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What Happens to Your Debt While in Prison


Dealing with financial obligations is challenging for most people, but what happens to those debts when you’re behind bars? For individuals who are incarcerated, understanding how to manage debts can be complex.

Types of Debts Incurred Prior to Prison

People going into prison might have a variety of debts including credit card balances, student loans, or mortgages. These debts do not vanish simply because the debtor is in prison. They continue to accrue interest and penalties, potentially causing a modest debt to balloon into an insurmountable sum.

The Reality of Prison and Debt Management

Many prisoners have little to no income while in prison, and thus are unable to make payments on their debts. In fact, while behind bars, it’s often impossible to effectively communicate with creditors or to access financial advice.

The Process of Debt Accumulation in Prison

Prison Expenses

While incarcerated, individuals may face additional expenses, such as legal fees, commissary costs, and charges for phone calls and emails. These expenses can add to an individual’s debt load.

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Post Release Debts

Upon release, former prisoners may find themselves facing debts incurred while in prison in addition to those they had before incarceration.

Debt Management Strategies for Inmates

Communicating with Creditors

The best strategy to avoid debt piling up is to communicate with creditors as soon as possible. It might be possible to negotiate a lower interest rate or a payment hiatus.

Hiring a Financial Power of Attorney

Inmates can appoint someone they trust as a financial power of attorney (POA). This person can then take steps to manage the inmate’s financial obligations, such as making payments or negotiating with creditors.

Debt Counseling Services

There are nonprofit organizations that offer debt counseling services for prisoners. They can help inmates understand their financial obligations and devise a debt management plan.

Consequences of Unattended Debts

Credit Score Implications

Unpaid debts will adversely affect the person’s credit score, which could make it more difficult for them to get loans or credit cards in the future.

Legal Consequences

In some circumstances, if the debt remains unpaid for a long period, creditors may take legal action. This can lead to wage garnishment, seizure of property, or even a court judgement.

Post-Prison Debt Management

Paying Off Debts

Once released from prison, it’s crucial to tackle these debts. This could involve setting up a payment plan, negotiating with creditors, or seeking help from a debt relief agency.

Repairing Credit

Repairing one’s credit after prison can be a daunting task. However, by making regular, on-time payments, and keeping debt levels low, it is possible to rebuild credit over time.

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Dealing with debt while in prison is a complex issue that requires a proactive approach and careful planning. But remember, there’s help available, and a debt-free future is achievable, no matter what the past may hold.


  1. Does prison erase debt? No, being incarcerated does not erase debt.
  2. Who can manage my debts while I’m in prison? You can assign a trusted individual as your financial power of attorney to manage your debts.
  3. Can creditors take legal action against me while I’m in prison? Yes, creditors can still take legal action to recover the debts.
  4. Can my credit score improve after my release from prison? Yes, with proper debt management and regular payments, you can improve your credit score.
  5. Are there organizations that help with post-prison debt management? Yes, there are numerous non-profit organizations that offer debt counseling and assistance to former prisoners.

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