Dealing with Debt

Can You Go to Jail Because of Outstanding Credit Card Debt?

Blog Home

People have loaned each other money for thousands of years. As a way to hedge against risk and make money, lenders charge borrowers money through the power of interest. Historically, if borrowers didn’t pay lenders back, lenders would primarily be responsible for recouping their losses.

In today’s civilized society, we have courts of law that oversee arguments between people. In this case, arguments about money owed. These courts are designed to keep us from taking care of our own business or in other words…taking matters into our own hands. Does this mean we could see some jail time for not paying back debts?

When credit card companies realize that borrowers are not going to pay them back, they put a variety of practices to work in an attempt to recover their capital from them. In this blog post, we’ll discuss what measures professional lenders like credit card companies, and banks take in attempting to get their money back.

First And Foremost – Can You Get Jail Time Because Of Credit Card Debt?

The answer to this question is a resounding NO!  In the United States, courts of law will not send you to jail or prison for failing to pay these lenders back. Debtors’ prisons have presumably been eliminated since 1833.

Please keep in mind that just because Americans won’t be sent to jail for failing to repay debts, it doesn’t mean that creditors and the courts of law will idly sit back and just allow debtors to get away scot-free. There are always penalties and consequences. One more thing – every situation in life is different. As such, there is no reliable or reasonable way to determine what track the case will carve for itself.

Get Started With a Free Debt Analysis

We make it easy on mobile or desktop. FREE with no obligations.

What Are Credit Cards? –

Credit cards are wallet-sized pieces of hard plastic used to pay for things. Payment processors can identify that Jane Doe, or whatever a debtor’s name is, is attempting to pay for something because the cashier swiped the magnetic strip on the card through the processor, allowing Jane to be identified.

These cards are convenient because they can be used virtually anywhere. Credit card companies make money by assigning interest rates to borrowers based on their credit reports and scores. People with bad credentials end up paying more than their counterparts do.

Each month, financial institutions that offer credit cards set a limit of how much money you can charge onto your account. This is your credit limit and it should not be exceeded. They make money even if some people don’t pay them back. This is true because they hedge risk among every single customer, charging them relatively high-interest rates as a means to guarantee they will turn a profit at the end of the day.

Lenders Won’t Forget That You Failed To Pay Them Back –

While it’s true that credit card companies will still generate profits when it’s all said and done, it doesn’t mean that they’ll happily write your debt off if debtors fail to pay them back. They’ll keep a record of such a delinquent payment history to either turn hopeful borrowers down for funding in the future or jack their interest rates up through the roof!

Here’s What You Can Expect From Creditors If You Don’t Pay –

After 30 days of not satisfying the company’s minimum monthly payment requirement, most credit card issuers will remind debtors with a few phone calls, emails, and/or letters. The same goes for payments that have been delinquent for up to 60 days.

After 60 days’ delinquency, the company will likely tack on another late fee or hit debtors with a penalty annual percentage rate (APR), which is an increased interest rate tacked on to debtors with delinquent accounts until debtors pay their lenders back.

After two consecutive missed payments a borrower is usually reported to the credit reporting agencies as being 60 days late which will hurt the borrower’s credit score significantly. Click Here for more information about delinquency rates.

Once the 90-day mark of delinquency is reached, credit card companies might look into selling the rights to collect your debt to debt collectors. Debt collectors can be relentless when they are trying to collect a debt from someone.

It’s Time To Get Annoyed –

Debt collectors often send lots of letters, emails, and phone calls to delinquent debtors as a way to hasten a potential payment. There are actually legal restrictions on how often, how, and when they can reach out to debtors. Make sure you know your rights! Check out these consumer credit laws: https://www.advantageccs.org/blog/consumer-credit-laws-and-what-you-need-to-know-about-them

However, they will generally call on a daily basis – perhaps even a few times a day – for anywhere between one week and several months to a year. Eventually, even debt collectors will give up trying to collect the money debtors owe on the accounts they bought. This is when they might try to sue you if they think you owe enough money to make it worth their while.

Courts of law sometimes implement garnishments on debtors’ sources of income to try and recuperate their losses. Credit card companies won’t waste their time on accounts with hundreds of dollars or even a thousand dollars on them. However, they routinely do take debtors with excessive amounts of debt to court.

If you don’t show up at court, the court will most likely legally force you to pay the entirety of what you owed those creditors plus any courts fees associated with the case. If you do, you can probably negotiate a reasonable amount to be forced to pay back as a type of settlement agreement.

Courts always get the money they’re owed, placing all-powerful garnishments on disability income, wages from work, bank account transfers, and every other transmission of value imaginable. If you get a judgment placed on you by the court and then refuse to pay, you could be in a lot of trouble. A judgment results in a legal obligation to pay the debt and any associated fees. A judgment happens when a creditor or collector sues you over outstanding debt and wins. This is entirely different from just owing a 30-60 day past due payment to a creditor. If you find yourself in this type of situation, you should seek reputable legal advice ASAP.

Just to reiterate, people don’t go to jail in the United States for delinquent credit card debt.*

*NOTE: The above information is provided for educational purposes only and is not to be taken as legal advice. Consult with a qualified legal professional for questions specific to your unique financial situation. Laws differ from state to state, so it’s important to know exactly what your state’s laws are in terms of delinquent debts and collection activities.

Author: Lauralynn Mangis
Lauralynn is the Online Marketing Specialist for AdvantageCCS. She is married and has two young daughters. She enjoys writing, reading, hiking, cooking, video games, sewing, and gardening. Lauralynn has a degree in Multimedia Technologies from Pittsburgh Technical College.