Articles Tagged with debt

jail for unpaid debtIt is quite unusual to go to jail for an unpaid debt. Debtors’ prisons were abolished in the 19th century in the United States, and the Fair Debt Collection Practices Act prohibits debt collectors from threatening you with criminal prosecution.

In the state of Florida, you can’t be put in jail for failing to pay a debt or judgment. What can happen when you fail to pay a debt is that it will be reported to credit bureaus, and it will become part of your credit history for up to seven years. It is also possible that your property is seized and your wages may be garnished. But since debtors’ prisons were found to be unconstitutional and biased against people with lower incomes, you are not likely to face jail time over an unpaid debt.

However, you should be aware that there are certain situations that can lead to jail time in relation to an outstanding debt. These include:

student loan bankruptcyIf the debt from your student loans is overwhelming you, you’re not alone. According to the Institute for College Access & Success, an independent non-profit organization, 68% of students who graduated from both private and public colleges in 2015 had student loan debt. The debt average had risen 4% since 2014 to a whopping $30,100 per borrower in 2015.

While it can be challenging, it is not impossible to have student loan debt discharged in bankruptcy. In order for your student loan to be discharged, you must be able to prove that it is causing undue hardship. Courts use certain tests to make this determination. The most common is called the Brunner Test, in which courts will look for you to meet the following three criteria:

  1. You are unable to maintain a minimal standard of living for you and your dependents if you are required to continue paying your student loans.