Going to Jail for Being in Debt

Everyone I have spoken with all this week has brought up the front page story in last Sunday’s Star Tribune about going to jail for debt. I’m glad that the newspaper is making people aware that this can happen. What you need to know about it, however, is that the procedure is rare and easy to avoid.

In Minnesota nobody is sent to jail for not paying a debt. You can wind up in jail, however, for not obeying a court order. A person who ignores a court order can be found in contempt of court, and the most common penalty for that is a little time – often just a few hours – behind bars. The kind of court order that’s usually involved is one that requires the debtor to respond to a request for information about his or her assets.

When you get sued for a debt in Minnesota, typically a judgment is entered. A judgment is a fancy piece of paper that says you owe the money. After getting a judgment, a creditor has a right to inquire into what assets the debtor has out of which the debt can be paid. Usually this inquiry takes place in the form of written questions or a demand for documents. Typically the debtor will ignore this – for one thing you probably need a lawyer to even figure out what it is. So when there’s no response, the creditor will bring a motion requiring a response. The creditor has a right to a response, so the judge will always order the debtor to respond.

Then the creditor serves the debtor with the court order. By now the debtor has received a large number of legal documents, and this one tends to look the same and just as incomprehensible as the others. The order should be served in person, and a good process server will make a point of showing the debtor that there is a judge’s signature on the document. Of course, a lot of the process servers aren’t so good.

When the debtor ignores the court order, the creditor is in a position to make a motion that the debtor be found in contempt. Another order is served, this one requiring the debtor to show up for the contempt motion hearing. If the debtor fails to show up for that, an arrest order can be issued.

Usually the judge will just have you held for a few hours. Sometimes in an extreme case that can become a few days, perhaps even a few weeks. One way to get a person in such circumstances released is to file a bankruptcy. The automatic stay from the bankruptcy court is usually all it takes to invalidate the legal process that is holding the person in jail. If one brings the receipt for the bankruptcy court filing fee to the judge who has ordered a person to jail, most judges will immediately order that the person be released. Since child support and spousal maintenance are not discharged in bankruptcy, I’m not sure this would work if the contempt of court involved nonpayment of child support or maintenance.

All week I have been trying to reassure people that it’s actually pretty difficult to have this happen and not see it coming in advance, so that we have plenty of time to get their bankruptcy filed before it would ever become a real danger. One moral of the story is that one should never let legal documents pile up without at least consulting somebody about what they mean.

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