Can I go to prison over unpaid debts?
If you’re struggling to repay debts, lenders cannot send you to prison if you cannot afford to repay what you owe.
However, you could face court action over unpaid debts, and in some cases, this could lead to a jail term.
The most important thing to do is get help as soon as you realise you are in trouble with your debts. Getting the right help could mean that you avoid legal action – so act fast.
Court action over unpaid unsecured debts
If you ignore orders from the court or fritter your money away on needless expenses, whilst deliberating choosing to ignore an instruction to pay certain kinds of debt, you could be threatened with legal action.
Credit consumer unsecured debts, such as credit cards, loans and overdrafts, for example, cannot result in a prison sentence. You may be subjected to legal action by the lender, which could result in a court order, but you will not be slapped behind bars because you have fallen into arrears with your debt.
There is, however, one exception to this rule and this is when the courts believe fraud has been committed. If you deliberately provided false, incomplete or inaccurate information on your application for credit, which influenced the lender’s decision to allow you to borrow money, you could face a prison sentence.
Debts that attract a prison sentence
There are some types of debt which could, in theory, attract a prison sentence. These include a fine from the magistrate’s court, maintenance payments for your spouse or children, council tax or business rates.
But although jail is an option for arrears on the above types of debt, in reality, it is a very rare occurrence. Sending an individual to jail for not having the money to pay what they owe is not going to help the situation and the courts recognise this. However, if there is evidence that the debtor is wilfully choosing not to pay or wasting money elsewhere, rather than clearing their debt, the court has the option to hand out a jail sentence.
But even in cases where there is the suggestion that payment has been avoided deliberately, the courts will normally prefer to give the individual the chance to set up a repayment schedule. Getting the debt repaid is the priority and sending the person to jail rarely is an effective means of accomplishing this.
If you fail to attend court for a hearing regarding an unpaid debt which potentially carries a prison sentence, a warrant could be issued. If you ignore this, you could risk being the subject of a Warrant without Bail, where police are asked to arrest you and hold you in custody overnight, before presenting you to the court.
Whoever you owe, the best scenario is always getting in touch to explain your difficulties and trying to come to an agreement over the arrears. Nearly every company would rather negotiate than end up in protracted legal proceedings.