collageIn this post, we review the details of: can you get arrested for not paying student loans, consequences of not paying student loans, should i not pay off my student loans, what happens if you don t pay your student loans and leave the country, states where you can go to jail for debt, how do i know if my student loans are in default, and do student loans ever go away.
The consequences of default are serious, but you can’t go to jail for nonpayment of student loans.
You might have seen the headline about a Texas man being arrested for $1,500 worth of student loans. We’ll go into the specifics shortly, but he was arrested for being in contempt of court.
To keep from being arrested if your lender sues for repayment, pay attention to your mailbox. Keep an eye out for communications from your lender, collections attempts, and court notices.
Is It Illegal To Not pay student loans
You may be wondering, “can you get arrested for not paying student loans?” The answer is yes. While not all student loan debtors will find themselves in the unfortunate situation of being arrested for a defaulted student loan, it does happen. Read on as we answer the questions: can you get arrested for not paying student loans, consequences of not paying student loans, should i not pay off my student loans, what happens if you don t pay your student loans and leave the country, states where you can go to jail for debt, how do i know if my student loans are in default, and do student loans ever go away.
The consequences of not paying your student loans may be severe, including arrest and/or jail time—depending on where you live. Here’s what you need to know about the consequences of not paying student loans and what happens if you don’t pay off your student loans.
Should I Not Pay Off My Student Loans?
Some people wonder whether it’s better to keep paying their student loans or just stop paying entirely. It depends on whether or not your lender has taken action against you yet (and whether they’re likely to).
can you get arrested for not paying student loans
You cannot be arrested or placed in jail for not paying student loan debt, but it can become overwhelming. Student loan debts are considered “civil” debts, which are in the same category as credit card debt and medical bills. Because of this, they cannot send you to jail for not paying them.
If you don’t pay your student loans, they will continue to add up to interest and late fees until they are paid off. If you don’t pay your student loans within six months of graduating, they may contact your employer directly to try and get some of their money back by garnishing your paycheck.
If you do not make payments on your student loans within 30 days of being notified that payment is due, then the federal government will start seizing funds from your bank account each month until there is enough money in there to cover the amount owed on your loan.
consequences of not paying student loans
` If you default on your student loans, there are some serious consequences.
Late fees. If you don’t pay your student loans, the government can add late fees to the amount you owe. These fees can quickly add up, and if you don’t make payments on time, the amount of money that you owe will increase significantly.
Lower credit score. When you default on your student loans, it negatively impacts your credit score. This means that you may find it difficult or impossible to get approved for certain types of loans in the future.
Lose loan benefits. If you have a federal loan and are in default, any benefits that come with that loan—such as income-based repayment or public service forgiveness—may be lost unless they are reinstated by paying at least $25 per month toward your loan balance for twelve consecutive months prior to applying for reinstatement under those programs.
Wage garnishment. If you continue to ignore your student loans or fail to make payments, wage garnishment may be used against you by the government as an additional means of collecting funds owed on these debts–withholding up to 15% of each paycheck until all funds owed have been repaid off (and possibly even more than this amount if additional interest has accrued).
should i not pay off my student loans
Paying off your student loans is a good idea, but you might get an even bigger financial benefit in the long run from applying extra cash toward shoring up an emergency fund, servicing an even higher-interest-rate loan, or saving more for retirement.
Let’s talk about this. If you have a high-interest-rate loan—say, a credit card at 15%—you might be better off paying it off first, especially if your student loans are at a low interest rate. However, if you have a low-interest-rate loan (like a home mortgage or student loan), paying down that debt will save you money over time.
One thing to keep in mind is that if you’re paying down your student loans aggressively and continue doing so for several years without saving for retirement or funding an emergency fund, you could find yourself without any liquid assets available to help get through unexpected expenses like job loss or medical emergencies.
what happens if you dont pay your student loans and leave the country
You’re a US citizen, and you’ve got a lot of responsibility.
