Debtors’ prison was supposedly eliminated in the United States in the 19th century, but in the 21st, people are still being arrested and tossed into jail for debts. It just takes an extra step these days.
This morning, I sat in court and watched a debt collector get six bench warrants for debts under $1,000. I recognized the names of all the plaintiffs: Palisades, LVNV, and Capital One. Palisades and LVNV, and maybe Capital One, probably would not have won their lawsuit if the defendants challenged them. But each defendant defaulted when he or she did not answer the lawsuit, and gave up their right to challenge it.
After getting a default judgment, the debt collector asked the court to issue an order for disclosure. An order for disclosure orders the debtor to disclose his or her assets—where they keep their money. Like any other court order, failure to obey will result in jail time. This makes perfect sense under ordinary circumstances, but debt collectors use the courts like an assembly line leading to jail.
The problem is not necessarily the court rules and Minnesota statutes that the debt collectors are using. Defendants should have to answer a lawsuit to challenge it, and court orders must be enforceable. But in order to do those things, defendants must understand their rights, as well as the documents they receive. Unfortunately, the rules and statutes, along with the court’s forms, are practically incomprehensible to non-lawyers. As a result, non-lawyers, like the defendants who will be tossed in jail as a result of what I saw this morning, probably had no idea how to answer their lawsuit, or that they would go to jail if they did not disclose their assets.
Debt collectors are just taking advantage of a system that is unfriendly and nearly impenetrable to non-lawyers.
(photo: abardwell)
If you are in Minnesota, contact The Glover Law Firm, LLC, for a free case evaluation. In any other state, you can find a consumer rights lawyer using the National Association of Consumer Advocates lawyer database.
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To add to Sam’s points. Some of blame lies with the courts. Granted the courts are hugely overloaded and underfunded, but that is not necessarily and excuse for rubber stamping things. The courts need to at least perfunctorily examine the claims in the complaint to see if at least basic information necessarily needed to support a claim is pled.
Also, as recounted here too many times, Minnesota’s system of allowing suits to be initiated without being filed, coupled with certain collectors overly technical and strict interpretation of what constitutes an “Answer” so that even if a person calls and disputes the debt with them over the phone or sends a letter to them, they still go and get default judgments.
If the courts even took an extra moment a large number of these judgments would never come to be.
But as always the people losing out are the people with money or corporations and banks, its the people.
It’s also amazing how much more cooperative these same entities become when they receive the following phone call (prior to court): “Yes, my name is (blank) and I’m an attorney representing…”
I think people are crazy for not retaining legal council prior to becoming entangled in such a mess. But then, I get strange looks when I tell people I’m looking for a lawyer–their immediate assumption is that something has gone horribly wrong. No, but I want to be well armed in case there is a problem. I’m just being proactive. An unheard of concept these days–even among lawyers.
BTY, why wasn’t the mandatory binding arbitration clause used in those cases? I mean, if both parties were required to submit the dispute to arbitration (as is required nowadays), how can anyone wind up in jail?
Even worse, there is some evidence that suggests that obtaining bench warrants does not lead to increased collections.
Debt collectors that get bench warrants en masse, like the one described in Sam’s post, are playing with fire in my opinion. There is an enormous potential for liability if you are causing people to be put in jail. Debt collectors better be sure all their i’s are dotted and t’s are crossed when obtaining these warrants.
While I couldn’t agree less with the sentiment of this post, thank you for bringing it to the public eye.
The debtors signed an agreement and chose not to live up to that agreement, which provides for very specific recourse in the event of default. If more creditors choose to pursue that recourse to the full extent of the law debtors would take their debts more seriously.
Despite the general apathy most of this country seem to feel for repaying their debts right now, the problem, in my opinion, lies with the easy underwriting methods of the creditors, like Capital One. The question is not whether these debtors should be put in jail, but why these debtors were even debtors in the first place. I would bet they’ve had credit problems in the recent past and probably should not have been approved for the cards they have.
Smoking cigarettes posed a health risk and the government took a big step to curb there use through legislation and taxation. While the debt problem we face in this country may not be causing cancer, it is certainly disrupting lives to an extent we’ve not seen before. It may take the same intervention to bring about real change in this regard.
Craig, I can assure you that none of those agreements mentioned jail time as a possible consequence of default. And at this point, the question actually is whether those debtors should be put in jail. They are actually being put in jail, you see.