Lenders Use a New Dirty Trick to Jail You For Small Debts

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Debt collectors can call you, hound you and make you feel like a lowlife, but here in America, they can’t throw you in jail over your unpaid bills. Or can they? A sneaky tactic called “body attachment” is a new twist on this ultimate form of intimidation by creditors, and people who have committed no greater offense than managing their finances poorly are finding themselves thrown in jail with hardened criminals. 

The St. Louis Post-Dispatch reports that debtors in St. Louis County are being preyed upon by payday lenders and the collection agencies to which they sell their debts. Those lenders and agencies are then using the taxpayer-funded court system to put the screws to people who owe money.

Here’s how it works: The creditor goes to court and gets a judgement against the debtor. In many cases, this action is successful only because the debtor never shows up to defend him or herself, sometimes because they’ve been the victim of “sewer service” and never received the paperwork telling them when to show up to court.

(MORE: 50 Percent Interest and Jail Time For Credit Card Debt?)

Once the creditor has obtained this judgment, they ask the judge for an “examination.” In theory, this process is intended to assess whether or not the indebted person has bank accounts or other assets that can be seized to pay their debts. The Post-Dispatch says creditors are exploiting this process, filing multiple requests for examinations that force people to return to court over and over. And if they don’t appear in court, then the creditor asks for a “body attachment,” which forces the imprisonment of the debtor until the next hearing — or until they cough up bail money that’s often the same amount as the debt, and often is turned over directly to the creditors.

In this way, the creditor often gets payment on the original debt as well as on all sorts of add-on interest and penalties. One woman profiled in the article was squeezed for $1,250. Her original debt? A $425 payday loan. Another woman was thrown in jail over a $588 debt.

Creditors say they need to use these methods to make sure people show up for their court dates, but not everybody buys it. “Don’t the county police have something better to do?” asks one Legal Aid lawyer interviewed by the newspaper. In neighboring Illinois, governor Pat Quinn signed off on a law last month that prohibits the use of body attachments in debt suits.

(MORE: 5 Steps To Settling Your Debts For Less Than You Owe)

This law is a step in the right direction, but it’s an exception. The scary prospect of being jailed over a three-figure debt isn’t limited to Missouri. An investigation by the Star Tribune of Minneapolis-St. Paul found that a growing number of creditors have gotten judges to issue arrest warrants to people who owe as little as $250.

For people in debt, the main lesson is to pay attention to any notices you receive about court appearances, and make sure you respond and show up as necessary. Many people never show up for hearings against them, perhaps out of intimidation, but it’s worth the effort: Those who do come to court often can successfully argue against the debt, since the burden of proof is on the creditor or company bringing the suit to prove that the person owes the amount being sought, and that the creditor has the right to collect the debt.

41 comments
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BustaLoan
BustaLoan

Prison for debtors is as scummy as it gets. The first step for a borrower is to check to see if their payday loan lender is licensed to offer loans in their state. If not, document and "tell it to the judge."

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mjfanibe
mjfanibe

..got a call yesterday that I would go to jail for 2-6 years for the fact that I wrote a check knowning that there was no money in my account..that I was unemployed after that day and they gave me the money.I defaulted on it. I know that I did.Lost 2 jobs at the time. I made a payment so they could get rid of the 'warrant' for my arrest.Paying off HALF of what I owed and it gets them off my back. If they are lying or not..you know when you owe.Just pay it and move on..

Tom@UnitedFinances.com
Tom@UnitedFinances.com

Fully agree with the statment below:

"Wow it's hard for an article to get more biased than that. You fail to mention they are basically being jailed for contempt of court. If these people had responded to court orders they would be fine, and have had many opportunities to do so when it gets to that point. So people owed money should have no rights to collect money owed to them?"

People make stupid decisions...

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SLoanSearch
SLoanSearch

People make stupid decisions - taking out multiple payday loans they can't afford being one of them. The spiral effect with rollover charges is well-documented for example. The fact that payday lenders take precisely no account of ability to repay is another reason I hate them. Personally the worst I've seen is a couple with 31 (yes, thirty one) between them, all due within the month and totalling some ?8000 - well over four times their monthly income. Of course that makes the couple culpable, but its only the startling lack of checks from lenders that allows this sort of mess to happen. And giving payday loans to undischarged bankrupts (seen that too) - for crying out loud, the lenders don't even need to pay to check that!

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DemocTheRock
DemocTheRock

The governor in Illinois is corrupt.  Quinn was Blagovich's right hand man before he went to prison.  'Nuf said. You can't expect Illinois to enforce basic laws.  This article makes no sense. The jailed person probably committed contempt of court.  You do not go to jail solely for failure to pay a debt.   This reporter doesn't have a clue.

stopthirdpartydebtcollectors
stopthirdpartydebtcollectors

yes you must respond to the court to fight the debt, and they usually can't prove you owe the debt...but the debt collector "gets around this" by getting you to admit you owe the debt..to some one...not necessarily them...they have to prove they now own the "contract" for the debt..but squeak and tweak the system to get their judgment... and 99 percent of the time the judges sign off on it.  the system is corrupt to the max and everybody gets a piece of the pie, courts, sheriffs office, ect.. so the debtor is screwed..unless they know how to fight it..

i went back to court 3 times till the bastards finally dropped the case..the judge refused to issue a verdict that they were wrong, because this would have set a precedent for future cases..

