Anyone who has ever fallen behind on their bills knows just how troubling that experience can be. Harassing phone calls, letters, and emails are the usual tricks of the trade, or for secured debts, repossession or foreclosure. But, America abolished debtors prisons. So, debt collectors are not supposed to be able to put you in jail because you owe money. However, a few have discovered a way to do just that.
Virtually every jurisdiction allows for “bodily attachment” when one violates a court order. Bodily attachment really just means that you will be arrested for something, and a “writ of bodily attachment” is often issued in contempt proceedings to get one to come into compliance or spend time in jail. These are usually reserved for instances when one misses a court date or starts to simply ignore order after order by the courts.
Enter the new model for underhanded debt collection. Fail to pay your debt, and the creditor goes to court to get a judgment against you. Many debtors fail to attend these proceedings, preferring to just sit back and wait for the inevitable judgment rather than spend the time and money to appear and be humiliated before a judge over a debt they know is owed. Once the creditor receives a judgment against you, it initiates post-judgment proceedings involving discovery and/or court hearings. Start missing those and the creditor can ask for sanctions against you, including – you guessed it – contempt of court and a resulting writ of bodily attachment. Get picked up on a writ of bodily attachment, and the amount you have to pay to get out of jail is often set as the amount of the judgment. To the court it makes sense to kill two birds with one stone, but to you, the debtor, it can mean spending time in jail for doing nothing worse than managing your finances poorly.
Through this method, the creditor is often able to blackmail debtors into payment of not only the original debt, but also attorney fees and costs, interest, late fees, and sometimes other expenses. This can cause a relatively small debt to skyrocket to astronomical amounts. So, for example, a $1,000 debt could easily have $20,000 in attorney fees and costs attached to it, particularly if you make it exceptionally difficult for the debt collector to advance the case through the court or get paid after judgment. And, there is plenty of case law out there saying that it is legal for attorney fees to exceed the amount of the original debt owed, so do not assume that the court will find such a markup unreasonable.
What can you take away from this? Obviously, if you are already in debt and facing collections, there is often little to be done about getting caught up, other than trying to reduce expenses and make what payments you can. If the debt collector takes you to court, pay very close attention to every notice and other paper you receive, and follow your case online by paying attention to the court's electronic docket. You will want to make sure you receive everything that is filed in the case, and attend every hearing (embarrassing and time consuming though they may be). If you are attempting to comply in good faith at every turn, there will be no grounds for contempt and no basis for issuance of any bodily attachment. Moreover, you may wish to speak with an attorney in your area that specializes in violations of debt collection laws. They may be willing to take your case on a contingency fee (meaning you will not have to pay out-of-pocket) and might even be able to turn the table on unscrupulous debt collectors who abuse and violate the law. At the very least, they may be able to negotiate a reduction of the debt you owe and/or obtain a term over which you can pay, making it easier to get caught up and out of debt.
About Stefan McHardy: Stefan is a Florida licensed attorney, real estate agent and a foreclosure auction investment specialist. He practices in the areas of real estate, foreclosure, business litigation, and contract law from his Pembroke Pines and Miami Beach offices. He frequently consults on general real estate and investing matters. You can find out more about Stefan at DSALegalGroup.com/stefan or by visiting StefanMcHardy.com