What Happens to Debt When You Go to Jail?

Jail time can drastically change your day-to-day life, but one thing it won’t erase is your debt. Whether you owe credit card companies, have outstanding loans, or are behind on child support, your financial obligations don’t disappear while you’re incarcerated.

Understanding how incarceration affects your debt, credit, and overall finances is essential if you (or someone you care about) may be facing jail time. In some cases, you might be able to take measures to protect your finances before incarceration begins. In others, you may need to seek help with your finances and credit from behind bars. The following guide will help you understand your options, learn your rights, and answer key questions about debt and jail time.

Does debt still accrue when you’re in jail?

As they do during other unfortunate life circumstances, most debts will continue to accrue even while you’re incarcerated. Loan and credit card terms won’t pause while you’re behind bars. And monthly interest, fees, and penalties can still pile up during this period.

If you’re unable to make payments, credit card balances may continue to grow, loans may become delinquent, and you could face collections and other negative consequences. Here are some examples of how different debts might behave while you’re in jail.

• Credit cards: Interest charges and late fees typically continue according to the terms of your credit card agreement. And without timely payments (by you or a trusted helper), your credit card account(s) may go into default.
• Auto loans: Payments on auto loans will remain due as scheduled. If you default on your payments, the lender could eventually repossess your vehicle.
• Student loans: Federal student loans might qualify for deferment or forbearance. But even if you’re eligible for one of these temporary payment relief options, interest may continue to accrue.^[1]
• Child support: Child support payments don’t automatically pause when you’re in jail. Depending on your situation (and state law), you may be able to request a temporary modification while you’re confined. But eligibility often depends on your ability to pay. Additionally, interest on any child support arrears will typically continue to grow during this time.^[2]

Preparing your finances before you go to jail

Jail time often comes without advance warning. But if you have some notice before serving time, even a short window to prepare your finances could make a difference.

Of course, there are challenges you’ll need to navigate. You typically won’t have access to your regular financial accounts while incarcerated. In a few states, like New York, you might even have to close outside checking account(s) or transfer control of those account(s) before you go to jail.^[3] And, in certain cases, you could be dealing with frozen assets.

Below are a few helpful tips to protect your financial and credit health before you go to jail.

• Appoint a financial power of attorney. Giving a trusted person legal permission to manage your finances could help make sure your bills get paid during your time behind bars (if you have money in an outside bank account to cover them).^[4] But keep in mind that power of attorney also allows someone else to make financial decisions without your knowledge or approval. So, there are risks. Only give this authority to someone you fully trust. It’s also wise to consult with an attorney for advice about your specific situation.
• Schedule automatic payments. Unless state law or financial limitations prevent you from doing so, consider setting up automatic payments for credit cards, loans, and other recurring debts.
• Contact creditors. Some lenders may offer hardship programs, payment deferrals, or other short-term debt relief solutions. Depending on the situation and the length of your incarceration, certain creditors may be willing to work with you.
• Freeze your credit reports. Protect your personal information and credit from identity theft by freezing all three of your credit reports. To place credit freezes, contact each of the three major credit bureaus—Equifax, TransUnion, and Experian. Credit freezes are free, and prevent others from fraudulently opening new credit accounts in your name while you’re behind bars.^[5]
• Budget for commissary and other needs. Learn how family members and friends can send money to your prison commissary account for essentials while you’re in jail. Options for sending money or visiting inmates differ between facilities. So, it’s best to contact the individual state or local correctional department where you’ll be assigned for further details.^[6]

These proactive steps could go a long way toward helping you protect your finances while you’re behind bars. And hopefully they’ll also provide a better foundation for you to rebuild on after your release.

What happens if you don’t pay your debt while in jail?

If you don’t pay your debt during incarceration, the consequences could unfortunately follow you well beyond your release date. First, creditors may send unpaid debts to collections. Once this step happens, debt collectors can attempt to contact you or your spouse and even seek repayment through legal channels (like filing a lawsuit against you).^[7]

Even while incarcerated, creditors can sue you for unpaid financial obligations. If you don’t respond to a lawsuit (a task which can be much more difficult as an inmate), the court might issue a default judgment against you.^[8] In some cases, those types of judgments could allow creditors to place liens on your property, garnish your bank account, seize assets, or garnish wages after your release.^[9]

Another common consequence of not paying your debts while in jail is long-term credit damage. Unpaid debts can lead to late payments, past-due balances, charge-offs, collection accounts, and other negative credit items that stay on your credit reports for years to come.

