Debtors' Prisons Making a Comeback?

Debtors' prison conjures up Dickensian visions of squalor and misery, but it may be making a comeback, albeit in a more civilized form. Minnesota offers fresh evidence that if you’re in debt, you may be looking at hard time.

Technically, debtors' prisons were outlawed by Congress back in the 19th century, so there are no physical jails in the U.S. to incarcerate those who owe money to banks, lenders, service providers, and retailers across the country.

But that doesn’t mean that law enforcement can’t take on a greater role. Minnesota may be ground zero for jailing residents who fall behind on their debt. According to a Minneapolis Star Tribune analysis of state court data, arrest warrants against debtors have risen 60% since 2006, with a total of 845 cases in 2009.

Three pieces of economic data underscore the debt picture in the U.S. One of them is positive. The other two aren’t.

1. Consumer debt looks better: The good news is U.S. debt delinquency is down. The Federal Reserve reports in its most recent quarterly survey that U.S. individual debt is down for the first time since 2006.

2. More poverty: The first piece of bad news is that the U.S. poverty rate is up, significantly. The U.S. Census Bureau reports that the poverty rate rose to 14.3% in 2009. That’s the highest level since 1994.

3. Higher foreclosure rate: Another big factor contributing to individual U.S. debt is the home foreclosure rate. RealtyTrac estimates we’ll finish 2010 with a record 1.2 million U.S. home repossessions. The firm says that another 3.2 million will be in “some stage of foreclosure.”

While the first statistic shows that Americans are serious about cutting down debt, the last two reveal it’s an uphill climb. Often that uphill climb puts consumers in the path of consumer debt issues that can indeed land them in jail. And debtor’s prison turns out to look just like regular prison.

If you liked this article you might like

Dividend Funds Need to Be in Your Life

Unlock the Secrets Behind Bitcoin Investing

Questions You Must Ask a Car Salesperson to Avoid Getting Ripped Off Big-Time

5 Surefire Ways to Destroy Your Marriage

Best States for Retirement in the U.S.