Prison and Debt: What Happens When a Person Goes to Jail?

When a person goes to prison, it is a common misconception that their debts are automatically forgiven. In most cases, incarceration does not erase debts like credit cards, personal loans, or medical bills. Creditors can still pursue collections, and the debtor may face additional penalties or interest on the outstanding balance. This article delves into the complexities of debt and incarceration, discussing the various types of debts, legal protections against incarceration for debt, and exceptions.

Types of Debts

Debts can be broadly categorized into civil and criminal. Civil debts are not crimes and do not violate criminal law. For example, if you buy a ring for $1,000.29 and the check bounces, or if you fail to pay your credit card bill, the seller can sue you for the amount owed. If a judgment is obtained, the seller can place a lien on your property, garnish your wages, or other financial assets. However, there is no debtor’s prison in the modern legal system.

However, there are exceptions in certain circumstances where a debtor may face criminal charges. For instance, in New York, if you issue a check knowing that it will bounce or if you issue a check on a closed account, you can be charged with a crime. This provision is different from civil contempt, where a judge orders you to pay money and you can be jailed until compliance. Once you pay the debt, you can be released from jail.

Illegal Activities and Debt Collection

Engaging in illegal activities or purchasing illegal products can result in more severe debt collection measures. If you owe money to someone for drugs or for losing in an illegal game of craps, the collection methods can be illegal. Sometimes, the pursuer knows that it is very difficult or impossible to collect debts arising from such transactions.

For instance, if a bar tender sells alcohol to a minor who then bounces a check or stops payment on a credit card, the transaction was illegal. In this case, the bar tender cannot collect on the debt in court. This raises the question: can the youth use the illegal sale of alcohol as an affirmative defense? The prevailing legal wisdom is that you cannot sue to collect for an illegal transaction, and a court will not issue a judgment in favor of the plaintiff.

Child Support and Other Legal Penalties

While debt collection typically does not involve incarceration for civil debts, there are specific cases where you can be jailed for not fulfilling your legal obligations. In the United States, you can be incarcerated for failing to pay child support if a judge orders you to do so. This situation is a form of contempt of court, and if you make a payment, you can be released from jail.

Similarly, failure to file tax returns or pay federal taxes can result in criminal charges and potential imprisonment. Again, these situations involve legal obligations and not just ordinary debts.

Conclusion: Debt and Incarceration - What Depends?

The answer to whether debt is forgiven when a person goes to jail depends on the reason for the debt. In the general case of civil debts, incarceration does not erase the debt, but there are exceptions and specific circumstances where individuals may face legal penalties. Understanding the difference between civil and criminal debts is crucial in navigating these complex legal issues.