Being in debt is difficult, particularly if you are concerned about the debt’s possible criminal repercussions. This article examines the question of whether debt can result in a criminal sentence under criminal law. Debt is a problem that afflicts many people in today’s society. Prior to the Covid-19 pandemic, the Money Advice Service estimated that 8. 3 million people in the UK were in debt. This number has probably increased due to the pandemic’s effects on unemployment and opportunity loss. Anyone who has ever been in debt knows how stressful it can be to have to deal with rising credit card payments or mortgage arrears. In addition to being concerned about losing your house and endangering your relationships with your family, you might also be afraid of the possible criminal penalties. This article looks at what happens if you don’t pay your debts in the UK. It answers the question of what happens if you ignore criminal fines. It considers if you can go to prison for council tax debts. Finally, it explores the consequences of existing debts if you go to prison.
Relax, you’re not going to jail for those unpaid bills. In the UK, imprisonment for debt is extremely rare and reserved for very specific situations.
Here’s the lowdown:
- Generally, NO: You cannot be thrown in the slammer for most common debts like credit cards, loans, overdrafts, or utility bills. Even if you’re struggling to pay, you won’t face jail time.
- Exceptions: There are a few types of debt where prison is a possibility, but only as a last resort. These include:
- Criminal fines: If you don’t pay a criminal fine, you could be imprisoned.
- Council tax (England only): In England, if you persistently refuse to pay your council tax, you could face imprisonment.
- Business rates: Similar to council tax, neglecting to pay business rates could lead to jail time.
- Child maintenance arrears: If you owe child maintenance and haven’t paid despite court orders, imprisonment is a possibility.
Even with these exceptions, jail is a last resort. The courts will only consider it if you’ve ignored the debt and refused to cooperate with attempts to collect it.
Here’s the deal:
- Don’t ignore: If you’re struggling with any of these debts, don’t bury your head in the sand. Ignoring the problem will only make it worse.
- Seek help: There are plenty of free debt advice services available to help you manage your finances and find solutions.
- Communicate: Talk to your creditors and explain your situation. They may be willing to work with you to create a repayment plan.
Remember, imprisonment for debt is incredibly rare in the UK. If you’re worried about your debts reach out for help and explore your options. There’s no shame in seeking assistance, and it’s the best way to avoid any potential legal consequences.
Additional Resources:
- StepChange Debt Charity: https://www.stepchange.org/debt-info/your-rights/can-you-go-to-prison-for-debt.aspx
- PayPlan: https://www.payplan.com/debt-info/law/imprisonment/
Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial professional for personalized guidance.
What happens if I don’t pay my debts in England and Wales?
You may be wondering what the consequences are of failing to pay your debts. The answer to this question is that it depends on what type of debt you are facing. If the debt is one that you have to pay by law, like council tax, the penalties are not the same as they are if the debt is one that you owe because of an agreement you have with a creditor, like credit card debt.
Priority debts
Debts that you are required to pay by law, such as council tax, are known as priority debts. If you fail to pay council tax, the local authority will send you two payment reminder notices. If you still do not pay, they will send you a final notice. At this point, you will no longer be able to pay the tax in installments, and you will be required to pay the entire amount of council tax by the end of the year.
If you still do not make the payment, the local authority will start court proceedings against you. You will receive a summons from the Magistrate’s Court with a court date. The council may request a liability order in order to recover the debt if you fail to pay the entire amount due on the court summons.
This may make it impossible for you to take actions like opening a bank account, applying for a credit card, or getting a mortgage. The court can enforce the order in the following ways:
- Enforcement officers, or bailiffs: bailiffs may be directed to seize items from your residence in order to satisfy the debt.
- Benefits attachment: The Department of Work and Pensions (DWP) may deduct funds from your benefits at the local authority’s discretion.
- Attachment to earnings: Until the debt is settled, the local government may direct your employer to deduct money from your pay. Your employer is legally obliged to comply.
- Charging order: The local government may ask the court for a charging order if you own property and owe at least £1,000. This implies that the local government can recoup their debt from the sale proceeds of the property when it is sold.
