I was listening to a podcast where a serial killer was in debt half a million dollars. He was then put in prison for life. What happens to that debt?
In: Economics
Any assets they own are sold off and the rest is written off as bad debts. If/once they are out, their credit score is all messed up and they probably won’t be able to take a good loan again.
If the prisoner doesn’t make arrangements to continue paying off the debt while they are in prison then they will suffer the same fate as anyone else who doesn’t pay their debts. Their credit score will be damaged, and they will find it hard to get credit once they get out. Possibly lawsuits if the debt is big enough. Still, it’s not like you are entirely isolated when in prison. You can still talk to relatives and friends on the outside, and you can use their assistance to make payments on the debt if you wanted to.
If you are understood to be in prison for life, then the debtors will probably just write it off as a lost cause, or potentially sue your family/estate to try and get any debts paid.
If he was worth anything, the same process creditors would have to follow for a non incarcerated person.
They’d have to go through all the usual methods to collect, file to garnish wages, sue in civil court to attempt to seize assets to repay, etc.
It all has to be done through the courts. Just because your guilty of one crime, doesn’t make your finances any more open game. Unless it’s a financial crime in which case repayment and seizures will usually be part of you criminal indictment and case.
You don’t have to go to jail though to have a bank write their loss off on you and call you not worth their time because you don’t have any money or assets for them to seize.
That much debt is typically charged off by the bank. Believe it or not, it also falls off the credit score after seven years in the US.
Debts don’t stop just because you are locked up, car notes still have to be paid, mortgages, rent, utilities and other large expenses. Most prisoners will be able to make arrangements, such as signing their cars over to relatives or whathaveyou. If you cannot pay, the same thing will happen as if you were in the free world, your debts will accumulate, and eventually they will default.
If you have money owed against you, it may get taken out of commissary or (if the state/federal prison you are in pays you for labor) it will get taken out of your “wage.” In prison next to everything costs money so relatives frequently send money, a portion of that (the bulk actually) goes to debts and fines. Most prisoners actually have legal fines of some kind so this isn’t abnormal. Even if you were debt free when you went in and assuming you have no legal fees or victim restitution fees, you can still accumulate legal fees behind bars. Assault a guard? It isn’t just a trip “to the hole” like they say in the movies, it gets passed on to a DA and in addition to a battery on a peace officer charge, you could be looking at a $10,000+ fine that follows you on the outside.
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