on bank loans. But in the United States, incarceration for debt was abolished in 1833, and now debt itself is a mere civil matter. Sure, collection agencies want you to think the FBI cares whether or not you pay that Nordstrom bill. But they risk losing their licenses for so much as implying this, thanks to the U.S. Fair Trade Commission's Fair Debt Collection Practices Act, in effect since 1966.

Read between the lines and you'll see that these debtors weren't arrested for being debtors but — in most cases — for missing court dates for negotiating their debts.

Incur debt and your creditor can call you, write you, hire a collection agency and finally sue you. At that point a subpoena, delivered via process server or registered mail, announces that you're now a defendant, your creditor a plaintiff. This subpoena lists a date and time at which you are ordered to appear before a judge in civil court "to disclose your assets and liabilities and determine how this defendant is going to pay this plaintiff," explains Will Lund, superintendent of Maine's Bureau of Consumer Credit Protection, which enforces the FDCA and licenses collection agencies.

"Attendance by the defendant is mandatory. To ensure that it's mandatory, a subpoena is involved. To not show up is not dissing the plaintiff. It's dissing the court," Lund says. "It's contempt of court, and that can lead to arrest."

Most debtors don't realize that ignoring the summons means crossing that line, exiting the stressful but safe realm of owing money and entering the stark realm of mugshots and body searches and jail-issued sandwiches eaten among robbers and arsonists. This transit happens when a judge signs a capias, a civil warrant for arrest on the basis of failure to appear in court.

"If you've got a capias against you for failure to appear, you could be arrested if you're stopped by the police," affirms Katherine Martell of Fairfax, Virginia-based K&M Law Group, which specializes in debt restructuring and debt recovery. "That's not the same as snatching people off the street for not paying debts."

The frequency of such arrests, and law-enforcement officers' eagerness to make them, vary from county to county and state to state, but given the severity of other crimes that cops have to deal with, this one is always low priority.

"It's not like a roundup where the police say, 'Hey, we're gonna go out and pick up all the debtors today," says attorney Marshall Meyers of Phoeniz, Arizona-based Weisberg & Meyers. "But if you get pulled over for a traffic ticket, say, and you've got a warrant for failure to appear in court, they can bring you in."

Such arrests shock arrestees and readers alike. Middle-aged patient-care advocate Joy Uhlmeyer's night in a Michigan holding cell was reported widely this week and spawned such headlines in the mainstream media as "A Return to Debtors' Prisons" and "In Jail for Being in Debt."

"The real story is that this is getting so much buzz while the coverage is so misleading," laments Maine's Lund, a lawyer himself. "These are unfortunate headlines because they blur the distinction in people's minds between civil and criminal matters." Lund admits that it's easy to jump to conclusions when the crucial missing link — that what started with a civil case led to a criminal act — is buried deep in stories and blog posts or omitted entirely.