Mt. Prospect Bankruptcy Attorney Says There Is No Debtor’s Prison An...

No, there is not a debtor’s prison in the United States claims Mt. Prospect bankruptcy attorney.  You will not go to jail simply for your failure to pay your bills.  An exception to this would be failure to pay child support if a divorce court judge feels that you have the ability to pay and that you are simply violating the law and being held in contempt.  Also in a civil case, you can be jailed or held in contempt for failure to disobey the court order.  Let me give you an example of someone who owes money on a credit card, let’s say it’s $10,000 and they get sued by that credit card company and that credit card company obtains a judgment. 

The credit card company has the ability to collect a debt by doing several things including wage garnishment, bank citations or a citation to discover assets which is where you have to come into court and show where you bank, where you work, your tax return and other information regarding your financial affairs.  Should you fail to appear at the citation to discover assets, the court may set a second court date will as a rule to show cause court date.  If you miss this second court date, then the court can order a writ of body attachment.  A body attachment is where the sheriff will actually pick you up and take you into custody and you will have to post a bond.  

Sometimes the bond is known as an I-Bond which means individual bond where you don’t have to put up any money, just your signature and you will be given another court date that you must appear before the court.  In other cases, you will get what’s known as a D-Bond which means deposit bond and you will have to pay a certain amount of money to get out of the jail.  You will also be given a second court date on that offense and you will have to appear before the court and explain why you should not be held in further contempt for disobeying a court order. 

So when a client contacts me and they say well, I got something from the court regarding a creditor but I’m going to be filing a bankruptcy through your office or I’m in the process of filing and I’m almost paid, do I have to go to that court date?  My answer is always if there is a court date, then you need to appear at that court date up until the time when your case is actually filed.  If you miss a court date, you might run the risk that you will be held in contempt or even worse; you will be picked up by the Sheriff.  My advice is always to appear in court and follow the court order and maybe try to get your case filed a little bit quicker because the filing of the case will create the automatic stay which will stop most collection efforts.  In fact, if you have a court date the very next day, we can send proof of the automatic stay via fax so that law firm representing the creditor can advise the court that a bankruptcy case was filed and they have to stop.  If the creditor violates the automatic stay, then the creditor could be held in contempt of court or sanctioned by the bankruptcy court. 

The automatic stay is a very important item or document that gets created automatically when the case is filed.  It is basically a stop sign that says to creditors you cannot collect on this debt or make any attempt to collect on this debt.  The case is then in Chapter 7 status and the bankruptcy trustee is the one who can decide whether or not there is any assets to administer for the benefit of creditors. 

So in summary, you do not go to jail for failure to pay a debt; however, you can go to jail for failure to obey court orders when you are actually held in contempt of court.