Despite the story spread all over about federal marshals arresting a man for an unpaid student loan, people aren’t arrested for debt.
And Fox News got the story wrong. The man was not arrested because he owed money he hadn’t paid.
He was arrested for blowing off a court order that he appear in court.
Not arrested for debt
A creditor with a judgment can get the courts to help them collect. This judge ordered the borrower subject to a judgment to appear and testify about his assets.
He didn’t appear and found out that bad things happen when you ignore a judge.
But it’s important to get the story straight.
Had the borrower appeared in court as ordered, he would not have been arrested, whether or not he could pay the judgment.
And the fact that the debt was a student loan didn’t drive the outcome. It would have been the same if the judgment arose from an unpaid dental bill.
What happens when there’s a judgment
Judgments have consequences. The man in the story had a judgment entered against him when he failed to pay his student loan.
The collector filed a law suit and got a judgment when the borrower did not contest the action.
The holder of a judgment gets access to the law enforcement apparatus to enforce that judgment.
One of the rights of a judgment creditor is a debtor examination. The judge issues an order that requires the person who owes the judgment to show up in court and testify under oath about their finances.
You are free to ignore the summons that the court issues when a case is filed. A summons is just official notice that there’s a lawsuit that may have important consequences on file.
But the only consequence of ignoring the summons is that your creditor, who brought the suit, wins.
But having won, the creditor is entitled to your testimony about what you own and how he can collect the judgment he got.
Ignoring court order not an option
The arrested student borrower in this story chose to ignore the court’s order to appear and testify.
Other news reports on the story indicate the man told federal marshals he wouldn’t appear, then retreated to his house, and announced he had a gun.
Nothing soothing is likely to result from that approach to a court order.
No imprisonment for debt
This country gave up debtor’s prisons two hundred years ago. It is not a crime not to pay your bills. People aren’t arrested for debt.
But it is an offense to wave your middle finger at a judge, an offense that might get you arrested for contempt.
So, the takeaway here is to be clear about the consequences of your actions, even if your approach to the problem is to do nothing.
No nothing when there’s a court order requesting your presence and you should pack your toothbrush for a stay in jail.
The most important debt management tool is a letter opener. Open the mail. Know what’s going on in your financial life.
If you have federal student loans, there are many more options these days to get out of default.
If you have judgments, consider bankruptcy.
Get in control.