If you don’t pay your student loans and leave the country, your responsibility for your federal and private loans doesn’t end at the US border. You could return to a huge financial mess that makes it difficult for you to buy a home, get a professional license, or pay your living expenses.
So what happens if you don’t pay your student loans and leave the country? Here’s what to expect:
1) You’ll be on the hook for any unpaid debts that are in collections.
2) The government can take money from your tax refund or garnish wages from your employer.
3) If you have no income coming in (like if you’re retired), they can take up to 15 percent of what’s left in your bank account each month until the debt is paid off.
states where you can go to jail for debt
We’ve all been there: you’re in a tight financial spot, you’re making payments on your credit card and hospital bills, but you can’t quite get everything paid off.
Unfortunately, if you live in one of these six states, it might not be enough to just pay what you owe—you may have to go to jail for unpaid debt.
In most states, failure to pay a court-ordered debt such as credit card or hospital bills can result in a warrant for your arrest. But if you live in Alabama, New Mexico, North Dakota, South Dakota, West Virginia or Wyoming (where failure to comply with a court order is a criminal offense), then failing to pay your debt could result in jail time.
how do i know if my student loans are in default
If you’re wondering if your student loans are in default, don’t worry—you can find out right from your computer.
Log in to StudentAid.gov and select “My Federal Student Aid.” You’ll need your FSA ID to sign in. If you don’t have one yet, you might be able to get it by calling the number on the back of your Social Security card or by visiting a local Social Security office.
Once you’re logged into your account, select the loan(s) you want to check on and look for the word “default” under its repayment status. If it’s listed as “defaulted,” that means that payments have not been made for 270 days or more and the government has sent a notice informing you of this status. You may also see that there’s a collection agency involved—that means they’ve been contacted by the government and they’ve started trying to collect on the debt.
If there are no defaults listed, but you still don’t think any payments have been made within the last 270 days, contact your loan servicer directly—they’ll be able to help figure out what happened!
do student loans ever go away
Student loans don’t disappear, but you can make them manageable.
There are a couple of ways to do this. First, if you have federal student loans, you may be able to qualify for deferment or forbearance—which will temporarily suspend your monthly payments and allow you some breathing room.
Second, if you have private loans, consider refinancing them. You’ll likely get a lower interest rate, which means less money going toward interest each month.
Finally: keep in mind that it’s never too late to start saving for retirement! Congress passed the Retirement Savings Contribution Credit (RSC) in 2018 which allows individuals making $50,000 or less per year to contribute up to $2,000 a year into their retirement accounts tax-free—a savings of up to $400 per year!
Can You Be Arrested for Not Repaying Your Student Loans?
The potential consequences of unpaid student loans can be serious, ranging from damaged credit and lawsuits to even arrest. Even though the United States no longer has debtors’ prisons, it is still possible today to be arrested for unpaid debt, including unpaid student loan debt, if you fail to appear in court.
A brief history of debtors’ prisons
The term “debtors’ prisons” refers to a jail or prison specifically operated to hold people who are arrested for failing to pay back debts. The term “peonage” refers to compelling a borrower to work off a debt.
Debtors’ prisons became illegal in the United States in 1833 and peonage was abolished by the Peonage Abolition Act of 1867. The U.S. Supreme Court ruled in Bearden v. Georgia in 1983 that jailing people who cannot repay their debts is unconstitutional, according to The Marshall Project.
Why do arrests for unpaid debt still happen?
If debtors’ prisons are illegal, how can people still be arrested for not repaying debts like student loans? These types of arrests occur because of more than just unpaid debt.
When someone defaults on their student loan, the lender will often turn to debt collectors. Filing a lawsuit against the borrower is one tactic collection agencies use to recoup the debt, according to an American Civil Liberties Union (ACLU) report on the criminalization of private debt. Both private student loan lenders and the federal government can sue for failure to pay student loan debt.
If the borrower is sued and fails to appear in court, the debt collection agency can ask the judge to issue an arrest warrant. The ACLU notes a number of reasons borrowers do not make their court appearances, including lack of notification and health issues. In some cases, notice was served at an incorrect or old address.
