The imprisonment of debtors has been illegal under U.S. federal law since 1833, but at least six people have been jailed in Texas after they were unable to pay back their payday loans.
Texas Appleseed, an economic advocacy group, recently released a study claiming that 1,576 debtors in eight Texas counties have been hit with criminal complaints between 2012 and 2014. The state passed a law in 2012 that banned lenders from pressing criminal charges against debtors, but the practice continues.
According to The Huffington Post, the report found that many of these criminal complaints against borrowers were based solely on the lenders' claims and questionable evidence.
If people fail to repay loans in Texas, it's supposed to be a civil issue unless a crime is clearly involved. However, payday loan services require a check and/or a bank account number for people who take out a loan. So when people can't pay their loan, the payday companies claim that the borrower intentionally wrote a bad check, which is a crime.
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Texas law is supposed to protect people who write checks for payday loans, but the Texas Justice of the Peace courts routinely file criminal charges based on bad check claims. If someone is charged, they must enter a plea or they will have a warrant issued for their arrest.
Debtors' prisons are not limited to Texas. PBS NewsHour recently reported that some cities hire private probation companies, such as Judicial Corrections Services, that collect city fines for free (video below). These private probation companies make their money by charging debtors fees and will even take them to court. If people miss their court appearances in these civil cases, a criminal charge can be filed against them in states such as Alabama.
Columbia law professor Gillian Metzger told PBS NewsHour that courts must provide a non-custodial solution for people who are too poor to pay off their court fines and arrange a way so that they can work off their fine in another manner. This has been the law since the U.S. Supreme Court ruled in 1971 that people cannot be jailed soley because they can't pay a fine.
However, David Dinelli, deputy legal director of the Southern Poverty Law Center, believes that 1,000 people are going to jail every month in Alabama simply because they don't have the money to pay their fines.