The practice of putting people in prison for not paying their debts ended in the United States more than a century ago.
What is a debtor’s prison?
Some state constitutions include provisions banning these “debtors’ prisons.”
But some creditors are increasingly using a little known tactic that, to the people they target, feels a lot like being sent to jail for not paying their debts.
In Iowa, as in many states, a creditor who gets a judgment against a debtor but is then unsuccessful at collecting the debt can ask for a “debtor’s examination.”
These “exams” take place before a judge and are used to find out:
- where a debtor has bank accounts
- what property they own
- where they’re employed
Debtor’s exam hearings are unlike other debt collection hearings that are frequently ignored by debtors without consequence, though.
What if I don’t attend the exam?
Failure to attend a debtor’s exam is considered contempt of court and can result in the creditor asking for a bench warrant to have the debtor arrested and brought before the judge.
If the arrest takes place at night or in a different county then where the lawsuit occurred, the debtor may be put in jail until they can be brought before a judge.
Some of these jail stays last for days.
Bond to be released from jail is the amount of the debt itself, which is often impossible for the debtor to pay.
When the debtor can be brought before a judge the examination takes place.
If the debtor has no money or property available to pay the debt they’re released without further proceedings.
But the consequences of being arrested, perhaps placed in jail and being brought before a judge can be severe to someone’s employment and family life.
The lesson is to never ignore a notice of hearing for a judgment debtor’s examination.
If you’re not certain about a hearing notice contact us.
But more importantly, even before a debtor’s exam is scheduled make plans for how to deal with the debt.
If you’re not going to file bankruptcy then how will you pay the debt? Are you going to try to negotiate a payment plan or settlement with the creditor?
If so, contact them immediately.
If this debt is just one of many, how do you plan to deal with them all?
Start making plans for whatever solution you choose sooner rather than later. Don’t wait to take action until the result of missing a hearing lands you in jail.