Editor’s note: This is the first in a series about how unexpected events or life changes can affect your personal finances. We spoke with experts and distilled their wisdom into succinct answers in a Q&A format. If you have suggestions for topics, send a note to firstname.lastname@example.org.
Unfortunately, there's no "get out of jail free" card in real life.
Being incarcerated–even for a short period of time and even if the arrestee is proven innocent–can have a wide range of effects on a person's finances. The impact is more severe for those who spend more time in jail, and for those who are convicted.
The issue affects many Americans: the Prison Policy Institute estimated last year that there were about 2.4 million people in U.S.-run jails, giving the country the highest incarceration rate in the world. The American Bar Association details more than 46,000 consequences of convictions on its web site, many of which relate to finances or employment. Fusion Money spoke with several experts on incarceration to highlight some of the most common financial ramifications of arrest and how to deal with them.
Q: If I get locked up for a brief time for a petty crime, what will it cost me?
A: To start there’s bail (if eligible), a lawyer (if the arrestee doesn’t qualify for a public defender) and sometimes fees for the court process and arrest itself. Those expenses alone can rack up a few thousand dollars.
It can also affect employment. As an example, let’s say someone's arrested for driving under the influence one evening and released on bail the next day. The arrestee typically loses his or her license for some period of time, which can make it tough to get to work or school if driving is necessary.
Q: Do more serious crimes lead to more serious financial consequences?
A: Generally, yes. If a person is eligible for bail, and can afford it, it's usually much more expensive for serious crimes–felonies as opposed to misdemeanors, say. A legal defense can also be more expensive because the crime takes longer to litigate, and expert witnesses or investigators may have to be hired.
If an arrestee can't get out quickly–which is often the case–he or she is less likely to remain employed, pay debts or keep skills sharp enough to seamlessly return to the workforce.
As the ABA site shows, various penalties and restrictions can be imposed on where convicts can work and live, what public assistance they're eligible for, and what professional licenses they can maintain. For instance, Wyoming, like many other states, prevents convicts from being certified child-care providers, as well as licensed midwives. And for certain convictions, Texas revokes food stamp benefits, Maine denies fishing licenses, and California considers convicts ineligible to be an autonomous vehicle test driver.
There’s also the issue of job applications that ask about criminal convictions, which some states and municipalities are doing away with. Even so, employers can run background checks that uncover arrest and conviction records anyway.
Q: How does jail time affect my debts?
A: The cost of being arrested can add to debt, but the bigger issue is usually whether the incarcerated person can stay current on debt that already exists. Someone can walk out of jail (or prison) with a much bigger debt burden than the one he or she walked in with, depending on how long the incarceration lasts.
It’s not uncommon for convicts to file for bankruptcy, says William Shepherd, a criminal defense attorney at Holland & Knight LLP and former chair of the ABA’s criminal justice section. But even then, they are still saddled with some types of non-dischargeable debt, like student loans.
“You’ve obligated yourself to those debts,” he says. “That means your car gets repossessed, you get thrown out of the place where you’re not paying your rent or your mortgage, and some of the debt remains outstanding even if you file for bankruptcy.”
Q: Is there ever a situation where I can get arrested and not suffer any financial consequences?
A: Probably not. The process of getting out of jail almost always costs money. If found innocent, or if charges are ultimately dropped or dismissed, the arrest is still a matter of public record that can affect current or future employment.
“When someone is incarcerated, even for a brief period of time, they often lose their job for a couple of reasons: one, they can’t show up, which is a problem, and, two, they have criminal records,” says Stephen Saltzburg, a criminal law professor at George Washington University. “Even if charges are dropped, some employers don’t want to deal with the person anymore.”
Q: Jeez, this is all really depressing. Is there nothing I can do to minimize the financial damage?
A: There are some steps people who are arrested can take. Many of them pertain to having a trusted person handle the arrestee's finances–if not paying bills, then calling lenders and sorting things out while a person is locked up. These steps may help, but they won't completely erase the financial burden of being arrested.
I oversee Fusion's money section and have spent most of my time as a journalist writing about banks and finance. I live in Brooklyn with my partner Geoffrey & our two dogs, Captain & Tallulah. Favs: leopard print, Diet Coke, gummy candy, Ireland.