Debt Prison? The Truth About Jail and Loans

Failing to pay a credit card, mortgage, or auto loan is not a crime, according to specialists, who highlight that only in some very specific cases can prison be involved.

According to the National Survey on Financial Health (Ensafi), 36.2% of the population aged 18 and over has some type of debt.

Armando owes nearly 60,000 pesos to a department store, and his income is insufficient to meet this debt. He fell into default in May, and threats began immediately, including the possibility of going to jail if he did not pay off the outstanding balance. He is not refusing to pay; he is only seeking a credit restructuring that aligns with his income, which has not yet arrived.

Like him, millions of people owe money on their credit cards, mortgages, cars, or some personal or payroll loan. According to the National Survey on Financial Health (Ensafi), 36.2% of the population aged 18 and over has some type of debt. Of that universe, 17.1% considered their level of indebtedness to be high or excessive, and 48.9% perceived it as moderate.

Ángel González, director general of the National Organization for the Defense of Debtors, makes it clear that no person can go to jail for a civil debt, meaning one owed to a private entity such as a bank, credit union, auto agency, department store, loan shark, or usurer.

"Collectors love to threaten people by telling them that if they don't pay, they will be put in jail. People already imagine themselves in an orange jumpsuit for not paying their credit card, loan, car, or mortgage. Can this be possible? No. Article 17 of the constitution states it clearly: no one may be imprisoned for debts of a purely civil nature," he states.

Owing 1,000 pesos, one million, 10 million, or 20 million is not grounds for ending up incarcerated. "Debts are not a crime; being in debt is not a crime." However, he urges people to pay their financial obligations, according to their possibilities, to avoid other types of consequences and measures, such as a poor rating in the Credit Bureau and asset seizure, following a court order.

When Can You Go to Jail?

When it is considered a property crime, prison can be involved, says attorney David Cordero. For example, fraud for providing false information to obtain a loan. Also, issuing a check without funds or for misappropriation, meaning if you sell assets before paying them off.

"All of this can be considered fraud, according to Article 386 of the Federal Penal Code," comments the specialist.

González adds that you could also be imprisoned for debts to the government, particularly to the tax authorities, but only after a prior analysis process that concludes in fraud.