Debt and Prison: What Happens to Debt When You Go to Jail?


One of the most common questions we hear about prison is, “What happens to my debt if I’m in jail?” It makes sense that someone going to jail would want to make sure that their finances are in order before leaving. It also makes sense that family members would want to know their responsibility, if any, for their loved one’s debt.

Therefore, this article will focus on several frequently asked questions we hear about jail time and debt, bills, and other finances, so that you can feel more prepared, whether you’re heading to jail yourself or you’re a family member of a soon-to-be inmate.

Debt and Jail FAQs

The following FAQs should answer most of your questions about how debt and bills work if you go to jail. However, the specifics of your case could change things a bit. We aren’t lawyers, so it’s important to speak directly to your lawyer to get any information that’s specific to your case. Use the answers below as guidelines to help you know what you might expect.

What Happens to Debt When You Go to Jail?

This is the number one question we hear about what happens in prison regarding an inmate’s finances. With the average American having more than $90,000 in debt to their name, it’s fair to assume that many people going to prison have at least some debt to deal with when it’s time to go.

So, what happens to it all? The short answer is that it stays the same. Of course, you might have some creditors that are willing to work with you to pause your payments or lower your interest on your debt while you’re in hail. However, it’s improbable that your debt will get wiped away. You’ll still be responsible for finding a way to pay for your debt while you’re in jail.

What Happens to Bills When You’re In Jail?

Just like your debt – car loan, credit cards, mortgage, etc. – your bills remain the same when you’re in jail, too. The only thing that might change this is if you contact companies you pay bills to ahead of time and get your services shut off. This might be a good idea if you have a cell phone, streaming TV services, and other things you won’t be using when you’re in jail.

However, things like your house payment, car payment, car insurance, and utilities, may still require payments. When you’re in jail, it’s unlikely that you’ll make enough money to cover your regular monthly bills.

You might need a family member or friend to take care of these for you if you have enough money in savings to cover your bills for a while. Otherwise, your unpaid bills will get added to your debt, and you could wind up with a financial mess when you return home.

What Happens to Student Loans in Prison?

If you’re not in default on your student loans, meaning that you haven’t already fallen behind on payments, you may qualify for an income-driven repayment plan while you’re in jail. Your payments on these plans are determined by your income, which you won’t have much or any of while you’re incarcerated. So, you might qualify for a $0/month payment.

Your student loans will still be waiting for you when you get out, but you won’t have to worry about defaulting on them while you’re in jail if you qualify for a $0 monthly payment.

In some cases, you might also qualify for public student loan forgiveness (PSLF). This typically happens if you get a job in a federal prison while you’re incarcerated. After making qualifying monthly payments, you could have the rest of your student loan debt forgiven. It will only help you during your incarceration if you’ve already made all qualifying payments, though.

Is My Family Responsible for My Debt If I’m in Prison?

Not technically, but the burden can fall on them if you haven’t prepared your finances before going to jail. In most cases, your family may only be legally responsible if they have cosigned on your bills or debts. If not, they might have creditors pursuing them to pay your bills, but they aren’t necessarily legally responsible for them.

With that said, your family will probably be helping you out while you’re in jail to keep up on your bills. It’s important to prepare them as much as possible before you leave to streamline the process.

What Can I Do to Prepare Financially Before Jail?

Before going to jail, it’s best to make sure your family has everything they need to get your bills and debts paid because you won’t be able to do it from the facility. Write down the bills you have, how much they are, how you pay them, and contact numbers for the companies and creditors.

You might need to give your family your passwords for your accounts if you typically pay them online. Make sure you’re leaving your financial tasks only to a person or people whom you trust completely.

You can also speak to creditors and your bill companies before heading to jail. Let them know how long you plan to be gone and see if there’s anything they can do to pause bills or lower interest rates before you leave. It’s also a good idea to let them know that someone else will be handling your bills while you’re gone.

Does Jail Time Affect Your Credit Score?

Jail doesn’t directly affect your credit score. In other words, your jail time won’t show on your credit report. However, if your bills and debts go unpaid while you’re in prison, you could see a significant hit to your score when you get out.

Payment history is a huge part of your credit score, so failing to make payments on time can quickly drop your score. If someone is taking care of your bills for you, make sure they understand how important it is to pay your bills on time.

Can You Go to Jail for Credit Card Debt?

Contrary to popular belief, creditors can not send you to jail for not paying your bills or debts. Debt collectors do try to use this tactic to scare people into paying their debts, but it doesn’t actually happen.

However, debt collectors do have other tactics they can use to go through the court system to sue you for your debt. The problem with this is that you can eventually end up in jail if you don’t make your payments according to the court judgment.

Debt and Prison

Navigating your finances in jail can undoubtedly be challenging, especially if you don’t have enough money saved to cover your bills during your jailtime. Still, with some preparation, planning, and the help of family and friends, you can avoid hurting your credit score and getting into financial trouble while you’re in jail.