Jails are different than prisons. Jail is where someone is held pending a hearing on their case. Prison is where someone is sent once it has been decided they are violating the law. Although other countries use different terminology, most have the same distinction between the two.

What happens in these cases is that someone doesn't show up to court. A bench warrant is issued, and they get arrested months later when they get pulled over for speeding or something unrelated, and the police find the warrant. At that point, the court can't immediately drop everything and hear the case. They get put in jail for a day or two until a bail hearing, at which point the court will set a new court date, and decide whether to require the person is required to post bail as a guarantee that they'll show up this time, or whether they'll be held in jail pending the court date. At this point, the judge can't order the person to do community service--they've done nothing wrong other than fail to show up to court, and the only reason they're in jail is the risk that they won't show up for the new court date. Many people can't post the bail, so they sit in jail waiting for their new court date.

No matter how lenient you are with debtors, at the end of the day the court needs some way to force someone to participate in the process of deciding what to do. Even if you say "we'll forgive small debts if the debtor is poor," how do you decide that if the debtor won't show up to court?