- Insolvency proceedings: If certain conditions are met, the local government may file for bankruptcy on your behalf.
- Committal to prison: In severe circumstances, you might also receive a prison sentence. Usually, this only happens if the court determines that you have deliberately avoided paying council tax.
Other household debts
If you fail to pay a non-priority debt such as a credit card debt, you may incur additional charges from the creditor and damage your credit score. Credit card debt is regulated by the Consumer Credit Act 1974. This states that before commencing court proceedings, your creditor is obliged to issue you with a default notice.
This notice gives you two weeks to catch up with any missed payments. If you do this, your account will continue as normal. If you do not catch up with your payments, your debt will be sold to a collection agency. If the collection agents do not succeed in securing payment, court proceedings may be issued against you. This could result in a CCJ against you. However, you cannot be sent to prison for failure to pay non-priority debt.
When you are in debt, it can be tempting to ignore letters from creditors asking for money. Research conducted by the debt charity Step Change suggests that over half of their clients wait a year or more before seeking help for the debt that they are facing. However, ignoring these letters can have damaging consequences. You could miss important information such as:
- Statutory demands
- notifications that a collections agency has been assigned the debt
- A letter of claim or a claim form
If you miss court deadlines, you are likely to find yourself in a worse situation than before. Immediately consult a solicitor for legal advice if you learn that your creditor has filed a lawsuit against you. The court will not have the chance to hear from you if you choose not to answer to the claim made against you, which could affect how the court perceives facts that are important to the case.
Can you go to prison for council tax debts?
The failure to pay certain debts, which are known as priority debts, can result in a prison sentence. In England, council tax is one such priority debt. Other priority debts include:
- Criminal fines
- Child maintenance arrears (formally required by the government)
- Business rates
A prison sentence for debt will only be imposed by the court as a last resort, following the failure of all other efforts to obtain repayment.
Most common household debts will not result in a prison sentence. Examples of debts that you cannot be sent to prison for include:
- Credit cards
- Overdrafts
- Pay day loans
- Mortgages or rent arrears
- Hire purchase debts
- Utility arrears such as gas and electricity
It is illegal for a debt collection company to threaten that you will go to prison for failing to pay these types of debts. However, failure to pay these types of debts can lead to other types of adverse consequences.
For instance, you risk losing your house if you don’t make your mortgage or rent payments on time. If you don’t pay your credit debt, you risk having a bad credit score, paying high interest rates, and possibly even facing late fees. If collection agencies are unable to collect the debt, you may be sued in a civil court, which could result in the bailiff being appointed.
What Happens to Debt when You Go to Jail?
FAQ
What happens if you don’t pay debt UK?
Can UK debt be enforced in US?
Is it a crime to be in debt UK?
What happens if you ignore debt collectors UK?
Is your debt causing you to go to prison?
This question is a source of anxiety for many in the UK. The fear of financial woes leading to prison is a real concern for those grappling with debt. The severity of your debt is often measured by the Debt-To-Income (DTI) ratio. A DTI over 36% is a warning sign. Recognising when debt escalates into a crisis is essential.
Can I go to prison for non-payment of debts?
You can only be sent to prison for non-payment of debts where the case was heard in a Magistrates’ Court. These are: income tax and VAT debts , this is very rare as it’s used mainly for large scale tax evasion rather than just owing money, see Tax Aid’s Factsheet which looks at HMRC’s other enforcement options;
Can you go to prison for council tax debt?
While being sent to prison for council tax debt is rare, it remains a legal possibility for persistent non-payment. To avoid such dire consequences, it’s crucial to address council tax debts promptly. Seeking advice and arranging a repayment plan can be effective steps. Criminal fines carry a weight that cannot be ignored.
What to do if you are facing prison time with debts?
The most important thing to do if you are facing prison time with debts is to communicate with your creditors. Keep them informed of your situation. For example, inform them of the length of your sentence. Of course, you will not know at the outset exactly how long you will spend behind bars.