Arrests made for unpaid student loan debt
A total of 44 states allow the arrest of debtors for contempt of court, according to the ACLU report. Failing to appear in court after a court summons can result in a warrant and arrest. The warrant and arrest are for a failure to appear in court, not for a failure to repay student loan debt.
Several arrests and arrest warrants related to unpaid student loan debt have made headlines in recent years.
- 2015. The ACLU report highlights the case of Gordon Wheeler. In 2015, U.S. Marshals arrested Wheeler at his home in Texas for failure to appear in court, according to the report. Wheeler did not make an appearance because he was recovering from open heart surgery. The debt in question stemmed from a $2,500 federal student loan taken out in 1983. The unpaid debt had increased to $12,000, according to the report.
- 2016. In 2016, another arrest related to unpaid student loan debt occurred in Texas. U.S. Marshals arrested Paul Aker for failure to appear in court for a case involving outstanding student loan debt, according to CNN Money. The initial federal student loan from 1987 was $1,500 but grew to approximately $5,700 with interest by the time of his arrest. Aker said he was unaware of the outstanding debt, while the U.S. Marshals claimed that several attempts to notify him of the court order were made, according to CNN Money.
- 2018. In 2018, Arielle Gray wrote a first-person account of receiving an arrest warrant in the mail. The civil warrant was issued in an attempt to recoup unpaid student loans from Boston University.
The loan had gone into default more than six years prior to the arrest warrant. But, Gray agreed to a repayment plan after that, according to her account. This reset the statute of limitations, allowing the lender to once again pursue legal action.
How to avoid arrest for unpaid student loans
There are several steps you can take to avoid being arrested and jailed for a failure to repay your student loans.
- Show up in court. If you are sued for a failure to repay your student loans, show up in court, ideally with an attorney. If you don’t show up in court, not only will judgment be rendered against you, but you can be arrested for contempt of court. If you can’t show up in court for health or other reasons, call the court to ask for the court date to be rescheduled.
- Update your address with the lender. Notify the loan servicer whenever you move. You are required to do so by the promissory note. A failure to provide the loan servicer with your current address can cause notices to be sent to an old address.
- Open your mail. The Fair Debt Collection Practices Act (FDCPA) allows you to tell creditors to stop contacting you. This will stop most of the mail and telephone calls. They can still contact you to tell you about specific actions they are taking, such as filing a lawsuit against you.
- Keep loan payment records forever. Keep records of your student loan payments and paid-in-full statements indefinitely. Statutes of limitation do not apply to federal student loans. Paid off and settled debt has a tendency to resurrect itself. It can be difficult to prove that the debt is not owing decades later without documentation.
States Where You Can Go to Jail for Debt
Not paying consumer debts, like credit cards or loans, won’t usually result in jail time as this isn’t considered a criminal offense. However, there are several states where you can go to jail for unpaid debts like federal taxes or child support.
The process is not always straightforward, though. For example, it can come with additional court fees and fines, which, if not paid, could result in jail time. By understanding your state’s laws and planning accordingly, it may be possible to avoid serving time for unpaid debts.
States where you can — and can’t — go to jail for debt
If you owe large amounts of unmanageable debt, the last thing you want to worry about is going to jail. Debt collectors often threaten jail time as a tactic to try to get you to pay. However, you won’t go to jail for not paying consumer debt — this includes credit cards, mortgage loans, payday loans, medical bills, and student loans. Nor will you be arrested or required to do court-ordered community service.
That’s not to say jail time is completely avoidable, though. If you have an unpaid debt, a creditor could initiate a lawsuit against you in civil court, particularly if you take deliberate action like closing your bank account. If you receive a court-mandated order or summons and fail to show up, you could go to jail for contempt of court. Because of this, it’s important to respond promptly and pay any court-ordered fines as soon as possible.
