May You Be Imprisoned for Failing to Pay a Debt?

09/16/2015 12:15 pm ET Updated Sep 16, 2016

The answer to the question contained in the title, in contemporary U.S. law, depends upon the definition of the word "debt" and the situation under consideration. This comment briefly notes some circumstances involving jail time or imprisonment that is imposed due to unmet legal obligations. Always consult an experienced attorney in debtor-creditor, bankruptcy, or other legal situations.

Debtors' prisons were abolished at the federal level in 1833 although states were free to continue imprisonment for debt and some states had debtors' prisons into the 1840s. Many state constitutions contain provisions generally prohibiting imprisonment for failing to pay a debt. Additionally, federal bankruptcy legislation starting in the late 1800s allowed debtors, including businesses such as railroads, to be released from many forms of indebtedness. There is a rich history of debtor-creditor relations and law extending back to antiquity.

A private citizen, unlike an authorized criminal prosecutor, does not have the authority to compromise a criminal charge. Thus, private contracts entered into under the threat of criminal prosecution are frequently considered void. Nor may a private contract contain a provision authorizing imprisonment if the contract is breached. A public official, the prosecutor, in contrast, generally has the statutory authority to recommend to a judge restitution and probation instead of imprisonment.

The following is an incomplete listing and brief educational overview of contemporary imprisonment for financial and debt related reasons.

1. There are broad categories of situations deemed to involve "contempt of court" (willful refusal to obey a court order). A judge has broad discretion to punish contempt of court, "civil" and "criminal" as explained below, with a range of jail time and/or fines. While the following two typical situations involve debt, they are not deemed to legally be imprisonment for debt:

A. The failure to pay court ordered child support and alimony is typically punished as contempt of court. This includes associated court costs and attorney's fees. The U.S. Supreme Court in 2011 held in a 5:4 decision that an individual must be notified that the ability to pay will be an issue in a child support "civil contempt" proceeding and be provided forms to submit financial information, but the individual is not entitled to a free attorney (Turner v. Rogers). A "civil contempt" proceeding enforces a previous order of a court.

"Criminal contempt" proceedings, in contrast, vindicate the authority of the court and typically involve misbehavior in court or obstruction of the administration of justice.

It is essential that divorce and separation property division contracts be incorporated into an affirmative court order in order to be potentially enforceable by contempt of court proceedings.

B. A failure to appear in court when officially notified of a hearing date and time may be punished as contempt of court. In some states a creditor may repeatedly request a judge to conduct a "debtor's examination," with the debtor appearing in court under oath, to determine if a debtor has assets that may be seized to satisfy an unpaid judgment. These assets might even include cash and checks in the debtor's billfold. Failure of the debtor to appear is punishable as contempt of court. Additionally, failure to answer questions truthfully concerning assets while under oath may result in the denial of a bankruptcy discharge of debts as the federal Bankruptcy Code prohibits a debtor from acting "with intent to hinder, delay, or defraud a creditor." Consult experienced legal counsel in debtor examination situations.

2. Punishment for a variety of financial crimes, such as fraud or intentionally issuing bad checks, may involve imprisonment. Hiding, damaging, or destroying collateral that is subject to repossession is the crime of "hindering a secured creditor." In like manner, failure to comply with the restitution requirements of criminal probation may be punished by the revocation of probation and imprisonment. As might be expected, state statutes punishing by imprisonment the obtaining of food or lodging with the intent to defraud (defrauding an innkeeper) are not considered imprisonment for debt.

Recently the Nevada Supreme Court held that a criminal conviction for issuing $384,000 of worthless casino markers did not violate a provision in the Nevada State Constitution that "there shall be no imprisonment for debt, except in cases of fraud" (Zahavi v. State of Nevada).

There are several U.S. Supreme Court decisions limiting the ability of courts to impose a fine or probation financial requirements and converting them into to jail time when the defendant is indigent. For example, the U.S. Supreme Court in 1971 held that it is a denial of equal protection of the law to convert a traffic fine to imprisonment because a person was unable to pay it (Tate v. Short). However, the state-by-state practical implementation of these decisions is not uniform.

3. There are a number of older state court decisions that allow imprisonment for unpaid damages arising from torts (a civil suit for injuries inflicted upon persons and property). These include situations such as libel, assault and battery, and "trespass," historically used as a term for personal injury. The distinction was made between a "debt" and an "injury." These decisions, if specifically challenged, might be overturned by a contemporary court.

4. The "writ of ne exeat republica" (Latin for "let him not go out of the republic") is obscurely mentioned in federal Internal Revenue Code Section 7402. In a simplified and incomplete overview, it allows a taxpayer to be briefly imprisoned if she or he owes significant taxes and has the ability to pay but is attempting to locate both herself and her assets outside of the jurisdiction of the U.S. It is occasionally used. Additionally, the failure to pay personal income and other taxes is a crime and may be punished by imprisonment. As is well known, the Internal Revenue Service has a number of extraordinary legal remedies to enforce the collection of taxes.

5. Cash bail may be imposed for traffic offenses or other misdemeanors. While technically not a "debt," if one does not have cash to post a bail, one might be jailed until a hearing or trial date. One may or may not be able to engage a commercial bail bond company. These firms typically charge 10 to 20 percent of the bail amount and may refuse a potential client.

State motor vehicle financial responsibility statutes that impose jail time for their violation are typically upheld when challenged as imposing imprisonment for debt.

6. In a related matter, a number of states are utilizing what are described as "private probation companies" to collect unpaid traffic fines and possibly misdemeanor fines generally. These companies assess offenders with collection fees in addition to court costs. Sometimes, due to procedural matters, one may owe the private company even if found not guilty of the original charge. A failure to make an assessed monthly payment may result in a jail sentence.

In conclusion, as noted, today there may not be technically "imprisonment for debt," in a legal sense, but imprisonment in a variety of situations may certainly be described as debt related. Many commentators consider it unfair, and potentially a violation of constitutionally guaranteed due process and equal protection, that the described situations disproportionally impact the poor. These critics wonder if there are not two de facto justice systems, one for the financially well off and another for the poor. Does this undermine public confidence in the judicial system generally and waste public resources when individuals are jailed simply for being financially indigent? Significant public policy questions are involved in this critique.

This comment provides an incomplete educational overview of a complex topic and is not intended to provide legal advice. Always consult an experienced attorney in all debtor-creditor, family law, bankruptcy, and criminal offense situations.