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Debt Collection Practices Blur the Difference between Debtors and Criminals

November 14, 2012

Ever since the mid-19th century, the concept of a Debtors’ Prison was outlawed in the U.S. According to recent reports, the difference between debtors and criminals is slowly blurring, with the former having more freedom and rights despite of ‘looting’ a finance company of its money.

In this context, O. Reginald Osenton, a bankruptcy attorney, said recently that although debt is a grim legal matter, it is rightfully a civil issue and not a criminal act, according to laws in Florida. As a matter of fact, the Constitution of the State of Florida, under Section 11, states that “no person shall be imprisoned for debt, except in cases of fraud.”   

In the state of Florida, when a creditor sues a debtor for non-repayment of debt, the creditor asks the court to order the person to compulsorily submit a document known as the Fact Information Sheet. This document serves as the financial disclosure form, presenting detailed information about the debtor’s current assets and liabilities. Forty-five days is allotted for the individual to submit the necessary documents, on failure of which the debtor may be held in contempt of court. This also gives right to the court to issue an arrest warrant against the debtor.

As an alternative procedure, in addition to the debtors submitting the necessary documents to the court, a creditor may call the debtor for a trial in the civil court. It is during this examination procedure that the creditors try to seek additional information about the debtor’s ability to pay her or his finances. This includes enquiring and reviewing the assets and income of the debtor for repayment of debts. If the debtor fails to be present in the court on the date notified by the creditor, in approval of the court itself, he may be held in contempt of court. In such scenario, the creditor may ask the court to issue a “body attachment,” which is an arrest warrant that specifies that the debtor will be held till the upcoming court hearing, or till the bond is being posted.

However, such practices are attracting criticisms from certain politicians and attorneys, who consider that such legal proceedings create the system for debtor’s prisons in modern days, which has been outlawed in the United States. Especially some court reports set the bond at the total amount owed by the debtor, and then ordering it to be turned over to the creditors. With such practices and legal enforcement on debtors, some consider that these turn the local law system and court into debt collection agents of the lending companies.

According to Mr. O. Reginald Osenton, such court reports raise certain complex issues that question the role of law and criminal justice system in cases like non-repayment of debts. Anybody who faces the court judgment on unpaid debt should necessarily comply with the court orders diligently, and consult with an expert bankruptcy attorney.

However, despite the United States banning the concept of debtors’ prison, it is still prevalent in certain states, if not in the actual form of imprisonment. Hence, it is being rightly considered that the legal system blurs the difference between a debtor and criminal, acting as debt collection agents on behalf of the lending companies.      

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Edited by Brooke Neuman

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