Can she go to jail or lose her home to debt collectors?

I am helping an elderly woman who only has $23 a month in disposable income after expenses. She has about $40,000 in credit card debt. She cannot afford to file for bankruptcy and is terrified she will lose her home or go to jail if she doesn't pay. What are her rights?

Comments for Can she go to jail or lose her home to debt collectors?

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Sep 15, 2009
jail and debt collectors
by: Gerri

I am so sorry to hear that. I can't give legal advice (am not a lawyer) but I would suggest a few things:

1. A bankruptcy attorney should be able to give her a free consultation in which she could find out if she is judgment-proof. If so, she has nothing they can really go after to collect.

She could then send each of her collectors a certified letter explaining that she has no ability to pay and no assets, and asking them to stop contacting her. If they contacted her again after receiving her letter, other than to inform her of legal action they were about to take, they would be breaking the law.

I don't know whether she is at risk of losing her home (or even if she's at risk of being sued) but it is very unlikely she could get put in jail for not paying her debts. That generally only happens when outright fraud occurs, or in some states when people bounce checks and ignore efforts to resolve them.

2. If she has a lot of equity in her home, then she potentially could be at risk of being sued and a lien being placed against her home. It depends on state law. That's why I would want her to at least talk with an attorney and ask them if she is judgment proof.

If it turns out her home equity is at risk she may be able to use debt settlement to settle the debts for less than she owes. (Provided she can get access to that equity through some sort of home equity loan.) In that case though she may also be a candidate for bankruptcy.

3. I would recommend she start keeping notes of every call with the collectors. She can get a free debt collection worksheet from our website. If a debt collector makes illegal threats (like jail when that is not an option) she may be able to get an attorney to represent her on a contingent fee basis, so she doesn't have to pay anything up front.

She's lucky to have you helping her. Please keep us posted.

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