Can You Go to Jail for Credit Card Debt? What You Need to Know
10 MIN READ
Published August 15, 2023 | Updated September 25, 2023
You may be feeling anxious if you’re not able to pay your debt but breathe easy because you can’t get arrested or go to jail for credit card debt. However, there are other consequences of unpaid debt, such as damage to your credit score, calls from collections, and wage garnishment.
Understanding Credit Card Debt Jail Time
If you’re behind on your credit card payments for a few months, you may receive collection calls. Your creditors can also sue you in civil court for unpaid debt. But can you go to jail for credit card debt? The short answer is no. No lender can get you arrested or jailed simply for owing payments.
What Happens When You Don’t Pay Credit Card Debt?
Defaulting on credit card debt is something you should avoid because it comes with a lot of risks. If you fail to pay your credit card bills, your outstanding balance will continue to increase as interest charges, late payment fees, and other penalties add up.
Your account may also go to collections and will damage your credit score. Your lender may also sue you in court, and you may have to face court-ordered account levies and wage garnishments. Additionally, lower credit scores mean you won’t be able to qualify for good interest rates when you try to borrow later.
Can You Go to Jail for Credit Card Debt?
No. Debtors’ prisons no longer exist. The Fair Debt Collection Practices Act (FDCPA) prohibits collectors from threatening jail time for credit card debt. Credit card companies or lenders cannot criminally charge someone for owing them money.
Your creditor may sue you in civil court for unpaid debt. If the judge grants a judgment in favor of your creditor, you’ll need to pay your debt as ordered by the agreement or have your wages garnished. The only possibility of jail time here is when you’re in contempt of court. So if you receive a court notice, it’s crucial to respond to it immediately. Because if you fail to appear in court, they may issue a warrant against you.
Teresa Dodson, founder of Greenbacks Consulting and debt expert, urges individuals with debt to learn more about their protections as a consumer. “Understanding the FDCPA and your rights when it comes to creditor harassment is so important,” she advises.
The Statute of Limitations on Debt
Based on the state laws where you reside and the federal laws, debt collectors only have a limited time period to sue you for debt according to the statute of limitations on debt collection. In most cases, this can be anywhere from three to six years.
This means that your lenders won’t be able to sue you in court for old credit card debt on which the statute of limitations has already passed. Even if the statute of limitations has passed, it doesn’t mean that your unpaid debt is erased. Your credit report will still reflect the debt, and it will continue to impact your credit score.
Dealing with Credit Card Debt and Jail
Now that we’ve established that you can’t go to jail for credit card debt, it’s important to learn more about what a collection agency can and cannot do to recover their money from you.
Collection agencies can contact you by letters, phone, messages, and texts about your debt. They also need to send you a notice stating the amount you owe and the name of the creditor. They aren’t legally allowed to engage in any unfair collection practices, such as harassing you or lying to you about your debt.
If you’ve asked them to stop contacting you, they aren’t legally permitted to contact you again. Additionally, debt collectors are also not allowed to discuss your debt with anyone else other than you or your spouse.
Avoiding Jail Time
If you want to avoid jail for credit card debt, the most important thing to do is promptly respond to any court notice you may have received. While you may not be prosecuted for owing debt, you may face jail time or fines if you’re in contempt of court.
To avoid this, you must pay attention to any court notice. If you are summoned for a hearing, you must always show up. If the court asks you to pay off credit card debt, you must obey the orders.
Preventing Legal Trouble
The best way to prevent legal trouble from credit card debt is by paying it off. Explore credit card debt relief programs and create a plan to clear your outstanding balance at the earliest. If your lender has already sued you for unpaid debt, do not ignore it.
When you fail to respond to the lawsuit or do not show up for court hearings, there may be a default judgment against you. This means that the judge may rule against you, and debt collectors may be allowed to act against your property, levy your account, or garnish your wages.