According to a report by the American Civil Liberties Union, some states cannot order an arrest or jail time for contempt of court. These include:
- Alabama
- New Mexico
- North Dakota
- South Dakota
- West Virginia
- Wyoming
However, the following 26 states could issue an arrest for contempt of court:
- Arizona
- Arkansas
- California
- Colorado
- Florida
- Georgia
- Idaho
- Illinois
- Indiana
- Kansas
- Louisiana
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Missouri
- Nebraska
- Ohio
- Oregon
- Pennsylvania
- Rhode Island
- Tennessee
- Texas
- Utah
- Washington
- Wisconsin
It’s important to note that there’s a difference between unpaid consumer debts and unpaid federal taxes or child support. Both taxes and child support could directly lead to jail time, especially if a judge has ordered payment and you fail to do so.
What exactly is contempt of court? To learn more, check out this video:
Debts that could land you in prison
Creditors and debt collectors cannot directly arrest someone for not paying consumer debts, but there are still several types of debt that could land you in prison. This includes unpaid criminal justice debt, taxes, and child support.
Criminal justice debt
Criminal justice debt, or court debt, is a type of debt that an individual who’s accused of committing a felony, misdemeanor, or infraction must pay. It includes:
- Fines — these are often applied as part of a punishment for a criminal or civil infraction; they may also include additional surcharges
- Fees or other costs — these primarily exist to help third parties or a governing body cover operational costs within the criminal justice system
- Other penalties — these include the cost of things like setting up a payment plan or collecting debt, as well as interest that accrues from not repaying a debt immediately
Unfortunately, criminal justice debt is often difficult or impossible to repay, especially for low-income households and certain minority groups. For those who can’t pay, these extra charges may lead to more significant problems they can’t necessarily escape without help. This includes:
- An ongoing cycle of debt due to being unable to pay the original debt plus the growing court debt
- Falling behind on other payments, such as rent or utilities, to pay the criminal justice debt
- Tanked credit score and difficulty qualifying for future forms of financing
- Arrest or incarceration
Certain states, including Alabama, Colorado, Georgia and Michigan could send you to prison for not paying your criminal justice debt.
Unpaid child support
Child support is a court-ordered payment that one divorced parent — usually the one without custody — makes to the other. It’s meant to help financially support any minor children until they’re at least 18 years of age. It may last longer in some cases, such as when the child is still a dependent and goes to college. Or it may end if the child gets married or passes away.
If you do not pay child support or fail to attend a court-mandated hearing, a judge could potentially send you to jail. States where you could go to jail for unpaid child support debt include:
- Alabama
- Colorado
- Florida
- Indiana
- Maryland
- Michigan
- Missouri
- Oklahoma
- Pennsylvania
- South Carolina
- Tennessee
- Texas
- Washington
Choosing jail
States like California and Missouri offer a third option for those who cannot afford to pay their criminal justice debts: choosing jail. By choosing to go to jail, it may be possible to avoid wage garnishment and reduce criminal justice debt.
However, choosing jail could also result in new debts. Currently, at least 43 states charge room and board fees for those in jail. Some states also charge for things like the initial booking and basic medical care.
These fees may be waived in certain cases (and states), but not always. This results in additional debt the individual and their family cannot pay.
For more information on the criminalization of private debt, check out this study from the ACLU.
Situations that could land you in jail for unpaid debt
You won’t go to jail for not paying a civil debt like a credit card or medical bill. You could, however, go to jail for not paying taxes or child support. Also, not paying debts could indirectly lead to:
- Warrants or arrest
- Incarceration through either criminal or civil proceedings
- Refusal for parole or probation
The U.S. Supreme Court has outlawed the use of prison to punish indigent criminal defendants (those who cannot afford legal representation in court) for not paying court fees and fines. Additionally, a debt collector cannot legally threaten you with jail time thanks to the Fair Debt Collection Practices Act (FDCPA). The concept of debtor’s prison was also made illegal in 1833.
There are some legal loopholes that debt collectors and creditors could use to try to get you to pay, though. Several state and local courts include fines, fees, and other court costs as a condition of probation or parole. This allows them to bypass the FDCPA regulations and potentially send you to jail if you don’t pay.
