Jail Time for Unpaid Debts?

We no longer have debtors prisons in the US, but loans gone bad can lead to jail time.

It's not because you fail to pay the loan.  Instead, the loan can trigger a series of events where you end up breaking some law or other.  The Consumerist explains how it might happen.

In short, a lender may bring legal action against you for failing to repay.  If you don't respond to requests from the court system, you can end up in hot water.  While it's not necessarily illegal to default on a loan, it is illegal to ignore court orders.

What can you do to avoid trouble?  Read your mail and respond to it.  If all you can say is "I can't pay," that's fine.