Over time, the combination of rising balances, credit damage, and possible legal judgments can make financial recovery even more difficult once you’re out of jail. That’s why it’s important to do everything you can to protect your credit and finances.

If you can, maintain minimum payments on your debt and monitor your three credit reports. Those steps could make a big difference in your post-release financial stability. But if minimum payments prove impossible while in jail, know that it’s still possible to rebuild your credit and finances afterwards.

How jail affects your credit score

On a positive note, criminal records do not appear on your credit report.^[10] So being incarcerated has no direct impact—negative or positive—on your credit history or credit score. This could make financial recovery after you serve your sentence less difficult.

Nonetheless, there are several indirect ways that your credit reports and scores may experience damage while you’re incarcerated, including the following.

• Missed payments: Payment history—worth 35% of your FICO® Score—is the most important factor in determining your credit score.^[11] If late payments appear on your credit report while you’re an inmate, the credit score impact can be serious and those negative marks can remain for up to seven years.^[12] Past-due balances (or even a history of past delinquencies) can also have a severe credit score impact.^[11]
• Higher credit card balances: If you can’t make payments on your credit cards, your credit utilization ratio is also likely to increase. Credit utilization—the relationship between your credit card limits and balances—along with other credit score factors, is responsible for 30% of your FICO Score.^[13] When this balance-to-limit ratio rises, your credit score can decline in response.
• Collection accounts: Eventually, unpaid debts may turn into major delinquencies like charge-offs and defaults. Your creditors may sometimes sell these uncollectable debts to third-party debt collectors who, in turn, report collection accounts to your credit report in addition to the original account. Collections can stay on your credit reports for up to seven years and can credit score damage as long as they remain.^[14] (However, credit score damage does tend to lessen over time.)

How to start rebuilding your finances after release

Rebuilding your finances after incarceration often takes time. If you’re able to take steps to avoid certain debt issues before you go to jail, the journey to financial recovery is typically faster. Yet even if you’re starting from scratch, recovery is still possible. Either way, the key is to create a plan that works for your situation and stick with it.

Start small and focus on steady progress. Every situation will be different. The steps below provide a helpful checklist to guide you along the way.

1. Open a bank account. After incarceration, many people need to open new checking and savings accounts. Having a safe place to store money and pay bills will be important as you re-enter society.

Consider a second-chance banking program if you might have negative information on a consumer reporting file with ChexSystems (or elsewhere) that could make it hard to open a new account. These types of accounts can be helpful for consumers who struggle to open traditional deposit accounts.^[15]

2. Build an emergency fund. As soon as possible, start setting aside some money to start an emergency fund. Even $25 to $50 per month could help you avoid future debt traps.

3. Check your credit reports. Another important step to take post-incarceration is reviewing your three credit reports from Equifax, TransUnion, and Experian. You can request free copies of your credit reports online at AnnualCreditReport.com.

It’s also possible to ask for copies of your credit reports while incarcerated. To do so, mail your request to the following address.

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281^[16]

Once you have your credit reports, review them in detail for any mistakes. If you find any problems, you can dispute errors or fraud with the appropriate credit reporting agencies.

4. Address remaining debts. If you can afford to do so, contact remaining creditors to repay outstanding debts or negotiate settlement offers. However, be aware of debt collection statutes of limitation. Depending on your length of incarceration, some older debts may no longer be legally enforceable.^[17]

It’s often wise to seek professional guidance regarding your situation first.
If settling your debts isn’t financially doable, a bankruptcy attorney or non-profit credit counseling agency may be able to review alternative solutions as well.

5. Reestablish credit responsibly. Building credit again takes time. If you’re ready to begin, consider a secured credit card or a credit builder loan. Just be sure to manage your new accounts with care—always paying on time and keeping your credit utilization ratio low on any credit cards.

No matter which steps you take, the key is to be consistent and patient. Financial recovery after incarceration is a marathon, not a sprint.

Can you go to jail for debt?

Contrary to what some people believe (and what some collectors who violate the FDCPA might threaten), you can’t be arrested or go to jail simply for owing money.^[18] Debtors’ prisons were outlawed in the United States close to two centuries ago.^[19]

Still, there are a few exceptions you should know.

Lawsuits

A creditor can’t file charges to have you arrested for failing to pay a civil debt. So, if you fall behind on a credit card, personal loan, student loan, car loan, mortgage, medical bill, etc., you don’t have to worry about jail time. However, that creditor (or a third-party debt collector) could file a lawsuit against you.

