What happens to someone's personal debt if s/he goes to prison?

September 1, 2004 7:24 PM

What happens to someone's personal debt (ex. credit cards, student loans) if s/he goes to prison? Does it matter if the term is <10 years? Life? (Not that I need to worry personally, just curious.)
posted by ferociouskitty to work & money (6 answers total)

Student loans provide for a forbearance or a deferrment if you are back in school or unemployed. Presumably in prison you could get an unemployment forbearance forbearance and (I think) the unpaid interest is turned into principal while it's not paid. (This was true 20 years ago, anyway, when I worked in a bank.) No idea about credit cards, or what happens if you are in for many, many years. Maybe you declare bankruptcy?
posted by onlyconnect at 8:51 PM on September 1, 2004

I don't see why anything special would happen. Being in prison doesn't prevent you from engaging in financial transactions. (Possibly with the help of friends/family/lawyers.) So if you just refused to pay, your debt would be sent to a collection agency, which could eventually sue you and have the court take your property, if any, and garnish your wages once you get out.

Think about someone like Martha Stewart going to prison. It's not like her whole financial empire is going to grind to a halt while she's in there--her assets will be managed by other people.
posted by mcguirk at 9:14 PM on September 1, 2004

A bankruptcy stays on your credit for what - 6 or 7 years? I would think that unless you had a lot of assets to manage, a long spell in prison would make bankruptcy seem like a non-issue.
posted by Salmonberry at 10:08 PM on September 1, 2004

Presumably in prison you could get an unemployment forbearance forbearance

Don't most prisoners have prison jobs? Doing stuff in the wood-shop or something that pays $0.25/hour? That is my understanding.


I saw a thing once about a prison in Main, if I remember correctly, where the inmates make detailed woodworks (bottles in a ship, lawn ornaments, etc) and they sell them at a gift shop at the prison. People come from all over to buy these items, and the prisoners make a decent amount of money on these items.

I don't see why you would get any deferment.
posted by Steve_at_Linnwood at 10:09 PM on September 1, 2004

I saw a thing once about a prison in Main

Er, I think that's Maine, Steve my friend. And what you're thinking of is Maine Prison Industries which does, in fact, pay the inmates some small stipend, but which functions more as a job training project than real employment (think vocational school rather than a real 'job').

FWIW, the guy who recently reupholstered my mother's antique living room set was trained at the Maine Correctional Center and he did an amazing job.
posted by anastasiav at 6:46 AM on September 2, 2004

yes, in the united states, while you are incarcerated, you are responsible for payment of whatever bills you have in the outside world. if someone doesn't make your car payment, your car will be repossessed and your credit rating will be ruined, although--honestly--that is the least of your worries. a prisoner could declare bankruptcy, but given the average american inmate's pre-prison finances, there's no reason to. as a prisoner in most states' DOC, you also have to pay for toiletries, phone calls, stamps, &c. frequently, 1/4 of whatever wage you earn in prison industry goes directly back to the prison to pay for your room and board.

child support payments are not suspended while a person obligated to pay child support is incarcerated, unless the civil court responsible for the support decree enters an order suspending them. accumulated unpaid child support may be reduced by court order once a prisoner is released and resumes payment.

inmates may not receive Social Security and Supplemental Security Income benefits generally for the months they are confined.

students loans are generally eligible for unlimited forbearance status. if you cannot afford the minimum monthly payment but are not unemployed, interest accrues and you must make some monthly payment but, by agreement, you are not in default. i have personally never known a prisoner with a student loan debt. i'm sure there are some, but they're not in my case load.
posted by crush-onastick at 7:51 AM on September 2, 2004 [1 favorite]