Having debt is tough, and it is especially so if you are worried about any potential criminal consequences of that debt. This article looks at the issue of debt in criminal law, and whether it can lead to a criminal sentence. 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. What with the unemployment and loss of opportunity caused by the pandemic, this number has, in all likelihood, risen. Anyone who has been in debt will know that facing spiralling credit card repayments or falling into arrears with their mortgage is intensely stressful. Not only will you be worried about losing your home and placing your family relationships in jeopardy, you may also be fearful of the criminal sanctions that you could face. 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.
Can You Be Imprisoned for Debt in the UK?
Being in debt can be an extremely stressful and worrying experience. Many people who are struggling with debt often wonder if they could actually be sent to prison for not paying what they owe.
This is a common concern, but the good news is that imprisonment for debt is rare in the UK nowadays. There are only a handful of situations where not paying specific priority debts can potentially lead to a prison sentence as an absolute last resort.
In this article. we’ll explain
- The types of debt that could result in imprisonment
- How prison for debt usually only happens after ignoring multiple warnings
- What to do if you’re worried about priority debts
- Your rights and options for managing problem debts
So can you really go to jail for owing money in the UK today? Let’s find out.
What Debts Can Lead to Imprisonment?
Over a century ago, many kinds of debt could land you in prison. Thankfully the law has evolved and this is no longer the case.
Nowadays, you cannot be imprisoned for most ordinary household debts like:
- Credit cards
- Personal loans
- Bank overdrafts
- Payday loans
- Rent or mortgage arrears
- Hire purchase agreements
- Utility bills
However, there are a handful of priority debts where prison remains a possibility:
- Council tax arrears (England only)
- Business rates
- Criminal fines
- Income tax or VAT debts
- Child maintenance arrears
- Magistrates’ court fines
But even with priority debts, prison will only ever be considered as an absolute last resort if you have continually ignored requests for payment or refused to engage with creditors.
How Does Imprisonment for Debt Happen?
For priority debts like council tax, there is a lengthy legal process creditors must follow before prison can even be considered.
This typically involves:
- Sending multiple letters requesting payment
- Getting a liability order from the court
- Bailiffs attempting to collect
- Deductions from benefits
- Charging orders against property
- Bankruptcy proceedings
Only after all of these options have failed might a creditor initiate committal proceedings in a Magistrates’ Court.
You would then be summoned to a means enquiry hearing where the court decides if your non-payment is due to:
- Wilful refusal to pay despite having the means
- Culpable neglect by spending money on less important things
If the court rules that you are deliberately not paying or irresponsibly prioritising other spending, you could potentially get a custodial sentence. But there are often alternatives like writing off part of the debt or reasonable repayment plans.
What To Do if You’re Worried About Priority Debts
If you’re struggling with priority debts, it’s absolutely vital that you don’t ignore the problem. Communication is key to avoiding any severe consequences.
Here’s what you can do:
- Speak to your creditors explain your situation and ability to pay. Offer affordable repayment plans.
- Seek professional debt advice from organisations like StepChange or National Debtline.
- Attend any court hearings and put your case forward with help from a solicitor or adviser.
- Provide financial information like income and expenditure if requested.
- Present realistic payment proposals based on what you can afford.
As long as you engage with the process, imprisonment for debt remains very unlikely. There are usually better solutions for both you and your creditors.
Your Debt Help Options
If debt is causing serious stress, it’s important to know your rights and the help available.
You have various options like:
- Free advice from charities like StepChange.
- Formal debt solutions like Debt Relief Orders, IVAs and bankruptcy.
- Legal protections from unfair treatment by creditors.
- Affordability complaints against credit card and loan providers.
Don’t suffer in silence. Reach out for support and take back control of your finances.
Conclusion
Can you go to prison for owing money in the UK today? The short answer is it’s very rare.
For most everyday debts, imprisonment simply isn’t on the cards. Even with priority debts, it only happens after all other avenues have failed and as a last resort.
If you’re worried about debt, the best approach is to communicate with creditors, seek professional advice, and take action. With the right help, more positive solutions can nearly always be found.
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
The court will only order a prison sentence for debt as a last resort, once all other attempts at securing repayment have failed.
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 example, if you fail to pay your rent or keep up with your mortgage payments you may lose your home. Failure to pay credit debt can lead to you developing a poor credit rating, being charged high rates of interest, or fines for late payment. Where collection agencies fail to recover the debt, you could be sued in the civil court, leading to the appointment of a bailiff.
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 it is a debt that you are required to pay by law, such as council tax, the consequences are different compared to if it is a debt that you owe through a contract with a creditor, such as a 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 lose your right to pay the tax by instalments and payment of the full amount of council tax to the end of the year will be due.
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. If you do not pay the full balance owed on the court summons then the council may apply for a liability order to recover the debt.
This can prevent you from being able to take steps such as open a bank account, or obtain a mortgage, or a credit card. The court can enforce the order in the following ways:
- Enforcement agents (bailiffs): bailiffs can be instructed to collect the debt by taking goods from your home.
- Attachment to benefits: the local authority can deduct money from your benefits received from Department of Work and Pensions (DWP).
- Attachment to earnings: the local authority can order your employer to take deductions from your wages or salary until the debt is repaid. Your employer is legally obliged to comply.
- Charging order: if you owe £1000 or more and own a property, the local authority can apply to the court for a charging order. This means that when the property is sold, the local authority can recover their debt from the proceeds of the sale.
- Insolvency proceedings: in extreme circumstances, the local authority could commence insolvency proceedings against you.
- Committal to prison: also in extreme cases, you may be given a prison sentence. This usually only occurs where the court takes the view that you have purposefully 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 the debt has been passed to a collections agency
- 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. If you receive notification that your creditor has started court proceedings against you, seek legal advice from a solicitor without delay. If you do not respond to the claim against you, the court will not have the opportunity to hear information from you, which may influence the court’s understanding of facts that are relevant to the case.
Can I get arrested for unpaid debt?
FAQ
Can you go to jail for unpaid debt in the UK?
The easy answer to your question is no, you will not go to jail for debts owed in the UK.
What happens if you can’t pay debt in the UK?
If you cannot pay off your debt
You can apply for a Debt Relief Order or Bankruptcy Order if you cannot pay your debts because you do not have enough money or assets you can sell. If you cannot pay off your debts, you can be made bankrupt.
Can a UK debt be collected in the US?
International Debt Collection is Possible | Many UK creditors work with international collection debt agencies or legal firms that operate across borders.
What happens if you ignore debt in the UK?
a Default Notice could be issued which could to lead to further enforcement. the debt could be passed to the Enforcement Agents (bailiffs) for collection.
Can I be imprisoned if I owe a debt?
Remember that even for these types of debt, imprisoning you is the last resort. You will only be imprisoned if the court deems you can afford to pay back the money you owe, but you’re refusing to. You won’t be imprisoned if the court finds that you simply can’t afford to pay the debt.
Can you go to jail for debt in the UK?
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.
What happens to my debts if I go to prison?
The short answer is that nothing happens to your debts when you go to prison. You will still owe the same amount to the same creditors. Your creditors can still take action to enforce a debt against you. This includes: A key consideration is that action taken by creditors may impact upon your family living at home.
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.
What happens if a debtor owes money?
In most instances if someone owed money, and the person they owed the money to got a court-ordered judgment, the “debtor” could then be sent to prison to work there to pay off the debt. However, the debtor while jailed not only worked to pay off their debt, but they also worked to pay the cost of their incarceration.