19-year-old Kevin Thompson didn’t think that he was going to jail the day he pulled his car out of the garage to go to his job in an auto-repair shop. He was pulled over for a speeding ticket and found out that he had not properly renewed his license. When Thompson appeared in traffic court, he was unable to pay the $810 fine and was put on a 30-day probation period to pay his ticket. The judge handed his case over to Judicial Correction Services, Inc., a for-profit corporation that oversees the collection of fines and the probation of people who have committed minor infractions, such as traffic tickets.

Thompson met with his parole officer from JCS weekly and made payments totaling $85, most of which he borrowed because he was unemployed. JCS kept $30 of those payments as a fee, so that amount didn’t count toward the total owed. Eventually, Thompson told his probation officer that he was unable to pay, and she informed him that he would have to appear before a judge to have his parole revoked. He ended up in a jail cell for owing $838 in fines and fees.

What Thompson experienced is called “pay-only” probation. It’s part of the growing private business of what’s euphemistically dubbed “incarceration alternatives,” a lucrative industry that ranges from electronic monitoring to drug treatment and halfway houses. Companies like JCS argue that they are providing an essential service by providing “offender-funded” supervision that doesn’t rely on tax dollars, as well as rehabilitative programs like “Financial Management” (for those convicted of writing bad checks) and “Job Readiness” (“Job skills such as goal-setting, job searching, the application process, grooming, and interviewing skills are discussed and practiced.”).

But for people like Thompson, this industry helps contribute to a cycle of jail, unemployment, and poverty. In late January, the ACLU filed a lawsuit against JCS and DeKalb County, alleging that pay-only probation unfairly targeted people who were too poor to pay at sentencing—and were, therefore, likely to be unable to pay later. “Across the county, the freedom of too many people is resting on their ability to pay,” said Nusrat Choudhury, an ACLU attorney who represents Thompson. “We seek to dismantle that two-tiered system of justice, which disproportionately punishes people of color.”

This isn’t the first legal challenge JCS has faced. Last year, the Southern Poverty Law Center, representing victims of pay-only probation, reached an agreement with the city of Montgomery, Alabama regarding overzealous practices that jailed people unable to pay mounting fines. The city also did not renew its contract with JCS. The ACLU said that 13 states currently use for-profit companies to manage their probation services. The arrangement is most common in the Deep South: Choudhury pointed out that Georgia employs private companies to monitor 80 percent of its probation services for misdemeanors, more than any other state.

Debt has historically been associated with a lack of moral character, and the Dickensian idea of a “debtor’s prison” has long been a fixture of Western culture. In fact, until the 19th century, prisons almost exclusively housed debtors, not murderers. The tradition began in ancient Rome, where only debtors were held behind bars; those who committed other crimes were brutally killed or banished. For centuries, England followed the same logic: Locking someone up would force them to pony up the cash, or at least find someone who could loan it to them. It was considered a more humane treatment that the previous methods of indentured servitude or slavery. Over time, helping poor debtors out of jail became a cause célèbre, advocated by people like Benjamin Franklin. Ironically, colonial Georgia was originally created as a place for debtors to escape the cycle of incarceration and debt.

Debtor’s prisons have been formally outlawed since the Supreme Court’s 1983 ruling in Bearden v. Georgia. Bearden was convicted of robbery and ordered to pay a $500 fine and $250 in restitution. He made the first few payments but was then laid off from his job and left unable to pay the balance. In response, Georgia sent him to prison. The Supreme Court unanimously held that this violated his Fourteenth Amendment rights to “fundamental fairness.” In other words, someone could not be imprisoned simply for failure to pay through no fault of his or her own. While this seems straightforward enough, people are incarcerated across the country without any judicial inquiry as to their ability to pay.

