What Happens to Debt When You Go to Jail? 

Are you wondering what happens to your money if you go to jail? You’ve come to the right place for answers. Each month, more than 170,000 people visit our website for advice on debt.

In this article, we’ll guide you through what you need to know:

• If some debt can be written off when you go to jail.
• What might happen to your debt if you are going to prison.
• Steps to take if you’re about to be sent to jail with debt.
• What is a payment break and how it relates to your situation.
• Whether you can go to prison for debt in the UK and how to deal with debts when you leave prison.

A study by Citizens Advice found evidence of poor practices by debt collectors in the UK, including the collection of very old debt.¹ So, we understand your worries.

You’re not alone! We’re here to help you understand the rules and choices you have.

I Might be Going to Prison, and I have Debt. What will happen to it? 

It’s a good idea to plan ahead with your debts if you feel you will be in prison soon. It’s important to communicate with your creditors and inform them of your situation.

If you don’t do this, you may find that your situation has worsened once you’re finally released, and you must face the debt consequences.

Creditors can still take legal actions against you for your debts while you’re in prison, and you would not be able to do anything to counter it.

For example, your creditors can still pursue court action, such as a County Court Judgment (CCJ) against you.

They can also make moves to make you bankrupt while in prison. 

» TAKE ACTION NOW: Fill out the short debt form

If you have arrears on priority debts such as Council Tax bills, then certain steps may be taken to retrieve this debt from your benefits and wages.

While this may not affect you since you’re in prison, it may affect your loved ones and relatives who depend on your salary to live. 

If you have rent arrears, your tenant could kick your family out of your home while in prison. 

If you have utility arrears such as electricity or gas, your energy provider could apply for a warrant to cut off the supply to your home, leaving your family in a predicament. 

Some of your debts may become statute-barred while you’re in prison, but this isn’t always true.

This is why I always suggest that you take concrete steps to ensure your creditors won’t take any drastic legal measures against you while in jail. 

I’m About to be Sent to Jail with Debt. What Steps Should I Take? 

If you have a court hearing and feel that you will be sent to jail after it, I highly recommend that you address debts while you’re inside so you don’t come out to a whole host of debt implications. 

Firstly, you should spend some time contacting creditors and inform them of your situation.

Tell them when you’ll be going to jail and approximately for how long (if you have an idea). Creditor communication is vital.

You can also ask them if you could appoint a person (such as a trusted friend or family member) to handle your account while inside. It would be quite convenient for you to do this, as dealing with your creditors while in jail could be very difficult.

Depending on your creditor, you may be allowed to appoint a person over the phone to handle debts, but other companies may require you to do this in writing so that they have some sort of proof. 

As you can see from below, many creditors will work with you or your family, but some will make it more difficult. This is where professional advice can be helpful.

If you cannot contact your creditors before going inside, you can try to contact them once you’re in jail.

Your access to a phone will be limited, so it might be a good idea to ask a friend or family member to do this for you. If you owe money, your income will likely not be enough to pay your debts.

Thus, you might need to ask creditors for a payment break to help you manage debts.

You can even take steps when you’re inside to take care of your debts, for example, by going bankrupt. However, this could be difficult to arrange and might not be the best option for you either.

What is a Payment Break? 

A payment break (also known as a payment holiday) is an agreement between you and your creditors stating that you won’t be paying any money towards your debt for a certain period. 

A payment break can be opted for if you’re experiencing debt difficulties, and it can also be opted for in certain other circumstances, e.g. if you’re going to jail. 

Of course, this is dependant on creditor cooperation and creditor flexibility.

You must remember that the missed payments during this period are treated as arrears, and extra charges and interest may continue to be added.

Thus, once your payment breaks, you will most likely see an increase in your monthly payments, and you will ultimately have to pay a larger amount overall, which could potentailly increase your debt struggles.

Your missed payments are also logged within your credit file and, thus, will make it quite hard for you to secure credit in the next six years. 

Can You Go to Prison for Debt in the UK? 

No. About a hundred years ago, being unable to pay back the money you owed had a real risk of you going to debtors’ prison.

However, in the modern age, it’s very unlikely that you’ll be imprisoned for being unable to pay your debts.

You must remember that it is not a criminal offence to be unable to pay off your debts.

If you’re struggling with your debts, there are many debt solutions in place that you can opt for to better your financial situation. 

That being said, some types of debts hold a small risk of you being imprisoned. These debts are: 

• Criminal fines 
• Council Tax 
• Child Maintenance Arrears 

Remember that even for these types of debt, imprisoning you is the last resort.

You will only be imprisoned if the court deems you can afford to pay back the money you owe, but you’re refusing to. You won’t be imprisoned if the court finds that you simply can’t afford to pay the debt.

In this case, steps will be taken to either reduce the amount of money you owe or create a repayment plan for you to make the repayments more affordable. 

As for unsecured debt from creditors registered in England and authorised and regulated by the Financial Conduct Authority, there’s no risk of you being imprisoned for being unable to pay your debt. 

Your credit score can take a major hit, you could go bankrupt, and you won’t be able to secure most types of credit in the future.

These are the worst things that could happen to people if they owe a debt they can’t afford to make payments for.

People are not imprisoned for this. 

Dealing with debts when you leave prison

Once you have left prison, you must get your finances back on track.

Depending on your age and circumstances, you may be entitled to Universal Credit, which will cover some living costs and housing expenses. If you cannot work due to poor health, you may be able to claim disability benefits.

Get professional advice to see what financial support you are entitled to.

Regarding your debts, if you haven’t made arrangements or contacted your creditors, now may be the time to do so.

If the debt has become unmanageable, solutions such as an IVA, debt relief order or debt management plan are available. These do have a credit file impact though.

Resources and assistance available for those in prison with debt

Debt charities and organisations, such as the ones I have listed below, are great places for free and impartial debt advice if you or a loved one are facing prison.

Talking to someone about it can be a huge relief and take pressure off at an already stressful time.

Most prisons also have a benefits or financial advisor you can speak to, as well as prison suppor services.

Organisation	Website	Phone number
Stepchange	http://www.stepchange.org	0800 138 1111
National Debtline	http://www.nationaldebtline.org	0808 808 4000
Citizens Advice	http://www.citizensadvice.org.uk	England: 0800 144 8848 Wales: 0800 702 2020

References

1. Citizens Advice – The state of debt collection