Prison Can Affect Credit Scores and Future Finances

Manage Your CreditNot many people plan for prison, so it's no surprise that, of the millions of people who end up serving time every year, few look ahead financially. A report from the Bureau of Justice Statistics says that as of 2008, the total incarcerated population at any given time was over 2 million. Many inmates were detained in local or county jails, while some were jailed in the federal prison system.

According to the Bureau of Prisons report, the average sentence for inmates in the prison population is between five and 10 years. More than 13 percent will be there for less than three years. At the time of the study, more than half of the prison population was incarcerated for non-violent offenses.

While three years may not seem like a long time compared to a life sentence, some have argued that substantial financial damage can occur within that time period. Many inmates leave behind unpaid mortgages, car loans, and credit card bills when they go to the big house. With fees, fines, and interest rates, these debts can quickly grow, hurting credit scores and leaving the incarcerated with meager, if any, funds, upon their release.

As would be expected, many perpetrators don't even consider making proper arrangements for their finances before they're arrested. Some even report becoming the victims of identity theft by close friends and relatives, and end up having to file for bankruptcy, according to Fox Business.

"Before I went to jail, I had a car, cellphone, cable and Internet, credit cards, and many other bills and loans that were being paid," Preston Love Jr., a Pennsylvania man released from prison in 2010, told Fox. "Once I was in jail, there was still nothing they could do. I had people try to call and make arrangements for me, but they wouldn't allow them."

Experts believe that many inmates, already overwhelmed by legal problems, choose to let these bills go unpaid. Going to jail for as little as three months could destroy even a solid credit report, Fox Business suggests. Experts say most inmates end up defaulting on loans and financial obligations, leaving spouses to carry the burden and deal with debt collectors.

In prison, mail is often restricted, with some facilities allowing correspondence with the outside world only via regular mail. Phone calls can also be costly, and inmates are often dealing with limited funds. Wallets, credit cards, and checkbooks are often found on a person when arrested, and these can end up sealed off in an envelope until the end of the prison sentence.

Prisoners are allowed to keep an inmate account; however, this consists mainly of money that was found on the person at the time of arrest, or money deposited by friends and relatives during visits. Under the law, inmates don't have the ability to transfer funds into another account, Fox Business says.

Prisoners may also have a hard time enlisting others to properly manage their funds.

"We get a number of calls from inmates who, because they didn't have access to accounts and they relied on others, they've been bilked," said David O'Neil, a Texas attorney. "They've had people take advantage of inheritances that they've received. We've seen some inmates who've gotten brokers or set up trusts and had trust officers from responsible banks handle their funds."

Prison time can also hinder a person from earning money and, as a result, has enduring repercussions, a recent study by the Pew Economic Policy Group found. The report found that family income declines as much as 22 percent during an incarceration and only rises seven percent upon release.


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