What Happens to Your Money When You Go to Prison?

The question of what happens to your money when you go to prison isn’t as straightforward as it might seem. In short, your money doesn’t simply vanish. However, access to and management of your funds become significantly restricted and regulated. Pre-existing bank accounts remain yours, but withdrawals and deposits require specific procedures. New income, like wages earned within the prison or funds sent by family, are typically managed through a prison commissary account. Debt obligations, like loans and child support, continue, potentially leading to further complications if not managed proactively.

Managing Your Finances Behind Bars: A Complex Landscape

The moment prison doors clang shut, your financial life undergoes a dramatic shift. Understanding this shift is crucial, not just for your own peace of mind, but also for your family and your eventual reintegration into society. It’s a process riddled with bureaucratic hurdles and specific regulations that vary state by state and even from one correctional facility to another.

Pre-Existing Bank Accounts: Dormant, But Not Forgotten

Those accounts you diligently built up before incarceration don’t disappear. Your checking accounts, savings accounts, and investment accounts remain legally yours. However, the challenge lies in accessing and managing them. You’ll no longer be able to simply walk into a bank or use an ATM.

• Power of Attorney: One of the smartest moves you can make before or shortly after entering prison is to grant power of attorney to a trusted individual. This allows them to legally manage your financial affairs, pay bills, and make decisions on your behalf. Without it, even simple transactions can become logistical nightmares.
• Communication is Key: Banks require proper identification and authorization. Communicating your situation to your bank and providing necessary documentation is paramount. Letters from prison, notarized documents (which require coordination with prison officials), and cooperation from your designated power of attorney are often necessary.
• Direct Deposit Considerations: If you had direct deposit set up for any benefits (social security, disability, etc.) before entering prison, you’ll need to notify the relevant agencies. While you may still be eligible for some benefits, the payment methods will likely need to be adjusted. Some benefits may be suspended during incarceration.

The Prison Commissary Account: Your Inmate Wallet

Within the prison walls, cash is virtually non-existent. Instead, you’ll be assigned a commissary account, which acts as your internal banking system.

• Sources of Funds: Funds can be deposited into your commissary account by family and friends through approved channels (often online services or money orders). You may also earn wages for prison jobs, though these are typically minimal.
• Allowable Purchases: The commissary stocks a variety of items: toiletries, snacks, over-the-counter medications, stamps, and even entertainment like radios or small televisions. The specific items available and the spending limits vary widely.
• Account Monitoring: Prison authorities closely monitor commissary accounts for suspicious activity. Large deposits or unusual spending patterns can raise red flags and potentially lead to investigations.

Debt Management: A Persistent Burden

Your financial obligations don’t magically disappear behind bars. Loans, credit card debt, child support, and other legal judgments continue to accrue interest and penalties.

• Child Support Obligations: Failure to pay child support can have severe consequences, even during incarceration. In some cases, your commissary account can be garnished to fulfill these obligations. It’s crucial to work with the relevant agencies to explore options for modification or temporary suspension of payments.
• Loan Repayment: Student loans may be eligible for deferment or forbearance during incarceration. Contact your loan servicer to explore these options. Other types of loans will likely require continued payments.
• Legal Judgments: Outstanding legal judgments can result in liens on your property or garnishment of future wages upon release. Ignoring these obligations can significantly hamper your financial recovery after prison.

Protecting Your Assets: Preventing Fraud and Mismanagement

Vulnerability is heightened during incarceration. Protecting your assets from fraud and mismanagement requires vigilance.

• Trusted Power of Attorney: This point bears repeating. Choose your power of attorney wisely. They should be someone you trust implicitly and who has a proven track record of responsible financial management.
• Regular Communication: Maintain regular communication with your power of attorney and your bank. Stay informed about account activity and any potential issues.
• Fraud Prevention: Be wary of any unsolicited requests for money or information. Scammers often target incarcerated individuals and their families.

Frequently Asked Questions (FAQs)

Here are some frequently asked questions to help clarify the intricacies of managing your finances while incarcerated:

1. Can I still receive Social Security benefits while in prison?

   It depends. Generally, Social Security retirement benefits can continue while incarcerated, but Social Security Disability Insurance (SSDI) benefits may be suspended if your crime is a felony. Supplemental Security Income (SSI) benefits are almost always suspended. Contact the Social Security Administration for specific guidance.

2. What happens to my taxes while I’m in prison?

   You are still responsible for filing and paying taxes on any income you earn, including wages from prison jobs or income from investments. Ensure someone handles your tax filings or seek assistance from a tax professional.

3. Can my family be held responsible for my debts while I’m in prison?

   Generally, your family is not responsible for your individual debts unless they co-signed on a loan or have a joint account with you. However, community property laws in some states may affect this.

4. How can I send money to an inmate?

   Each correctional facility has its own specific procedures for sending money. Typically, you can send money orders or use approved online services. Contact the specific facility for detailed instructions.

5. Can an inmate invest money while in prison?

   While technically possible, investing while incarcerated is extremely difficult. You would need a power of attorney to manage your investment accounts and comply with prison regulations regarding communication and transactions.

6. What happens to my property (house, car) while I’m in prison?

   Your property remains yours, but it’s crucial to manage it responsibly. You can rent out your property, sell it (through a power of attorney), or make arrangements for someone to maintain it. Failure to pay property taxes or mortgage payments can lead to foreclosure.

7. Can I open a new bank account while in prison?

   Opening a new bank account while incarcerated is extremely challenging, as it typically requires in-person verification and access to identification documents.

8. What happens to my commissary account balance when I’m released?

   Upon release, the remaining balance in your commissary account will typically be returned to you in the form of a check or deposited into a bank account you designate.

9. Can the prison take money from my commissary account to pay for my debts?

   In some cases, yes. Child support obligations, court-ordered fines, and restitution can be deducted from your commissary account.

10. What resources are available to help inmates manage their finances?

    Some prisons offer financial literacy programs or access to legal aid services. Contact the prison’s administration or social services department for information.

11. How does imprisonment affect my credit score?

    Imprisonment itself doesn’t directly affect your credit score. However, failure to pay bills or manage your debts while incarcerated will negatively impact your credit.

12. What are the potential legal consequences of financial mismanagement while in prison?

    Financial mismanagement, such as fraud, embezzlement, or failure to pay taxes, can result in additional criminal charges and extended prison sentences.

Navigating the financial complexities of incarceration requires careful planning, diligent communication, and a trusted support system. By understanding the rules, regulations, and available resources, you can protect your assets, manage your debts, and prepare for a smoother financial transition upon release.