Until the mid-19th century, many people would go to jail for debt. Similar to today’s workhouses, you could go to jail for debt until the debt was paid off. Debtors prisons were abolished long ago, but there are still are ways that you can go to jail for unpaid debt.
If you are held in contempt of court, you can go to jail for debt. It’s not as hard for this to happen as you might think. If a creditor sues you and obtains a court determination that you owe money (called a “judgment””), and you can’t or won’t pay, then the creditor may send you a demand for disclosure of your income, your bank accounts, and property. Or the creditor may subpoena you for a deposition to give sworn testimony regarding these matters. The creditor wants this information so that it knows how to garnish your wages, levy your bank accounts, and seize your property. If you don’t respond with the information, then you may receive an “order to show cause” at a court hearing as to why you should not be held in contempt of court for failing to cooperate. If you don’t then show up at the hearing with the information, the judge may enter a bench warrant for your arrest. The purpose of the arrest warrant is not to punish you, it is to force you to give the creditor and the court the information regarding your income and assets. It wouldn’t be uncommon to be arrested on a Friday and spend the weekend in jail until you are brought before a judge on Monday to testify as to your income and property.
If you need to file bankruptcy, save yourself a lot of misery and do it before matters reach this point. When you file a bankruptcy petition, you are protected by the automatic bankruptcy stay against collection efforts and you don’t need to worry about being held in contempt of court.
For more information regarding your specific situation, contact Minnesota Bankruptcy Attorney Gregory J. Wald at 952-921-5802 or at www.www.gregorywald.com for a consultation.