One cannot be jailed merely for an inability to pay debts that are owed. Debtors' prisons were eliminated many years ago.
This information does not constitute legal advice and does not establish an attorney-client relationship.
No. They are lying to you and likely violating the law by threatening criminal sanctions for failure to pay on a civil loan.
The information provided in this answer does not create an attorney-client relationship and is not considered to be legal advice.
If they are saying you are going to jail you should immediately contact a lawyer and make a claim. You are entitled to damages and attorney fees. Many times your lawyer will be able to wipe out the debt in addition to getting you compensation. This sort of conduct is actually good news in that you can, if done correctly, eliminate this debt at no cost to you.
If you want to discuss your case further, please contact me at 855-709-5788 or at firstname.lastname@example.org. We only represents consumers in CA. Every case is unique and requires a thorough analysis of your situation with a lawyer.