Other reasons that could result in jail time include:
- Unpaid federal taxes: Not paying federal taxes will not lead to jail time. However, you could be incarcerated for committing a tax-related crime. This includes failure to file a tax return, tax evasion, and knowingly filing a fraudulent return.
- Court fees and fines: In Bearden v. Georgia (1983), the U.S. Supreme Court ruled that it’s unconstitutional to imprison someone who cannot pay court fees. But if you can pay but choose not to, you could be sent to jail.
Civil vs. criminal charges
When someone breaks the law, there are two types of cases that could happen: criminal and civil.
Criminal cases refer to topics that affect society as a whole. This includes things like assault, murder, and other criminal offenses. These cases usually require more evidence and a jury to decide their outcome. A guilty conviction typically results in jail time.
Civil cases are typically made against an individual or a business. They’re usually related to monetary or property-related issues or other conflicts that violate an individual’s rights. This includes things like unpaid consumer debts. Most cases do not result in jail time but rather a fine or another form of compensation.
Federal and state consumer collection laws, including the FDCPA, protect individuals by forbidding debt collectors from threatening criminal prosecution for failing to pay a debt. In particular, the FDCPA has a set of rules and regulations debt collectors must follow. If, for example, a debt collector wants to get their money, they must file a complaint or initiate a lawsuit.
The debtor’s examination
Creditors can ask a judge to order a wage garnishment or attach your bank account to get their money. If there isn’t any money, the court can then order you to appear for a debtor’s examination.
A debtor’s examination is essentially the first step before collection efforts begin. It’s a formal court proceeding where the creditor can question the debtor about their financial situation. This includes things like their income, bank accounts, investments, and other assets. The creditor may also ask a third-party individual who may currently have the debtor’s assets.
During this proceeding, you must answer any related questions and explain, under oath, why you haven’t paid your debt. If the court finds you have nothing to give, the examination may simply end. Or, you may be asked to negotiate a settlement with your creditor.
Either way, you must attend the debtor’s examination. If you do not, you could face jail time due to contempt of court. The only exception is if you find an alternative way to pay your creditors, or if you file bankruptcy.
Some creditors, particularly payday lenders, will repeatedly request the same debtor’s examination, hoping you will fail to appear.
Legislation to prevent abuses
Many state and federal laws exist to prevent debt collectors from using unfair, manipulative, or abusive practices to collect money. However, these laws are not foolproof.
Some states’ attorney general’s offices are trying to buckle down on these laws to better protect consumers. To learn about your rights, speak with an attorney or research your state’s debt collection and consumer laws.
Which types of debt will not land you in jail
One of the most common scare tactics debt collection agencies use to get their money is threatening arrest or jail time. This is extremely common with predatory lenders, such as payday lending. Since it tends to make the borrower feel anxious or scared, it’s also often effective.
However, creditors cannot send you to jail for not paying debts in your state. Along with this, most types of consumer debt cannot lead to arrest at all. This includes:
- Credit card debt
- Car loans
- Payday loans
- Student loans
- Mortgages
- Medical bills
- Unpaid rent or utility bills
- Account overdrafts
Remember, debt collection agencies cannot legally threaten you with arrest or jail for unpaid consumer debt. This ban is included in the Fair Debt Collection Practices Act.
If you have unpaid debts — ex. loans or medical bills — and receive a threat, you could potentially sue them. If you believe your rights have been violated but aren’t sure, contact one or more of the following:
- Consumer Financial Protection Bureau
- Federal Trade Commission (FTC)
- Your state attorney general’s office
The bottom line
Creditors cannot legally threaten you with jail time to get you to pay what you owe. However, they can take you to court. If you fail to attend a court-mandated hearing, you could be incarcerated.
Besides this, certain debts, such as criminal justice debt or child support, could result in jail time. Check with your state’s laws to determine whether you could go end up serving time and under what circumstances.
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