Some legal experts say the practice violates state constitutional bans on debtors prisons.
Herman Button listened in stunned silence as a judge in Perry County, Ind., threatened him with jail time unless he agreed to pay $25 a month toward an eight-year-old housing debt.
Unemployed and living on a disability check, Button decided to fight back after the January 2009 hearing. He and an attorney from Indiana Legal Services appealed, citing the Indiana Constitution's Bill of Rights, which says "there shall be no imprisonment for debt, except in case of fraud."
To Button's surprise, a state Appeals Court judge agreed. "I'm no lawyer, but I knew we abolished debtors prisons in this country a very long time ago," said Button, 50, who now lives in Hawesville, Ky.
The Button case highlights a potential pitfall for creditors that use the law enforcement system to collect old debts. Most state constitutions, including Minnesota's, have clauses dating to the 1850s that expressly prohibit the jailing of people for their debts. As legal actions against debtors intensify, attorneys are taking a fresh look at these clauses.
"We have created a de facto debtors prison system in the United States that is largely unconstitutional," said Judith Fox, a law professor at Notre Dame Law School. "In some parts of the country, people are so fearful of arrest they are scrambling to pay money they might not even owe."
In states such as Indiana and Illinois, people are being locked up for not making court-ordered payments. Known as "pay or stay," it can mean days in jail and multiple arrests for the same debt. Some legal experts say the practice is unconstitutional because the arrest is directly linked to the failure to pay a debt.
In Minnesota, the issue is less clear because warrants to arrest debtors are issued for disobeying court orders, such as not filling out a financial disclosure form and missing a required hearing, not for failure to pay debt. So long as someone fulfills the court order, they can avoid incarceration.
"It looks on the surface like debtors prison," said William G. Ross, a law professor at Samford University's Cumberland School of Law in Birmingham, Ala. "But it's really not, because the person isn't being punished for the debt, but for failing to appear."
In Illinois, the issue is more straightforward.
Jack Hinton of Kenney, Ill., was sentenced to jail indefinitely in January after he fell behind on a court order that he pay $150 a month on a debt of $6,440.
According to a court transcript, Hinton, then a self-employed roofing contractor, said he broke his neck and back in a fall from a roof and filed for disability. The judge got upset after learning that Hinton used $1,000 for other bills rather than his court-ordered payments. Hinton was ordered to the county jail indefinitely until he could come up with $300.
After three hours in a holding cell, his wife got him released by borrowing $300 on a credit card. He is considering a challenge to the ruling on constitutional grounds. "I couldn't pay, and I was stuck in jail until I did," he said. "How is that any different from debtors prison?"
In Button's case, the judge threatened him with jail if he didn't pay $25 a month toward a $1,865 judgment. After Button twice said, "I can't," Judge Lucy Goffinet responded, "I'm not going to accept, 'I cannot,' and if the next words out of your mouth are 'I cannot,' Mr. Button, then you'll set ... at the Sheriff's Department until you find a way that, yes, you can," according to the transcript.
Alan White, a law professor at Valparaiso University in Indiana, says even the threat of jail for debts is unconstitutional. He also questioned the practice -- common in Minnesota and elsewhere-- of bail being set at the amount of the debt.
"If, in effect, people are being incarcerated until they pay bail, and bail is being used to pay their debts, then they're being incarcerated to pay their debts," he said.
Chris Serres • 612-673-4308