“I Can Go to Jail for Payday Loans” (and Other  Myths About the Punishment for Owing Money)

I recently had a client come in concerned about payday loans. She worried she would go to jail for debt she couldn’t pay, and so she stopped buying basic needs in order to cover the costs.

As her payday loans grew and grew in interest, she lost everything she had. 

Going to jail for debt is a common fear — and it’s a myth. Here’s what you need to know about the punishment for not paying your debts.

You Can’t Go to Jail for Debt 

Many people believe they can go to jail for not paying their debts, but this is a common myth.

In fact, debtors’ prisons were abolished in the United States over 150 years ago, and it is illegal for creditors to threaten people with prison for unpaid debts.

However, there are certain circumstances where you can be incarcerated for failing to pay a debt. For example, if you’ve been ordered by a court to pay child support or restitution and failed to do so.

Additionally, some states may arrest people who write bad checks or commit fraud.

When Creditors Threaten Prison

When you get a payday loan (which we never recommend), the lender may tell you from the start that you’ll go to prison if you don’t pay. This isn’t true. 

Our clients have had creditors threaten people by phone as well. They say things like “the police are coming to arrest you.” This also isn’t true. 

Creditor harassment is a serious issue. Federal and state laws prohibit creditors from making these kinds of threats. If you’re being harassed or threatened, you should speak with a bankruptcy attorney and file a complaint. We lay out all of these rules and options in our free report Creditors Can’t Do That.

The Real Punishments for Not Paying Debt

While you won’t go to jail for debt, it can have consequences.

If you don’t pay a debt, the creditor is allowed to take legal action to try to collect the money owed. This can include sending collection letters, making phone calls, and reporting the debt to credit bureaus, which can hurt your credit score.

In some cases, the creditor may sue you in court to obtain a judgment against you. If they win, they may garnish your wages or put a lien on your property.

Debt can also lead to car repossession, which makes it even harder to get to work and make a living. And if you’re behind on your house payment, you may be at risk of foreclosure.

So it’s still very important you address your debts—and we can help.

How Our Memphis Bankruptcy Lawyers Help

Bankruptcy can be a powerful tool if you’re overwhelmed by debt. And our attorneys work to make the process as easy as possible. 

We believe people should live in freedom — including freedom from debt. In fact, bankruptcy was designed around the jubilee system in the Bible, which was God’s way of giving people a way out of debt. I discuss this at length in my free report What the Bible Says About Bankruptcyone of our most popular publications.

When you come into our office, we work hard to help you get out of debt and move on with a new life. We focus on your needs and worries, and we treat you with compassion and respect. What’s more, that first conversation is free, no strings attached.

Our team has won multiple awards for client satisfaction, and we want to help you, too. To get started, call us today at 901-327-2100 or fill out the form on this page. We look forward to talking with you.