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Payday Lenders Use Courts To Create Modern Debtors' Prison

Have a debt you didn’t pay? If you live in the State of Missouri you may face jail time if you don’t settle the debt and fail to appear in court.

According to The St. Louis Post-Dispatch, a practice of summoning debtors to civil court for an “examination” is resulting in arrests and prompting critics to complain about modern-day debtors’ prison tactics in the state.

While Missouri’s Bill of Rights explicitly declares “no person shall be imprisoned for debt, except for nonpayment of fines and penalties imposed by law,” the St. Louis Post-Dispatch reports that residents are regularly being jailed over their private debt.

Jail time comes into play after a creditor secures a civil judgment against a debtor, then asks to have the debtor summoned to court for an “examination” to explore creditor assets, the Post-Dispatch explains. If the debtor is a no-show, the creditor can ask for the debtor’s arrest in the form of a “body attachment.” Once arrested, the debtor can be held until there’s a court hearing or bond is posted.

“Debtors are sometimes summoned to court repeatedly, increasing chances that they’ll miss a date and be arrested,” the Post-Dispatch reports. “Critics note that judges often set the debtor’s release bond at the amount of the debt and turn the bond money over to the creditor—essentially turning publicly financed police and court employees into private debt collectors for predatory lenders.”

The practice has drawn critics from Missouri legal aid offices and from politicians in neighboring Illinois, where legislation was recently signed restricting body attachments for civil debt.

“It is outrageous to think, in this day and age, that creditors are manipulating the courts, even threatening jail time, to extract whatever they could from people who could least afford to pay, ” Illinois Attorney General Lisa Madigan is quoted saying.

The Post-Dispatch told the story of a woman jailed three days over her $425 payday loan.

A payday loan is a short-term loan that can be borrowed, based on the borrower’s personal check being held for a future deposit, or electronic access to the borrower’s bank account.

Wakita Shaw’s payday loan was for $425. She stated that “After a few months, I forgot about the debt all together,” even after her mother gave her the court documents requesting her to appear for the examination. After she didn’t appear, Circuit Judge Dale Hood of St. Louis County issued a body attachment. By the time she was jailed two weeks later, interest and legal fees on grown the $425 debt to $855.

No one knows how many people go to jail over debt in St. Louis. Courts keep no count of body attachments for debt.

Legal Services of Eastern Missouri, which represents poor people for free in civil cases, checked records for civil debt cases filed by a single St. Louis creditors’ attorney, Mitchell Jacobs in 2011 and this year. His law firm summoned 55 debtors for examinations and requested 23 body attachment orders, ending in seven arrests.

Creditors’ lawyers see things differently. Jacobs, who represents payday shops and other lenders, says he has sympathy for debtors. “Most are good people who just don’t have the money to pay,” he says.

But sympathy has limits. “If they’ve had notice and they fail to appear, then they get what they deserve,” he said.

Although creditors attorneys request body attachments, it’s the judges who issue them, he noted. “It’s the judge saying, ‘You didn’t show up when we told you to, and I don’t like it.”

Post- Dispatch notes that judges differ in their approaches to body attachments, with some using them sparingly.



Principal & Founder
This article was written by Mark Sadaka, a seasoned trial lawyer in nationally significant cases. He fearlessly champions clients impacted by fatal or severe injuries caused by others or corporations. Renowned for his expertise in complex litigation, he's featured in books, sought after by media for interviews, and a highly sought speaker. Notably, he exclusively represents individuals facing life-changing injuries or substantial financial losses.

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