More Collection Agencies Using Courts to Put Debtors Behind Bars
Collection agencies have implementing harsher tactics to get back the money owed to them by debtors, resulting in some people getting arrested and thrown in jail, despite “debtors' prisons” having been illegal in the U.S. since the 19th century.
According to NPR, debtors are being arrested for owing money – but in an indirect way. The process reportedly involves a collection agency buying a person's debt and then filing a lawsuit against that person, which requires a court appearance. When the person does not show up for court, a warrant is issued for their arrest.
However, not many people are even aware that a warrant has been issued, which is what happened to Robin Sanders in Illinois. Sanders was stopped by a police officer for having a loud muffler. After the police officer ran a background check, he arrested Sanders, who did not know she had a warrant for a $730 medical bill.
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"That's when I found out [that] I had a warrant for failure to appear in Macoupin County. And I didn't know what it was about,” she said.
Sanders ended up spending 4 days in jail, being released after her father was able to raise $500 for bail, which ended up going to the creditor, NPR reported.
This tactic is reportedly becoming more common.
According to The Wall Street Journal, more than one-third of states allow debtors to be jailed if they will not or are unable to pay their bills. In nine counties with a total population of 13.6 million people, judges have signed over 5,000 warrants to arrest people who are behind on their bills, as of March, 2011. Nationwide figures are unavailable because many courts do not keep track of warrants based on offenses.
Quite often, the cost of incarceration ends up being much higher than the actual debt owed in the first place, as was the case with a homeless construction worker from New Orleans who spent 5 months in jail for owing $498 in legal fees. The city spent more than $3,000 to keep him locked up, according to ThinkProgress.
The American Civil Liberties Union (ACLU) released a 2010 report about the growing trend of incarcerating people for falling behind on their debt, arguing it unfairly affected the poor and minorities. The ACLU declared such tactics create a “two-tier system of justice” that eventually forces the poor to pay more.
“Those unable to pay end up incarcerated or under continued court supervision. Perversely, they also often end up paying much more in fines and fees than defendants who can pay their legal financial obligations (LFO),” the ACLU report said. “Poor defendants who are re-arrested and incarcerated for failing to pay their LFOs face added costs, such as warrant fees, as well as booking and jail 'pay-to-stay' fees.”
In addition to more arrests, the growth of the debt collection industry has led to more harassment of debtors. Consumers have lodged complaints about debt collectors more than any other industry, according to the Federal Trade Commission, which said it received 140,036 such complaints, up from 119,609 in 2009.
Although personal debt has decreased slightly over the past year in addition to late payments on credit cards being at their lowest point since 1994, according to The Associated Press, the debt collection industry is expected to grow 26 percent over the next 3 years.
