Many debtors considering bankruptcy are confused about a very important fact when it comes to debt collection. Many of them mistakenly believe that debtors’ prisons await those who fail to pay their debts. Fortunately for them, the existence of debtors’ prisons is a myth. You would think that this myth would have been dispelled; but this robust myth tends to reemerge every time the country faces a financial crisis and the number of people seeking bankruptcy rises.So let’s take a look at the facts:
*Debtors cannot go to jail for failing to pay their debts such as credit cards or medical debt , but they can be sued for the money. By using bankruptcy, creditor lawsuits and judgments are stopped immediately.
*On the other hand, a debtor may face prison if he/she engages in tax evasion or tax fraud and even this is rare. Don’t confuse failing to pay taxes because financial issues and not paying them because you are purposely avoiding them. The IRS has several programs setup to help tax debtors handle tax debt they can’t pay because of hardship. Also, some taxes may be discharged in bankruptcy under certain circumstances.
*Some creditors get “creative” with their scare tactics especially when they want the debtor to avoid bankruptcy. By telling debtors that they are “going to send the sheriff” after them, creditors hope that debtors fearing imprisonment will jeopardize everything to repay their debts. What they don’t tell debtors is that when a creditor files a lawsuit against a debtor to collect a debt, the sheriff may be responsible for serving the debtor with papers regarding the lawsuit; but he/she is not coming to put the debtor in jail.
Debtors must remember that they may be able to discharge their debt in bankruptcy. Contact a Dallas-Fort Worth bankruptcy attorney to discover your bankruptcy options.