Can You Go to Jail for Debt?
Many people have experienced financial problems, including credit card debt. This results in collection offices making insistent calls for you to pay, even threatening to put you in jail, but is this legal?
If you receive calls threatening that if you do not pay you will go to prison, it is important that you take into account that this is not legal. Debt collection offices have certain limits that should not be exceeded. However, many times they commit actions that, in addition to making people uncomfortable, can be grounds for sanctions.
Does the Constitution Protect You?
First you should know that, constitutionally, they cannot put you in jail in the case of having contracted debts of a civil nature, such as credit cards, personal loans, or mortgages. In this sense, when you stop paying, you become a creditor of a civil or commercial lawsuit, but not a criminal complaint.
In accordance with the Constitution of the United States, no one can be imprisoned for debts of a purely civil nature.
For this reason, collection offices should not threaten or harass you. In addition, there is a code of ethics, to which all banks and any other company that carries out banking activities must adhere.
Debts Are Common
Any businessman, in his daily activity, contracts debts such as credits with the bank to finance purchases, services with suppliers, taxes, Social Security contributions or employee salaries.
The same happens in the case of individuals who buy a house and take out a mortgage to finance the purchase or apply for a loan to buy furniture, for example.
Debts are, therefore, common for companies and individuals. However, the problem appears when it is impossible to pay the debts and fraudulent actions are carried out to hide assets from creditors.
The Law
Can you go to jail for debt? In which cases can debt lead to a crime? The first thing to keep in mind is that non-payment of debts is not a crime in itself. Therefore, it does not carry jail sentences.
However, if actions are taken to hide assets to avoid paying, then it would be possible to find yourself facing a crime of seizure of assets regulated in the Penal Code or a punishable insolvency crime, regulated in the Penal Code as well.
What Is Insolvency?
seizure of assets
insolvency
The crime of seizure of assets consists of selling or transferring assets to the detriment of creditors, since the sale or transfer places the debtor in a situation of total or partial insolvency.
Insolvency is an economic crime that occurs when the debtor performs fraudulent acts that harm the estate that is intended to be disposed of in the bankruptcy.
Requirements Of the Crime Of Seizure Of Assets
For a crime of seizure of property to occur, several requirements must be met.
Existence of a previous debt
Actual or fictitious destruction of the debtor's assets
Insolvency of the debtor makes the seizure difficult
Intent of the debtor
Existence of Previous Debt
For example, an entrepreneur buys products from a supplier and cannot pay for them. The supplier claims the payment and the debtor, in order to avoid the seizure of his assets, transfers goods to third parties.
Actual or Fictitious Destruction of the Debtor's Assets
The operation carried out by the debtor must involve the concealment or destruction of assets. It is common for assets to be passed on to a relative or friend in order to hide it.
Insolvency of the Debtor that Makes the Seizure Difficult
The transmission that occurs puts the debtor in a situation of insolvency that is an obstacle to the seizure of assets and the payment of debts. Some cases must be taken into account in which transfers of assets can take place, but which are not a crime. For example, the case in which assets of a company are contributed. In this case, a crime does not occur as long as the value of the shares is greater than that of the assets that have been contributed.
Intent of the Debtor
For the crime of seizure of assets to exist, the debtor's willingness to hide or transmit his assets is essential to prevent creditors from collecting his debt. Therefore, the intent of the debtor is important in deciding whether he goes to jail for debt or not.
Seeking Legal Help
Can you go to jail for debt? Many businessmen and individuals are still unaware that, in the event of insolvency, they have the option of resorting to the mechanism regulated by Chapter 13 Bankruptcy.
This mechanism offers the possibility of totally or partially canceling the debts and starting from scratch.
To take advantage of it, it is necessary to meet the legally established requirements and have the help of a lawyer specializing in Bankruptcy Law.
Conclusion
As we already mentioned, the only possibility that you will go to prison for a debt is that it is proven that from the beginning you did not intend to pay, that is, that you defrauded the financial institution and you went a step further to hide the assets.
In the event that it is proven that you wanted to commit fraud, the non-payment will be classified as a "property crime". In this case the punishment will be to go to prison. For non-payment to be qualified in this way, there must be the existence of false checks, non-existent or canceled accounts, among other things. Now you know that no financial institution can threaten you with imprisonment for not paying a loan, but you are also aware of the consequences of non-payment.
Never borrow too much, always keep up to date with your payments and if you fall behind on them, try to negotiate with the bank. If you want to learn more about acquiring loans and paying off your debt, go to the Goalry platform. You will become well informed if you download the Goalry app.