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Going to jail is not something that tops anyone’s bucket list, especially if you never committed a serious offense. The scary prospect of being locked with the most dangerous individuals of the country can put even the bravest at unease, especially if they find out that they are going to jail for unpaid credit card debt and shady loan offers. Debt collectors exploit the psychology of debtors, reminding them of prison to make them pay.
If you are wondering whether they are legally entitled to threaten you with time in jail for unpaid credit card debt, then let’s settle things right now: the law does not allow them to make jail threats.
In 1977, the Fair Debt Collection Practices Act explicitly mentioned that debt collectors did not carry any legal right to threaten debtors with a stint in jail for unpaid credit card debt.
Keep in mind that if you hear such threats, then you don’t need to go on the back foot. Instead, fight back by reporting their threats. Although they will likely avoid a jail sentence, authorities are likely to impose a fine on them and compensate you in return.
Can You Really Avoid Jail for Credit Card Debt?
Since many people have been on the receiving side of jail threats, it has floated a misconception that creditors can make their debtors spend some time in prison. Even if you feel like you are in an avalanche of debt, creditors cannot call the police and ask them to arrest you.
However, there is a tiny possibility that can make you go to jail for unpaid credit card debt. This happens when you misuse someone’s identity to take credit card debt. This criminal activity is more commonly known as credit card fraud. However, in such a scenario, the actual factor that can land you in jail is committing fraud, not taking a loan.
If one cannot go to jail for unpaid credit card debt, then why are debt collectors so persistent with jail threats? Well, they cash in on the lack of awareness regarding credit law among their naive clients, creating doubts and fear in their minds. In this way, several people who owe them credit card debt pay back their personal loans for debt consolidation in a bid to escape any potential jail time.
Also, keep in mind that debt collectors do not have the power to blacklist you permanently, seize your home, or come at you with physical assault. Therefore, keep track of their communication and don’t get intimidated by their false threats.
Civil debt is another name for credit card debt. The debt incurs between two parties who enter a contract, such as a credit card issuer and a customer. When the customer fails to pay back the money, it effectively breaks off the contact.
Around two centuries ago, debtor prisons were a bitter reality; people actually went to jail for unpaid credit card debt. Luckily, the Supreme Court outlawed the unfair practice in 1833.
You should know the following considerations when it comes to legal matters.
- A debt collector can sue you in the civil court for monetary compensation.
- They will try their best to convince the judge into accepting their stance and rule accordingly against you.
- If you are found guilty, then authorities can seize your tax fund, or you may have to face wage garnishment.
- Even in the worst-case scenario, when all the odds are stacked against you, the judge cannot sentence prison time to you for not paying your credit card debt.
How to Manage Your Credit Card Debt
You can avoid being harassed by debt collectors by planning a proper strategy to pay off your credit card debt. For a bare minimum, you should make at least one credit card payment every month. Although this approach will not eat up your credit card debt by much, it can stop you from being delinquent when it comes to debt payments.
By cutting down all your debt, you no longer have to face any threat related to jail for unpaid credit card debt. The following routes can navigate you to a path of recovery.
- Have a discussion with a credit counselor. They will go through your entire history and analyze your current status to come out with the best possible solution. Next, they will conduct a negotiation with creditors to create a tailored debt management plan. You are required to pay a fixed monthly payment to a credit counseling agency. It then splits up the money between your creditors.
- Many debtors apply for the debt consolidation loan marked by a lower interest rate. Hence, if you own debt on more than one credit card, then debt consolidation can streamline and merge all of it in a single, convenient loan.
- Bankruptcy is the ultimate option. Always consider it when you have exhausted all other methods to resolve your credit card debt. With bankruptcy, you face two possibilities:
- Chapter 7 Bankruptcy – It cancels your credit card debt at the expense of your valuables. You have to put your possessions on sale and pay back your creditors with the earned money.
- Chapter 13 Bankruptcy – It reorganizes and renegotiates your debt so it can be paid over a longer period: around 3 to 5 years.
Tips to Handle an Aggressive Debt Collector
Being harassed by a debt collector can put you under a lot of stress. Here is how you should respond.
- Get the facts straight. Make sure to validate the debt and confirm whether the debt amount is correct.
- Don’t let the pressure get into your head. It can force you to make a hasty, unwise decision. Take all the time in the world to figure out a viable response against the crisis.
- File a report about the harassing debt collectors to the Consumer Financial Protection Bureau.
The idea of The XtraPoint Digital Network landed Antonia to the digital avenue. Antonia brought life to this idea and rendered all that was necessary to create an interactive and attractive platform for the readers. Apart from co-managing the platform, she also contributes her expertise in marketing.