Possibly Col. Brandon is softening the phrases used, and means 'debtors' prison' when he says 'spunging house.'

But since the rest of his tale is talking about callous guardians of young ladies plotting to rob them, cruel husbands imprisoning their pure brides in miserable situations, extramarital affairs (and divorce therefrom), natural children, and innocents being seduced and abandoned by rogues, it seems an odd time to rely on euphemisms.