Seeking Legal Assistance for Credit Card Debt
Instead of ignoring the lawsuit, hire a credit card debt lawyer to represent you. Your lawyer can help you respond to the lawsuit. Law firms also take care of the paperwork and ensure that you are treated fairly in court. A good lawyer may also be able to convince your creditor to accept a settlement.
There are several organizations and programs that offer you access to free or low-cost legal help. Some of these programs may only be available to those with low incomes. Explore all your options to find low-cost legal advice that can help you navigate your debt and lawsuit successfully.
How to Handle Your Debt
Dealing with collectors can be stressful and frustrating. There are several ways of getting out of debt to avoid this frustration and the legal consequences of unpaid debt.
Establish a Budget
Budgeting is one of the most important money management skills you should learn. When you make a budget, you’ll have a better understanding of how much money you’re earning and how much you’re spending. More importantly, it will help you determine how much you can put aside for debt repayment.
Identify areas where you can cut back on expenses so you can free up more funds to pay debts. Once you make a budget, stick to it to see results. Review the results and see if you need to make any changes based on your current financial situation. Seek credit counseling if you need help creating a budget and paying off your debt. A credit counselor can provide you with financial education and resources.
Find Ways to Earn More
Find ways to bump up your earnings each month and use that extra cash to bring down your credit card balance. Start a side gig, ask your employer if they can give you extra hours at your existing jobs, or think of selling any unwanted items in your home to generate some extra cash.
Avoid using this extra cash for anything other than debt payments, and you’ll be able to pay off your debt much sooner.
Look into Debt Consolidation
Credit card consolidation can help you save a considerable amount of money on interest charges. If you have a good credit score, you may qualify for a 0% balance transfer credit card. Credit card issuers will usually offer you a 0% APR for an introductory period of a year. If you can manage to pay off your balance within that time, there’s the potential to save hundreds of dollars.
Another option is to apply for a credit card consolidation loan at a lower interest rate. Use these funds to pay off your high-interest credit cards. You’ll then have a fixed monthly payment to pay off the loan.
Use Debt Repayment Strategies
Be strategic about paying off your credit card debt. There are two main methods to consider, the debt avalanche method and the debt snowball method. Both of these can wipe out credit card debt.
The debt snowball method involves focusing on paying off the credit card with the smallest balance while making minimum payments on the rest. Once that is paid off, you move on to the next smallest balance. Repeat the process until you’re debt-free.
With the debt avalanche method, you’ll focus on paying off the balance on the card with the highest interest rate. Once that debt is paid off, you can move on to the card with the next highest interest rates. The debt avalanche method can help you save a lot of money in interest charges. But if you are finding it difficult to stay motivated, the debt snowball method may be right for you.
Consider Debt Settlement
If your credit score is not high enough to qualify for debt consolidation, or if your outstanding balance is overwhelmingly high, debt settlement may be the right option for you. Consult a settlement professional that can negotiate with your lenders on your behalf to accept a settlement amount lower than what you currently owe.
When you settle your credit card debt, the remaining amount will be forgiven. For example, if you owe $8,000 on your credit card and your lender agrees to accept a settlement amount of $5,000, the remaining $3,000 will be forgiven. Ideally, you should consider this option before your lenders file a lawsuit against you.
The Bottom Line on Going to Jail for Credit Card Debt
When you fail to pay your credit card bills, some of the consequences you may face are collection phone calls, damaged credit, and lawsuits. In extreme cases, you may have to file for Chapter 7 or Chapter 13 bankruptcy as a last resort. But can you go to jail for credit card debt? Fortunately, no. It may take years for you to recover from the fallout and rebuild your credit. The best thing to do is to take care of your debt at the earliest before any legal action can be taken.
If you have over $10k in credit card debt, contact TurboDebt to pay it off before it spirals out of control. There may be many debt relief options for you, like debt consolidation, debt settlement, and debt management plans. Take advantage of our free consultation to see how we can help you find the right debt relief option for your needs.