In their current incarnation, private-probation companies operate as debt collectors with handcuffs—and little oversight. According to a report issued last year by Human Rights Watch, “pay-only” probation practices specifically exploit those who are unable to pay a fine on a set court date and must agree to make installments. These installment payments include overhead fees that go directly to the company and compound over time. As a result, someone who is unemployed and lacks resources will ultimately owe more money than someone who is able to pay on their court date. The ACLU has additionally found that these practices disproportionately impact minorities, who end up paying more money in total—and represent a greater percent of the jail population—than non-minorities.

Hiring JCS, which bills itself as “Proven Offender Management,” enables cash-strapped municipalities to collect more overdue fines and increase their available revenue. Human Rights Watch estimates that JCS collects over $1 million in fees every year from people in DeKalb County on probation for minor offenses like traffic tickets. On JCS’s website, a Georgia judge is quoted as saying, “We are now collecting more than 90 percent of our fines, and I see far fewer return visits from those I sentence to probation.”

While the full extent of municipalities’ reliance on fees is unclear, a report by the ACLU points to the growing use of fee collection to balance overextended budgets. The same report points out that the New Orleans Parish Criminal Court collected $1.47 million in fees from private citizens in 2009, amounting to one-third of its total revenue. However, because people like Thompson face jail time if they do not pay, it’s unclear if private-probation companies are actually generating more revenue for the municipalities than the costs of housing someone in jail.

As it stands, people who move through the criminal-justice system are being asked to bear the cost for many services. These costs can even include the legal counsel guaranteed to criminal defendants by the Constitution. Kevin Thompson was incorrectly told by JCS that he needed to pay $150 for a public defender to appear at his probation-revocation hearing. (In fact, the fee is $50 and can be waived.) Putting people in jail for failure to pay simply makes it harder for them to get back on their feet.

In some jurisdictions, people have been forced to pay for “room and board” for time served in a jail awaiting trial. Called “pay-to-stay,” these practices require people to pay for staying in jail—even if they haven’t been convicted yet—on top of costs of toilet paper, clothing, and medical care. One county in California even allows jail inmates to pay for “premium” jail cells for an optional $155 daily fee. Because minorities often have less wealth and fewer economic opportunities, these policies disproportionately affect them.

Private companies aren’t the only ones resorting to these tactics. It appears that the state-sanctioned debtor’s prison shows no signs of disappearing, as evidenced by lawsuits filed in February against the municipal governments of Ferguson and Jennings, Missouri for their use of jail as a way to punish people who cannot pay their fines and fees. Thomas Harvey, a co-founder of Arch City Defenders, filed this lawsuit as a class action on behalf of all individuals jailed for debt. He describes a system that unfairly targeted citizens for traffic tickets and then locked them in overcrowded jails for an indeterminate time until they made payments. Several people who were locked up just for owing money attempted suicide, and two succeeded while in the Jennings jail. Harvey said that municipalities extort money in this way to supplement their budgets, and an Arch City Defenders report found that the greater the minority population of a city, the greater percent of its revenue stream comes from fines. The Ferguson complaint alleges that, over the last five years, the city has collected $10 million from municipal court fines and fees. “Implicitly or explicitly, there a link between the people who set the budget and the police,” he added.

The push against debtor’s prisons may be reaching a new turning point. Last week the Department of Justice filed a statement of interest in the case of Varden v. City of Clanton in Alabama. Christy Varden, the plaintiff, was thrown into jail because she was unemployed and did not have enough money to pay a fixed bond amount (the bond was issued for her arrests for shoplifting and other petty crimes). DOJ lawyers argued in their motion to the court that “any bail or bond scheme that mandates payment of pre-fixed amounts for different offenses in order to gain pre-trial release, without any regard for indigence, not only violates the Fourteenth Amendment’s Equal Protection Clause, but also constitutes bad public policy.”

While the Varden case involved bonds rather than fines, the notion that the wealthy and the poor should be treated equally has broad implications elsewhere in the legal system. In a post-Lehman Brothers world, it’s hard not to be startled by the difference in how losses are treated. Few financial executives have served any prison time for crimes committed in connection with the Great Recession. Meanwhile, the continued use of jail time by private companies to punish debts reinforces a system in which people become profits and liberty can be purchased.