Can You go to Prison For Not Paying Your Debts?


Can You go to Prison For Not Paying Your Debts?


Earlier this month, payday lender, Quick Loans, who charge up to 1,575% on their loans, called for debtor prisons to be brought back to deal with customers who are not paying their loans.

Controversially, the company then compared non-payment of debts with shoplifting and asked why non-payers should not be treated the same as shoplifters and sent to prison? They even argued that the cost of loans would be reduced if debtors were sent to prison because “bad people” would no longer apply for loans for fear of going to jail.

They argued UK law still allows debtors to be sent to prison.

Failure to pay a court order, they said, could be deemed as contempt of court and if there was a will to do so, non-payers could still be sent to prison.

So, we decided to fact check, is this correct?

Is non-payment of debt contempt of court in Scotland?

In Scotland, this is not correct. Ever since the Debtors (Scotland) Act of 1880, people in Scotland cannot be imprisoned for not paying their debts.  There are only a few exceptions to this rule, one being for the non-payment of maintenance for a child or a former spouse.

Another is if you are fined for contempt of court and don’t pay the fine. This is what Quick Loans were referring to when they said it is still possible to imprison debtors.

However, there was a recent court case in Hamilton Sheriff Court where Moneybarn, a lender who specialises in providing car finance, tried to persuade a Scottish sheriff to have their customer arrested because he would not return a car to them.

However, Sheriff Kelly, the judge, wasn’t impressed and observed: “The arguments which led to the abolition of imprisonment for non-payment of civil debt in the nineteenth century are likely to be equally valid… today in relation to a conditional sale agreement.”

He also observed, although, such attempts by lenders were on the increase, “…many customers might relish the opportunity to acquire a new car…[however]…few would expect that experience to lead to their imprisonment on the application of the finance company” and, therefore, refused the application to send Moneybarn’s customer to prison.

So what debts can you be imprisoned for in Scotland?

As noted above, one of the few debts you can still be jailed for in Scotland is the non-payment of child maintenance or maintenance to an ex-spouse. It is still necessary to show, however, you can afford the debt and are just refusing to pay it before the court will imprison you.

Also, unlike other parts of the UK, wherein 2016-17, at least 62 people were imprisoned for not paying their council tax; in Scotland, it is not possible to imprison someone for not paying council tax.

And although you can still be imprisoned for not paying a criminal fine in Scotland, law reforms have been made so that you can no longer be jailed for non-payment of a court fine, if it is for less than £500.

This has resulted in no-one being jailed in recent years in Scotland for not paying TV licence fines, despite the fact across the rest of the UK, dozens of people are still sent to jail each year for not paying their TV licence fines.

So although it is still possible to be imprisoned in Scotland for a few types of debts, the practice of using debtor prisons to recover debt has largely fallen into disuse for over a century.

No Remorse

Despite suffering a barrage of criticism for the blog, Quick Loans CEO, Graeme Wingate has refused to show any remorse and instead has penned his own blog in response to his critics.

In it, he states that neither he, nor any of his businesses have ever had a complaint made against them to the Financial Ombudsman Service, the Financial Conduct Authority, or the Office of Fair Trading.

He also labels consumer champion Martin Lewis, as the “high priest of virtue signaling”, and labels the Shadow Chancellor, John McDonnell, a hypocrite.

He also questions the veracity of some of the statements that Martin Lewis has made concerning the number of people attempting suicide because of debt; and highlighted, that in England and Wales, Labour Council’s are involved in jailing council tax non-payers.

He states Quick Loans are only calling for those debtors who take out loans with no intention of paying them to be jailed, and those who provide false information about their income when they are applying for the loan.

He has also revealed that, since the original blog was published, Quick Loans has received a letter from the Advertising Standards Authority, calling for them to retract the blog, suggesting there may be consequences if they don’t.

Mr. Wingate is refusing to retract the blog and instead has announced he now intends to sell Quick Loans and leave the finance industry altogether.

 If you are struggling with financial difficulties, don’t allow yourself to be bullied with threats from lenders, call a Carrington Dean adviser on 0808 2085 195 for free confidential advice.

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