Can a Debt Collector Threaten You with Jail? Effects you might Face for Neglecting To Repay Debt Home В» Can a Debt Collector Threaten You with Jail? From the time 1833, so-called debtorsвЂ™ prison, or even the training of locking up those who owe debts, happens to be outlawed when you look at the U.S. Which means that loan companies cannot threaten you with jail time for failing woefully to spend your debt back. In fact, threatening prison could be considered a lie about escalation, which can be forbidden because of the Fair Debt Collection Practices Act (FDCPA).