Prisoners and Debt (4.9.1)
Words You May Need to Know
Debt - a debt is a sum of money which has not been paid but which is owed to a person or company
Debtor - someone who owes somebody or a company money
Creditor - someone who is owed money by someone or a company
Freeze - stop
Lend – to give something to somebody to use but to expect to get it back
Lender – someone or a company or organisation that has leant money
Rebate – a deduction from the amount of money to be paid
Many people are in debt when they go to prison and for most prisoners, a debt problem will get worse whilst you are in prison. Your family also might get into debt because you are in prison. This fact sheet will help you to deal with your debts and help you get back control of your finances as much as possible.
Examples of debts
Even if you don't have debts when you first arrive in prison, debts can soon build up if you don't deal with your finances quickly. Here are some examples of debts you might have:
- rent or mortgage arrears
- parish rates
- gas and electricity bills
- credit cards or store cards
- catalogue debts
- child maintenance
- court fines you owe
- tax and social security debts.
Contact the people you owe money to
First of all, try to check that the money they say you owe is correct. Then, as soon as possible, write to the people you owe money to (your creditors). Explain that your situation has changed. Say why you can't pay back the money you owe and ask them if they will freeze interest. You can also ask them to write off the debt altogether. This is the best option if the only money you have coming in is your prison earnings.
Other options might include asking your creditors to allow you to pay smaller amounts of money each month or to allow you to make no repayments until your release date.
If you have credit or store cards, explain you can no longer use them. If possible, get them cut up and sent back to the lender. At the end of this fact sheet, we have included details about a sample letter you can use to write to your creditors. Make sure you keep copies of each letter you write.
If you delay contacting your creditors, your debt is very likely to just get bigger because of ‘late payment’ and ‘interest charges’. These are additional charges which can be charged on the amount of money that you owe and that you do not pay back. Interest rate charges can be very high and the amount of your outstanding debt can soon mount up as the charges continue to be added unless you have agreed that this will not happen.
Your creditors could also take you to court. This will make it difficult for you to get credit when you leave prison and you could even end up losing your home.
If you need time to get proper details of your debts, it is best to write just a brief holding letter to your creditors to say that you are in prison. Ask them to freeze interest and late payment charges until you've been able to get advice about what to do next.
If an advice agency like the CAB runs sessions in your prison, you could ask them for advice.
Paying back what you owe
If the creditor agrees that you can pay back a small amount, start paying as soon as you can. Make sure you don’t miss any payments. A creditor will usually only agree a small payment for a short period of time, usually three or six months. Then they will contact you again to find out whether your situation has changed. You should always reply to these letters. Check the amount of money they say you owe on any statements or letters you are sent, to make sure that interest hasn't been added. When you reply, make sure to ask them to carry on freezing the interest.
When you first get to prison, make sure that you have claimed all the benefits you have a right to. If you are due a back payment, this could be used to help pay off your debts. Get advice from an advice agency like the CAB about what benefits you and your family can get whilst you're in prison. Also, check your tax situation – you may be due a tax rebate when you first go into prison.
When you are in prison, you are allowed to use your private cash to repay money you owe to creditors. You are also allowed to use your prison earnings to pay back your debts, up to a certain limit. If the only money you have is prison earnings, you will need to explain to your creditors how much your prison earnings are, and what you are allowed to spend to repay any debts. This information will show them why you can make only very small payments, if at all.
When you are in prison, you can still sell any property you own. You could use the money to pay off your debts. You should get advice from an advice agency like the CAB before you sell any personal property. In particular, it is very important to get advice if you're thinking of selling your home.
If you are in prison awaiting trial you should take particular care if you intend to sell or dispose of any of your property and should always take advice before doing so.
If you have a bank account, you will need to get permission from the prison to send out cheques to pay off your debts. If you have a telephone or internet bank account, get in touch with your bank to change the account to a paper account. This is because you are not allowed to use a telephone or internet bank account when you're in prison.
It is very unlikely that you will be able to take out any further loans when you’re in prison, because most lenders will simply refuse to lend you any more money. For example, you won’t be able to re-mortgage your home to release money to pay off your debts. However, if you have a joint mortgage, your partner may be able to re-mortgage the property if they can afford the extra mortgage payments. They should get financial advice before deciding to do this.
Someone else may be responsible for your debts. For example, if you took out a joint loan, the other person is responsible for the whole of the debt as well as you. Also, if you were living with someone and you got into arrears with your parish rates, the other person may also be responsible for the whole of the arrears.
But if you took out a loan in your name, no one else is responsible for your debt. Your family don't have to pay. Your may feel your creditors are putting pressure on your family members to pay your debt. This is against the law. Get advice about what to do if this is happening.
Mortgage and rent arrears
It is very important for you to sort out mortgage arrears and rent arrears because otherwise you could lose your family home. There are rules about payment of benefits for your home if you’re in prison. These rules depend on how long your sentence is. If you have family living in the family home, make sure they get advice from an advice agency like the CAB about how they can keep the home. If you lose your home, get advice from a CAB about how your family might be able to get rehoused.
Courses to help you control your finances
Your prison may run courses to help you get back in control of your finances. These courses can help you sort out your debts and also help you to claim benefits, make budgets, run a bank account and understand more about credit.
Citizens Advice Jersey
The Annexe, St Paul’s Community Centre, New Street, St Helier, JE2 3WP
Tel: 08007 350249 and 724942
Citizens Advice Jersey gives free, confidential, impartial and independent advice to help you solve problems. This may include:
- Prisoners and benefits
- Sample debt letters - please click here
- Leaving prison
- Prisoners and housing
Community Savings Ltd.
Commercial House, 2 Commercial Street, St Helier JE2 3RU
This charity can help provide you with a basic account while you are in prison and can help you manage it after your release. They are part of the Prison Rehabilitation service and attend the two monthly Market Place at the prison where appointments can be made to meet with one of their staff.
For full details of the services offered see: http://www.communitysavings.org.je/