Jim Weix
Jim Weix

This sort of thing is EXACTLY why American people need guns, Carry Permits, and "Stand Your Ground" laws.

As the story clearly shows, big business, the government, and law enforcement are the only real enemies of the American people.

Nick Sparagis
Nick Sparagis

I've got to pin this one on the judge.  The judge has to order the warrant, so they should "judge" when it's appropriate.  Right?

ACAInternational1
ACAInternational1

 

 An incredibly important point was buried at the bottom of the story about the value in communicating with a creditor or debt collector.   Ignoring communication from a creditor or debt collector does not make a debt disappear.    

 

While it garners great headlines, consumers are not arrested for owing a debt. Rather, a consumer has violated a court order issued by a judge, and is held to be in civil contempt.  To claim that creditors or debt collectors are manipulating our judicial system for their exclusive benefit is simply wrong and runs counter to judicial independence, when in fact creditors and collectors are simply following the law. 

   

    

 

 

StJohnny
StJohnny

SICK how our American legal system is being exploited by cooked debt collection crooks.

If Obama's Consumer protection act was set up correctly it would limit interest rate charges to 3 % and No additional fee.

This would stop almost all debt problems in the USA.

Current retail amp; bank credit practices are "loan Shark" rates and crooked fees so many get sucked into title pool of debt.

FYI Nick The current cost of fund (fed fund) rate is .25 % . So they charge 26% with no recourse available to customers and make 25.75%. That is criminal. Chase amp; Citi where quoted as saying we raised the rates because , WE COULD !

Athiest
Athiest

Hang on a second here. How does a judgment get placed against an American without them being properly served?

Richard Bates
Richard Bates

These creditors prey on the uneducated and poor.  Payday lenders dont set up shop in rich neighborhoods.  And they charge very large sums in interest.  A $1000 loan for a week is $1200 to pay off.  Thats one week with $200 interest.  Someone is doing something funny here.  I say make a national law that limits body attachment. To hell with payday loan companies.  We ought to get rid of the rent a tv companies too. What a scam!!

scottindallas
scottindallas

debtor's prisons are unConstitutional.  Except, no one cares about the Constitution. 

dbansal
dbansal

Wow it's hard for an article to get more biased than that. You fail to mention they are basically being jailed for contempt of court. If these people had responded to court orders they would be fine, and have had many opportunities to do so when it gets to that point. So people owed money should have no rights to collect money owed to them? The point of the debtor exam is to find assets that they can try to seize to satisfy the debt, if they respond to the court order and have nothing to seize, the debtor is out of luck. And most courts are funded primarily by filing fees, rather than taxpayer money, and in any case the "taxpayer funded" courts are there for everyone to use, even the horrible people that are trying to get paid money that was borrowed from them. And I am someone who has several lawsuits against me over foreclosures gone bad. So I am on the non-paying side of this, but I respond to all court proceedings to stay out of trouble, and I am objective enough to respect the needs of both parties in the process.

Nick Sparagis
Nick Sparagis

You forgot, no one would lend any money.  How can you be serious?

sgtbilko
sgtbilko

I dunno.  Ask Anwar al-Awlaki.

Oh, wait...

vippy
vippy

USA is all about Mafia Tactics, whether the laws or things like that.  The rich or the government will always win.  Take Germany for instance, if you can't pay your bills, they take your luxuries away and a car to go to work is a necessity unlike here where you can just rot! 

Chinga_Tu_Madre
Chinga_Tu_Madre

Pay day loans services are in the same despicable league as pawn shops, divorce lawyers and child molesters. Of course you're going to doubt that most of the debtors weren't the victims of "sewer service" because you're biased for the debt collectors.

josiev
josiev

WOW. talk about someone with no reading comprehension skills...

NaveedXVO
NaveedXVO

"sewer service" meaning they didn't get served the papers so they didn't know they were supposed to show up for court. I'm sure you'd be pissed if you were thrown in jail when you didn't know you were supposed to go to court.

Greg Pabich
Greg Pabich

AND THE SAME  LEAGUE AS CRUDE PEOPLE WHO USE DESPICABLE LANGUAGE AND THINK IT IS "CLEVER" BECAUSE IT IS IN SPANISH 

dbansal
dbansal

Yes, judgment does not equal cash in your pocket. You have to collect the judgment. These people didn't respond to discovery of their assets and got thrown in jail for contempt of court, this is not about "debtor's prisons".

Lisahas
Lisahas

Scott replied I am alarmed that a mom can make $5974 in one month on the network. did you look at this (Click on menu Home)

dbansal
dbansal

Doubt this happens very much in reality, we both know that the debtor just ignored it and hoped it would go away in almost all cases. Judges only throw people in jail for things like this only as an absolute last resort, they will have a sheriff's deputy pick up the individual and appear before them in court to explain their lack of response, if they are still uncooperative they go to jail.

dbansal
dbansal

Naveed it wouldn't let me reply directly to your comment, but yes most states require that a licensed process server serve the papers.

NaveedXVO
NaveedXVO

I don't know that. Seems like a good scam to me. Definitely very profitable, it seems like both parties have a huge conflict of interest in getting the papers delivered properly. The creditor would want to not deliver them and say they were delivered and the debtor would want to lie and say they weren't delivered if they were. The only way you could really be sure is if the court had a neutral third party deliver the papers. Too expensive so some people will go to jail when they shouldn't. Maybe I'm missing something maybe they do have a neutral third party deliver the papers?