Lawmakers seek to curb spate of debt collection arrest warrants
The use of debt collection arrest warrants has mushroomed since the financial crisis. People often assume that the debtors prison is ancient history and they can’t be arrested for not paying a debt. But more than a third of U.S. states have laws that allow the debt collection industry to obtain arrest warrants to recoup money.
Debt collectors profit from public resources
More than 5,000 debt collection arrest warrants have been signed by judges in the U.S. since January 2010, according to the Wall Street Journal. In some states, debt collection arrest warrants can be issued if a borrower ignores court order to settle a debt or fails to attend a hearing. However, buying old debt for pennies on the dollar and using illegal tactics to collect those debts has become a booming industry. The volume of debt collection arrest warrants in some states is draining the law enforcement resources needed to pursue more serious crimes. A growing number of legislators, judges and financial regulators are looking into limiting the debt collection industry’s ability to obtain debt collection arrest warrants to pressure borrowers.
Borrowers in contempt of court
Debt collection arrest warrants were typically issued for borrowers who defy repeated summons to appear in court. In debt collection cases, the warrant and arrest are usually for contempt of court. In the aftermath of the recession, many unscrupulous debt collectors use sloppy documentation and, in some cases, mistruths that that result in an arrest of a person who had no idea they were being charged with a crime. Last summer, the Federal Trade Commission began investigating the increasing use of arrest warrants in debt collection lawsuits. Last fall, Senator Al Franken, D-Minn., introduced legislation that bans the use of arrest warrants by private debt collection firms. Franken said the collection industry is taking advantage of sheriffs’ offices and other public resources to enrich themselves at the public’s expense. Franken’s bill would also require debt collectors to provide borrowers with information that verifies exactly what they owe.
How to avoid a debt collection arrest warrant
Despite the growing number of debt collection arrest warrants, an arrest is unlikely for most borrowers who get behind on their payments. Debtors prison was abolished in the U.S. in 1833. It is also illegal under the Fair Debt Collection Practices Act for debt collectors to threaten borrowers with arrest. Borrowers who are threatened with arrest by a debt collector are advised to get help immediately from a consumer law attorney. Those who do receive a summons to appear in court over a debt must not ignore it. It is even more important to appear before a judge if they are unaware of the debt or aren’t familiar with the company suing them.