When Debt Collection Became a Federal Case in Texas and Resulted in an Arrest

Student loan debt is a tremendous burden all across the country, with outstanding student loans totaling about $1.2 trillion. One might not think, however, that defaulting on student loans would lead to criminal penalties, but recent news stories have suggested—not entirely accurately—that this is a possibility. The U.S. Marshals Service arrested a Houston man in February 2016, reportedly due to unpaid student loans, but the initial reporting did not tell the full story. While the reason for the arrest was not specifically student loan default, it is worth exploring how a debt collection matter ended up in federal court and led to an arrest.

Debt collection proceedings are civil in nature, not criminal. Federal courts presumably would not have jurisdiction over most debt collection matters. Even if the creditor and debtor were in different states, few debt collection claims (one hopes) would meet the $75,000 amount-in-controversy requirement for diversity jurisdiction. 28 U.S.C. § 1332. One way to ensure federal jurisdiction over a claim, however, is for the federal government to be a party.

The U.S. Department of Education (DOE) is the nation’s largest student loan creditor. It makes a substantial percentage of student loans directly to students, and it guarantees many private student loans. Federal courts automatically have jurisdiction over most lawsuits in which the United States is a plaintiff. 28 U.S.C. § 1345. The question remains of how a debtor, who would be the defendant in such a case, could get arrested.

Once a lawsuit is underway, a party may request a subpoena compelling an opposing party to take certain actions, such as attending a deposition. Fed. R. Civ. P. 45. If the party served with the subpoena fails to comply, the court can enforce the subpoena by contempt. This is where an arrest may come into play.

The Houston debtor took out $1,500 in private student loans in 1987, according to the DOE, and defaulted on the loans in 1989. The loan guarantor paid the lender, and the DOE reimbursed the guarantor. The DOE filed suit against the debtor nearly 20 years later. United States v. Aker, No. 4:06-cv-03788, complaint (S.D. Tex., Nov. 30, 2006). After the debtor failed to file an answer, the court granted a default judgment in April 2007 for about $2,600.

In early 2012, the DOE attempted to serve the debtor with a deposition notice, along with a subpoena for various documents, known as a subpoena duces tecum. The notice was sent by certified mail to the debtor’s last known address, but the debtor did not appear for the deposition.

The court issued an “order to show cause,” ordering the debtor to appear in court in December 2012. When he did not appear, the court issued an order to arrest, directing the U.S. Marshal “to arrest him and bring him before this court immediately.” This was the document that led to the debtor’s arrest in February 2016.

If there is a lesson to be found in this case, it is that even civil court proceedings can have criminal consequences if a defendant does not respond to correspondence from the court. Luckily, use of the U.S. Marshal in student loan enforcement is not a widespread practice, since it seems to occur in only one court in the Southern District of Texas.

These blog posts are meant to be illustrative only. Unless expressly stated to the contrary herein, these matters are not the result of any legal work of Michael J. Brown, but are used to communicate a particular point of view. Michael J. Brown does not claim credit for any legal work done by any lawyer or law firm either generally or specifically, with respect to the matters contained in this blog.

For more than two decades, board-certified criminal defense attorney Michael J. Brown has advocated for the rights of defendants in west Texas courts facing federal and state criminal charges. Contact us online or at (432) 687-5157 today to schedule a confidential consultation, and see how our years of experience can assist you.

More Blog Posts:

Federal Prosecutors Assert Jurisdiction Across International Borders in Fraud Case, Texas Criminal Lawyer Blog, December 23, 2015

Facial Recognition Technology Arrives at Texas Border Patrol Stations, Texas Criminal Lawyer Blog, July 17, 2015

Appellate Court Ruling Considers Whether Confession Was “Voluntary,” Reviews Implications for Defendant’s Fourth Amendment Rights, Texas Criminal Lawyer Blog, July 13, 2015.

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