Is There Such a Thing as a Debtor’s Prison?

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In this modern world that we live in, consumers are protected and have certain rights when it comes to debt collection. The practices of debt collection agencies have to abide by rules through the Fair Debt Collection Practices Act (FDCPA) as enforced by the Federal Trade Commission (FTC). According to the FTC, consumers are to be safeguarded from abusive, harassing or unfair debt collection practices. But, the question is, “Does this act protect consumers from being arrested for the failure to pay back their debts and sent to a debtor’s prison?” The short answer is yes, but there are some instances related to debt in which people have been sent to jail.

Debtor’s Prisons were abolished in the US in 1833, and thankfully so. Before the abolishment, being arrested for outstanding debt was a catch-22 situation. Since there were no work-release programs in place at that time, there was no opportunity for the debtors to make good on their outstanding debt. To make matters worse and put more debt strain on the debtor, they would be responsible for paying prison fees as well. So, without the financial help of friends or family, there would literally be no way to escape their sentence.

Consumers’ debt rights have come a long way, but why are people still being arrested if the debtor’s prison was abolished so long ago? Here are some answers that can shed some light.

What Could Put You at Risk for Arrest

While arrests can be made in a debt situation, it’s not the debt itself that will get you arrested; it’s the violation of the court order that can land you in jail. Depending on the court and jurisdiction, it may be required of the debtor to appear in court. If you are summoned to appear and ignore that summons, a warrant may be issued for your arrest for failure to appear in court. It’s very important to ensure that you don’t ignore any correspondence from the courts and are compliant in regards to being sued for debt and the appearances you are expected to make.

If you don’t know what to do, don’t procrastinate and push it aside. Ignoring a summons to appear in court will not go away. You have the option to represent yourself. However, you may want to consult an attorney that understands the laws on what debt collectors can and cannot do by law as well as your legal rights as a debtor. Depending on your state, there are some other specific restrictions on what creditors and debt collectors can and cannot do when trying to collect a debt.

Many types of debt collection practices are prohibited.

Should you have any debt that is in the process of collection, it’s important to educate yourself on the types of debt collection practices that are prohibited. In addition to being prohibited from harassment, debt collectors may not:

  • Use any threats of violence or harm
  • Publish a list of consumers who refuse to pay their debts (except to a credit bureau such as Experian, Equifax, and Transunion)
  • Use obscene or profane language when trying to collect on the debt; or
  • Repeatedly use the telephone to annoy and harass a debtor.
  • Take or threaten to take your property unless this can be done legally(meaning the debt is secured and tied to an item that can be repossessed);
  • Threaten to sue, garnish your wages and freeze your bank account if they have no intention of doing so.

Knowing what debt collectors are legally allowed to can be overwhelming. Consider consulting an attorney in your county to help you find out what you need to know to keep yourself protected.

If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated each month.

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Who Can a Debt Collector Call to Track You Down?

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Can a debt collector contact family, friends, or co-workers in an attempt to find you?

Yes, yes, and yes. But she or he can’t say very much.

The Fair Debt Collection Practices Act offers consumers a wide set of protections about how collectors can go about their business. But it doesn’t prevent them from contacting whoever they want while looking for you.

There are very strict rules about what they can say, however. The law says collectors can only ask about a debtor’s “location information,” meaning their “place of abode and … telephone number at such place, or … place of employment.”

What Can a Collector Say? 

Critically, collectors are not allowed to share any information about the debt with these third parties. Collectors do have to identify their employer if asked, which probably tips off neighbors or relatives that the debtor has money trouble. But otherwise, collectors cannot reveal anything about the debt. Generally, they can’t even leave voicemails requesting callbacks.

The law also only gives collectors one bite of that apple. They can’t call friends, neighbors or co-workers more than once, unless they have some reason to believe there is new information to be gleaned.

Here’s what the law says:

“(A collector can not) communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information.”

A bunch of other rules further limit who debt collectors can contact and how. If a collector knows a debtor can’t take personal calls at work, the collector can’t call their workplace, for example.

And most importantly, once a debtor tells a collector to stop calling third parties, or stop calling the office, those calls must stop. Their only legitimate reason to contact a third party is if collectors have no way to contact the debtor, so a request to stop third parties eliminates the grounds for contacting them.

Also, if a debtor is being represented by an attorney, the collector must contact that attorney instead of the debtor or any third party.

While the law is pretty clear on what is and isn’t permitted, there are ample opportunities for abuse. Collectors who reach family members or friends may hint — or directly express — threats aimed at the debtor. They may even request or demand payment. Those activities are illegal, but it’s easy to see how they can happen.

“If you don’t want your friend to get in serious trouble with the law, make sure you deliver this message,” for example.

A Different Kind of Block Party 

Collectors who repeatedly use these tactics with multiple neighbors are conducting what’s known as a “block party.” It’s illegal, and victims can sue collectors for sizable damages when a block party is conducted. A similar tactic, when used to call a debtor’s workplace, is sometimes called an “office party.” That’s also illegal.

Third parties who believe they have been harassed – if stop contact requests aren’t honored, or if they are contacted at inconvenient times – can potentially have their own cause of action against collectors, in addition to potential legal action by the debtor.

The Federal Trade Commission makes the full text of the Fair Debt Collections Practices Act available in brochure form on its website.

Remember, a debt collection account can damage your credit. You can see how any of these accounts may be affecting your credit score by viewing your free credit report summary, updated each month, on Credit.com.

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