Barred from Bankruptcy: Recently Incarcerated Debtors In and Outside Bankruptcy


Recently incarcerated individuals often have significant amounts of debt, including civil and criminal restitution, child support, taxes, personal loans, and ordinary consumer obligations. However, bankruptcy is often unavailable or unhelpful to these individuals. Many of the debts common among post-incarcerated debtors are nondischargeable in bankruptcy, and the problem is compounded by lack of affordable legal services and an economic culture of interpersonal lending that discourages formal discharge of debt. In response, a number of states have created ways of reducing or discharging such debts at sentencing, upon release from prison, or as part of the collections process. These procedures call into question the nondischargeability of debts common to the post-incarcerated population and suggest that bankruptcy should be made more widely available to recently incarcerated debtors.

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