More Americans are in debt than ever - and some are being jailed for it, ACLU says

An ACLU report highlighted how debt collectors can use the court system to get debtors arrested and jailed, a practice the organization says is abusive and dangerous
An ACLU report highlighted how debt collectors can use the court system to get debtors arrested and jailed, a practice the organization says is abusive and dangerous Fresno Bee Staff Photo

More Americans are in debt today than ever before, whether that’s the one in five people whose credit card debt outweighs their entire savings, the average college student with $37,172 in loans, or anyone else who has taken out borrowed money.

That’s led to some problems. In 2014, one in every three Americans had at least some debt turned over to a collection agency, according to a study from the Urban Institute.

You can’t be locked up for not being able to pay your debts. Although “debtors prison” were common from the middle ages up to the early 1800s, they were outlawed by Congress in 1833.

More than a century later, the U.S. Supreme Court reaffirmed the decision in a 1983 case out of Georgia, with justice Sandra Day O’Connor writing that jailing someone for not bring able to pay a fine “would be little more than punishing a person for his poverty.”

But according to the American Civil Liberties Union, some debt collection companies have been using the court system to secure arrest warrants for their debtors, effectively criminalizing late debt payments.

Here’s how the organization says it works:

Depending on the type of debt, a collection agency can sue in small claims court to recover the money a debtor owes.

The debtor, who the ACLU says usually doesn’t have a lawyer and, in fact, often doesn’t even know they’re being sued, is ruled against by a judge.

People are required to be notified when they’re being sued, but the ACLU says they often aren’t. Notices are sometimes reported delivered when they never were, or are sent to wrong addresses and never followed up on, the organization wrote.

After the court rules , the collector can ask to have the debtor’s paycheck garnished or assets like a car or property seized.

At that point, the creditor can again ask courts to require the debtor to attend another court session and answer questions about finances and assets.

Once again, the ACLU says, defendants sometimes don’t show up because of work, children, sickness - or just because they weren’t told they had a court date. When they don’t show, the court can then issue an arrest warrant - not for failure to pay debt, but for failure to appear in court.

“Once arrested, debtors may languish in jail for days until they can arrange to pay the bail. In some cases, people were jailed for as long as two weeks,” the ACLU wrote. “Judges sometimes set bail at the exact amount of the judgment. And the bail money often is turned over to the debt collector or creditor as payment against the judgment.”

The ACLU pointed to several cases, including a woman who was arrested in her pajamas after she was unable to pay debts for cancer treatment and another woman who, after having been homeless while court orders were issued and never knowing she was being sued, was arrested years later while caring for her dying mother.

Those arrested are not charged criminally, but Jennifer Turner with the ACLU told NBC News they “still lose their liberty.”

It’s a system that’s been fought in court before with some success. In 2016, Biloxi, Miss., settled with the ACLU for $75,000 after it was accused of routinely jailing people for nonpayment of fines.

A year earlier, a lawsuit was filed in a city near Ferguson, Mo,. on similar accusations. The city settled for nearly $5 million in 2016, reported the Washington Post.

Now the ACLU says it wants to step up efforts to reduce the ability of people to be jailed for failure to appear in debt collection proceedings by pressuring attorneys general, state court rules committees, district attorney’s offices and government rulemakers to create protections for debtors.

“These abusive practices raise grave due process, equal protection, and human rights concerns, yet they remain largely unchecked because there is minimal government oversight and scant protection for debtors under federal and state laws,” the ACLU wrote.

“But there’s much that can be done by state attorneys general, state courts, legislatures, the Consumer Financial Protection Bureau, and Congress to protect consumers against these forms of intimidation and threats.”