Wednesday, July 28, 2010
We still have debtors' prison--sort of
Martha White writes that the Minneapolis Star-Tribune did a story on people who say their debts got them sent to jail.
And not income tax evasion, either.
The problem is aggressive bottomfeeder collectors.
The collector files against the debtor, requiring him or her to appear in court.
If the debtor does not appear, the collector gets a default judgment, allowing a second hearing at which the judge will go through the person’s assets and bank accounts to see if there is anything to get there.
If the debtor does not show up then, either, a warrant for arrest may be issued.
This means govt funds are used to collect a private debt. The person can be picked up and thrown in jail.
The debt may not even be owed anymore at this point or be all penalties and attorneys’ fees. The collector owns it.
But—this can be good for the debtor. The collector may not have the paperwork. All the debtor has to do is show up and ask for the papers.
If you get a letter threatening legal action, respond, don’t hide.