If a debt collector sues you for unpaid debt and you receive a summons to appear in court, it’s important not to ignore the order. Failing to answer a summons might result in your arrest (should a judge decide to hold you in contempt of court). Additionally, a judge might also decide to hold you in contempt if you defy a court-ordered judgment.^[18]

Child support

Failing to pay child support could result in jail time under state and federal law. You could face up to two years in prison, depending on the situation.^[20]

Federal taxes

It’s rare for taxpayers to go to jail because they can’t afford to pay their taxes. But the IRS does target people who commit tax fraud or hide assets and income they should use to pay their back taxes.^[21] In 2024, there were 360 cases involving federal tax fraud according to the United States Sentencing Commission. Sixty-six percent received prison sentences with the average sentence lasting 15 months.^[22]

What to do if a debt collector threatens you with jail time

While not every debt collector is dishonest, there are some bad apples that use deceptive practices in an attempt to pressure consumers to pay. If someone contacts you and dishonestly suggests you’ll face jail time for unpaid debt, it’s important to know your rights. Threatening to arrest you for not paying a debt is a violation of federal law—specifically the Fair Debt Collection Practices Act (FDCPA).^[23]

If you experience this type of harassment, ask for written verification of the debt. It’s also a good idea to document all communication. From there, you can file a complaint with the Consumer Financial Protection Bureau (CFPB)^[24] or your state attorney general^[25] if threats continue. You may also seek legal advice from a reputable attorney.

Bottom line

Going to jail doesn’t erase your debts. In many cases, it makes your financial situation much worse. Most debts will continue to accrue interest and fees while you’re behind bars. And failing to pay can lead to lawsuits, judgments and lasting credit damage.

Although this information can be discouraging, you do have tools you can use to protect yourself. Planning ahead and understanding your rights are two of the most important ways to limit potential financial harm. And if your debts do spiral while you’re incarcerated, it’s possible to rebuild your financial security and credit over time after your release.

Debt is stressful under any circumstance. But it’s important to understand that incarceration doesn’t have to mean lifelong financial ruin. With the right knowledge and a plan, you can work toward a fresh start—both in your freedom and in your finances.

Sources

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2. TexasAttorneyGeneral.gov. “Incarcerated Parents.” https://www.texasattorneygeneral.gov/child-support/programs-and-initiatives/incarcerated-parents
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14. Experian.com. “How Long Do Collections Stay on Your Credit Report?” https://www.experian.com/blogs/ask-experian/credit-education/report-basics/how-and-when-collections-are-removed-from-a-credit-report/
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16. Experian.com. “How to Request a Credit Report When Incarcerated.” https://www.experian.com/blogs/ask-experian/credit-report-when-incarcerated-without-internet/
17. ConsumerFinance.gov. “Can debt collectors collect a debt that’s several years old?” https://www.consumerfinance.gov/ask-cfpb/can-debt-collectors-collect-a-debt-thats-several-years-old-en-1423/
18. Experian.com. “Can You Go to Jail for Debt?” https://www.experian.com/blogs/ask-experian/can-you-go-to-jail-for-debt/
19. Justice.gov. “Debtors’ Prisons, Then and Now: FAQ.” https://www.justice.gov/usao-sdal/page/file/918356/dl
20. Justice.gov. “Citizen’s Guide To U.S. Federal Law On Child Support Enforcement.” https://www.justice.gov/criminal/criminal-ceos/citizens-guide-us-federal-law-child-support-enforcement
21. HRBlock.com. “Who Goes to Prison for Tax Evasion?” https://www.hrblock.com/tax-center/irs/tax-responsibilities/prision-for-tax-evasion/?srsltid=AfmBOorj1Pt5y1kJA2eWFHpB2x_UPTeE7sIHLtcKcJnSlEaxPYs7waaH
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24. ConsumerFinance.gov. “Submit a complaint about a financial product or service.” https://www.consumerfinance.gov/complaint/
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About the author

Michelle Lambright Black is a nationally recognized credit expert with two decades of experience. She is the founder of CreditWriter.com, an online credit education resource and community that helps busy moms learn how to build good credit and a strong financial plan that they can leverage to their advantage. Michelle's work has been published thousands of times by FICO, Experian, Forbes, Bankrate, MarketWatch, Parents, U.S. News & World Report, and many other outlets. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).

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