BOISE — Idaho courts do the bidding of debt collectors by issuing arrest warrants for people who may not even know they have outstanding debts, according to a new report from the American Civil Liberties Union.
The ACLU examined more than 1,000 cases nationwide in which judges issued arrest warrants when someone owed as little as $28. Judges in 26 states, including Idaho, have signed off on jailing people in cases for “every kind of consumer debt, from medical bills to car payments to student loans,” the ACLU said. The group likened the practice to “debtors’ prisons” that were outlawed 185 years ago.
The report highlighted several cases in Idaho.
For example, Idaho judges have issued arrest warrants for people with medical debts, setting the bond at “more than double the amount of the default judgment, which itself was already padded with fees,” the ACLU said.
The report describes an Idaho debt collector “that specializes in collecting medical debts, (and) is responsible for securing the arrests of more debtors statewide than any other collector, having obtained 345 arrest warrants from 2010 to 2016 that resulted in the jailing of 222 debtors, based on the ACLU’s review of court records.”
The warrants are often a ripple effect of how courts handle debt collection.
Depending on the type of debt, a collection agency can sue in small claims court to recover the money a debtor owes. The debtor, who the ACLU says usually doesn’t have a lawyer and may not even know they’re being sued, doesn’t respond and loses the case.
The company can ask the court to garnish the person’s wages or take their car or property. The company also can seek a “debtor’s exam,” when the person has to show up and answer questions about finances and assets — basically, to make sure they’re not hiding any money.
Once again, the ACLU says, defendants sometimes don’t show up because of work, children, sickness, or just because they weren’t told they had a court date. The no-show can trigger an arrest warrant.
The Statesman found a case in Ada County, in which a man’s debts — medical bills from 2014 and a gym membership from 2015 — ballooned from $2,600 to more than $4,000, mostly due to attorney’s fees and interest. The man failed to show for a debtor’s exam, and the judge issued an arrest warrant in January. The Statesman was unable to reach the man by phone.
“Once arrested, debtors may languish in jail for days until they can arrange to pay the bail. In some cases, people were jailed for as long as two weeks,” the ACLU wrote. “Judges sometimes set bail at the exact amount of the judgment. And the bail money often is turned over to the debt collector or creditor as payment against the judgment.”
The debt-collection process itself is fraught with problems.
A huge number of debt collection cases in Idaho are filed against people who never respond — not just because they’re ignoring the debt, but sometimes because they can’t afford a lawyer, don’t understand what’s happening or simply were never notified of the lawsuit, the ACLU said. Notices are sometimes reported delivered when they never were, or are sent to wrong addresses and never followed up on, the organization wrote.
A Statesman investigation in 2012 found that debt collectors didn’t have to give the court evidence that the person actually owed the money. The debt might be so old the company can’t legally collect it anymore, or it might belong to someone with a similar name, or it might have already been paid. But because the debtor never responded, the courts would side with the collection agency — often approving large attorney’s fees and years of interest to be added to the original debt.
Bankruptcy judge speaks out
U.S. Bankruptcy Judge Jim Pappas, one of two assigned to Idaho, wrote a stern rebuke of the practice when he saw it happen in one of his cases in 2004.
The debt collection agency had gotten a state court to issue a warrant over a man’s failure to provide tax returns. At the debt collector’s request, the court set bail at exactly the amount of money the company was trying to collect. It would be payable only in cash, and the company’s lawyer said the plan was to have the cash handed over directly to the company “in satisfaction of the debt.”
Pappas wasn’t happy.
“There was a time in America when debtors were jailed for not paying their debts. In reviewing the facts of this case, it appears perhaps that time has not passed,” he wrote. “The court was distraught to learn that, even today, a creditor can persuade a state court to incarcerate a debtor to compel payment of a debt.”
Pappas said it was clear that the debt collector sought the warrant not to get the tax returns but to “coerce” the man into paying the company. He ruled against the debt collector in the dispute and ordered it to pay additional damages “to punish [the debt collector and its lawyer] and to deter others from engaging in similar conduct.”
More Americans are in debt today than ever before, whether that’s the one in five people whose credit card debt outweighs their entire savings, the average college student with $37,172 in loans, or anyone else who has taken out borrowed money.
That’s led to some problems. In 2014, one in every three Americans had at least some debt turned over to a collection agency, according to a study from the Urban Institute.
‘Punishing a person for his poverty’
You can’t be locked up for not being able to pay your debts. Although “debtors prisons” were common from the Middle Ages up to the early 1800s, they were outlawed by Congress in 1833.
More than a century later, the U.S. Supreme Court reaffirmed the decision in a 1983 case out of Georgia, with Justice Sandra Day O’Connor writing that jailing someone for not bring able to pay a fine “would be little more than punishing a person for his poverty.”
But according to the ACLU, it’s still happening.
The ACLU pointed to several cases, including a woman who was arrested in her pajamas after she was unable to pay debts for cancer treatment. Another woman had been homeless while court orders were issued for her, never knew she was sued, then was arrested years later while caring for her dying mother.
Those arrested are not charged criminally, but Jennifer Turner with the ACLU told NBC News they “still lose their liberty.”
It’s a system that’s been fought in court before with some success. In 2016, Biloxi, Miss., settled with the ACLU for $75,000 after it was accused of routinely jailing people for nonpayment of fines.
A year earlier, a lawsuit was filed in Jennings, Mo,. on similar accusations. The city settled for nearly $5 million in 2016, reported the Washington Post.
Now the ACLU says it wants to step up efforts to reduce the ability of people to be jailed for failure to appear in debt collection proceedings by pressuring attorneys general, state court rules committees, district attorney’s offices and government rulemakers to create protections for debtors.
“These abusive practices raise grave due process, equal protection, and human rights concerns, yet they remain largely unchecked because there is minimal government oversight and scant protection for debtors under federal and state laws,” the ACLU wrote. “But there’s much that can be done by state attorneys general, state courts, legislatures, the Consumer Financial Protection Bureau, and Congress to protect consumers against these forms of intimidation and threats.”