What happens to your debt if you go to prison?

22 June2012

There are many different things to deal with if you go to prison, but it's important that you carry on paying attention to your debts.

If you go to prison, your debts are not automatically written off or frozen. They may continue to build up - and debt problems can get worse if you don't deal with your finances quickly, from gas and electricity bills to loans, credit / store cards and court fines.

What can you do about your debts in prison?

Dealing with debt in prison can be particularly difficult, due to limited contact with the outside world and a drop in your household's income.

It is still important to try and tackle your debt as soon as possible, however. Here are a few steps you can take:

  • Contact your lenders and explain how your circumstances have changed.
  • Explain why you can't pay back the money as agreed and ask whether they will freeze interest and charges on your debts - or even write them off (you can always ask).
  • Ask whether you could pay a smaller amount each month, or even nothing at all, until you are released.
  • Take into account your prison earnings and any other private money you have access to.
  • If you agree to make smaller payments, start paying as soon as possible and try not to miss any payments.
  • Make sure you have claimed all of the benefits you are eligible for.

Find out more about how to negotiate with your lenders here.

What money can you access in prison?

You cannot take out any further loans in prison - nor can you remortgage your house to release equity, although your partner may be able to do this if you have a joint mortgage. You should get professional advice before you do anything, as securing any debt on a property could put it at risk if the owner doesn't keep up with the payments.


If your lenders refuse to accept lower payments or you have no hope of repaying your debts, you may need to consider bankruptcy. This will write your debts off, usually after one year, allowing you to 'start afresh'. Having said that, you'd need to think about the drawbacks of bankruptcy - like the effect it'll have on your credit rating, and the fact that you might need to sell your home and other assets.

It can also be more difficult to go bankrupt in prison, as you cannot contact or meet bankruptcy officials as easily as you could if you were outside.

If you'd like some more information about bankruptcy, you can find it here.

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Tags: debt, prison, debt help, advice, benefits, unsecured debt, loans, remortgage, mortgage, bankruptcy

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