- March 1, 2022
- Kelvin Birk
Back in the olden days of England there were things called “debtors’ prisons,” but those have long since been done away with in modern times. These days, no one goes to jail for credit card debt. However, credit card debt can cause all kinds of other hardships including stress, financial woes, low credit scores, and roadblocks to getting a home mortgage.
While you can’t be arrested or put in jail for past-due credit card payments, there are a few kinds of debt that could land you behind bars. For example, failure to pay federal taxes or filing fraudulent tax returns could result in going to jail. Or being in contempt of court by refusing to pay large overdue child support payments could lead to jail time. Additionally, committing fraud with credit cards could lead to an arrest for financial fraud.
Keep in mind that a creditor can sue you in civil court in an attempt to collect a debt. Hopefully, a person with large credit card debt proactively seeks a solution – such as bankruptcy – before a creditor files a lawsuit. The longer overdue credit card debt piles up, the more complicated things can get.
Your Rights: Credit Card Debt
Can you go to jail for not paying your credit card bills?
The Fair Debt Collections Practices Act (Pub. L. 95-109; 91 Stat. 874, codified as 15 U.S.C. § 1692 –1692p, approved on September 20, 1977) is a federal law providing consumer protections against pernicious and abusive debt collection practices. The U.S. Federal Trade Commission publishes Debt Collection FAQs that lay out your rights under the law, and it answers questions about what a debt collector can and cannot do. This document is worth reviewing.
If you have large overdue debt on your Visa, MasterCard, American Express, or department store credit cards, there are some unpleasant experiences you may face. These include:
- Ongoing, incessant phone calls from debt collection agencies
- Lots of intimidating letters in your mailbox from debt collectors
- Refusals from banks to provide you with a personal loan or mortgage
- Inability to buy a car because you can’t get an auto loan
- An embarrassing experience if you are job hunting and potential employers do a background credit check as part of their interview process
If you feel creditors are violating your rights by using unlawful practices in trying to collect a debt, you can file a complaint with the Federal Trade Commission by calling 202-326-2222 or clicking on www.ftccomplaintassistant.gov. You can also lodge a complaint with:
Consumer Financial Protection Bureau
P.O. Box 2900
Clinton, IA 52733
There are also legal options you can explore – like bankruptcy — if your credit card debt has become unbearable and you can’t make even minimum monthly payments.
Bankruptcy May Be a Solution
Worry less about going to jail for debt in Missouri.
If your credit card balances are so huge that there’s little hope of ever paying them off, then bankruptcy may be a solution. Credit card debt, which is considered “unsecured debt,” can often be discharged through Chapter 7 bankruptcy, and some if not all of it can be discharged through Chapter 13, depending on your unique circumstances.
Chapter 7 Bankruptcy
This is a liquidation bankruptcy. Some assets may be sold to pay creditors, and any remaining debt is discharged under Chapter 7. But in some cases, most or all of your assets – such as your house and vehicles – do not have to be liquidated. Many Chapter 7 bankruptcies are “no assets” cases where none of the assets have to be sold to pay your debts.
Chapter 7 is usually more advantageous for the filer, but not everyone qualifies. There are income requirements using the “bankruptcy means test” to qualify for Chapter 7. The test determines if your income is below the state median for your household size. If you don’t qualify for Chapter 7, you will likely want to pursue Chapter 13. Chapter 7 bankruptcy will stay on your credit record for 10 years.
Chapter 13 Bankruptcy
This bankruptcy is a personal reorganization of debt that spreads repayment out over 3 to 5 years. Sometimes simply restructuring debt into more manageable terms provides enough relief for you to move forward successfully. In a Chapter 13, you must show that you have a consistent income. You will develop a court-approved repayment plan laying out how you will repay some debts. A portion of your future earnings will pay down your current debts. As part of the court-approved plan, some of your unsecured debts, like credit cards, are likely to be discharged, but the amount of debt discharged without payment will depend on the amount of your current income, assets, and liabilities.
One advantage to Chapter 13 is that you may keep your home, even if it is in foreclosure and you’re behind on your payments. You can stop foreclosure proceedings and work out a longer, more favorable mortgage repayment plan than your current mortgage company would typically allow. Chapter 13 bankruptcy will stay on your credit record for 7 years from the date your repayment plan is completed.
What Is the Average Credit Card Debt in Missouri?
The average amount of debt carried by Missourians is lower than the U.S. national average. Nonetheless, 35% of Missouri consumers have at least one debt in collections – that’s 1 in 3, according to the National Consumer Law Center. The per capita balance of credit card debt among Missouri residents is $2,690, placing Missouri 39th among all 50 states (with #1 being the highest debt).
Call Birk Law Firm Today
Attorney Kelvin Birk has been providing legal services to the Cape Girardeau community for many years. He is not only a trusted bankruptcy lawyer, but he is also a certified public accountant. This means he has both a keen legal mind and deep financial knowledge. All of his skill is focused on helping every client achieve the optimum outcome possible. You can read testimonials to find out what his satisfied clients have to say. To get started, call Birk Law Firm for a free initial consultation at 573-332-8585.
Attorney Kelvin Birk
Kelvin Birk is a lawyer as well as a certified public accountant, with more than 30 years of experience in accounting and tax and business consulting, and more than 20 years of experience in numerous legal matters. This combined expertise allows our law firm to provide a level of service above that of other firms. Whatever your legal situation, your attorney at Birk Law Firm can counsel you as to the tax implications. We have experience in providing myriad legal representation services to residents of southeast Missouri and other areas. [ Attorney Bio ]