Will I Go to Jail If I Don’t Pay My Creditors?

One of the reasons that the United States developed bankruptcy laws was to end the practice of throwing debtors in jail. Once prevalent in England and its colonies, debtors’ prisons were effectively eliminated in the U.S. by the 1830s. This means that under ordinary circumstances, a person cannot be sent to prison simply because he or she is unable to pay a consumer debt.

Pensacola Debtor Held in Contempt for Ignoring Bankruptcy Court Orders

But if you do file for Chapter 7 or Chapter 13 bankruptcy due to unpaid debts, it is important to follow any court orders issued as part of your case. While you cannot go to jail for unpaid debts, you can be held in “contempt of court” and imprisoned if you ignore or disregard a judge’s orders without explanation. A recent case from Pensacola, Florida, illustrates how this can happen.

This case actually involves an “involuntary” bankruptcy petition. An involuntary bankruptcy means the petition was filed by a creditor rather than the debtor. It should be noted that it is extremely rare for any creditor to take this step against an individual debtor.

In any event, the debtor here was represented by a Florida bankruptcy attorney and consented to the issuance of a subpoena for copies of his business records. He then failed to comply with the subpoena. He also failed to file required schedules detailing his assets, even though the court noted his former attorneys had advised him on this subject. Accordingly, the creditor who filed the involuntary bankruptcy petition demanded the bankruptcy judge hold the debtor in contempt and incarcerate him for his failure to comply with the court’s prior order.

The bankruptcy judge instead scheduled a hearing to afford the debtor an opportunity to explain himself. But the debtor—who was no longer represented by counsel—neither appeared at the hearing nor presented any evidence in his defense. As a result of this and other failures to comply with bankruptcy rules, the judge cited the debtor in civil contempt and ordered federal marshals to take him into custody if he did not provide the creditor with the subpoenaed documents within 14 days. As the bankruptcy judge explained, a person can be detained indefinitely for civil contempt—that is, unless and until he complies with the court’s orders.

Need Help From a South Florida Bankruptcy Lawyer?

While the above case is an extraordinary situation, it underscores the seriousness of a Chapter 7 or Chapter 13 bankruptcy proceeding. You should never file for bankruptcy unless you are prepared to comply with all applicable rules and court orders. Among other things, this means providing the court and your creditors with detailed financial records.

You should also not go into bankruptcy court without the assistance of qualified legal counsel. Bankruptcy is not a “do it yourself” project. If you need to speak with an experienced Miami bankruptcy attorney, contact the Law Office of Julia Kefalinos today.