Debtors’ Prison Makes a Comeback
The Wall Street Journal paints an unflattering picture of lenders that are increasingly having borrowers thrown in jail to collect unpaid debts. Although Republicans are not usually eager to expand regulations, every one of their 42-strong contingent in the Washington State House of Representatives voted for additional regulations to make it more difficult for a judge to issue arrest warrant for debtors. The bill was supported by a debt collectors trade group, and collections firm Encore Capital Group decided that jailing debtors made it “‘look bad'” (this from a company that filed 425,000 lawsuits against debtors last year!) and prohibited its lawyers from asking that borrowers be taken into custody.
More than a third of states reportedly allow the jailing of borrowers. Exactly what does it take to get a debtor behind bars? Is no amount too small? What notice is required? And what proof that notice has been served? How long can they be held? Can bail be set based on the amount owed?