What happens to your money when you go to jail?

This article has been updated from a previous version.

Think for a second about how you do your everyday banking. It might involve opening an app on your phone, pushing some buttons, moving some money around, paying some bills. For others, it might involve physically visiting a branch and having the teller do the work. Whatever your preference, you’ve got ready access to your money and control over your bill payments.

But once someone is sentenced to either a provincial or federal institution, they lose the ability to do either of these things. Inmates in federal and provincial correctional institutions aren’t allowed to keep their credit cards or debit cards with them. And many don’t have key pieces of information that would allow them to bank, either, such as transit numbers, says Amber Kellen, Director of Community Initiatives, Policy and Research at the John Howard Society (JHS) of Toronto, a not-for-profit organization committed to reforming the criminal justice system.

“They don’t have access to their cell phones or anything like that, so people who do store all of that information on their personal phones wouldn’t have access to it.”

What happens to your bank account when you go to jail?

To find out how, if at all, inmates can manage their money from jail or prison, we distributed a survey to a small sample of clients at John Howard Society (JHS) Toronto. While 14 people participated in the survey, every question did not receive an answer. So, for the purposes of this story, all percentages mentioned are reflective of only the number of responses we received for that specific question — not reflective of the total number of survey participants.

What we learned from respondents’ answers was telling: many had no chance to notify their bank or any other creditors that they were being or had been taken into custody, which caused their accounts to fall into arrears; many were unable to manage their money while in custody; and, upon release, many faced financial obstacles like not being able to get approved for credit.

No chance to notify

When someone is taken into custody or sentenced to jail or prison, they often don’t have the chance to let banks or other creditors know.

“Unless they’re out on bail,” says Kellen, “there would be no opportunity.”

If they don’t have a friend, family member or other sort of representative managing their money on their behalf, then their accounts can fall into arrears. This inconvenience begs the question: if you go to jail, what happens to your debt? Credit card companies, for instance, may have no idea that a person is failing to make their monthly payments because they’ve been taken into custody or serving a sentence in jail or prison.

“People inside are very dependent on friends and family to be able to make those calls and connections,” says Kellen.

We asked JHS clients whether they were able to notify their bank or other lenders that they were being admitted to custody before it happened, and 86% said no. We also asked JHS clients if they were able to notify their bank or other lenders once they were actually in custody, and 92% said no.

Respondents were then asked what happened to their finances as a result of being taken into custody.

86% of respondents said they couldn’t notify their banks or lenders they were being taken into custody

Of those who responded to this question, 69% said their finances fell into arrears, which includes missed payments and the financial product they had (credit card, line of credit, mortgage, etc.) being closed or cancelled. And 23% said that a family member or friend made payments/banked on their behalf.

The remaining 8% represents a single respondent most recently involved with the provincial system, who said they did their own banking, though they did not reveal any more particulars.

Andrew Morrison, a spokesperson for the Ministry of Community Safety and Correctional Services (MCSCS), points out, however, that in the provincial system, the total average length of stay is only about 45 days. In the case of this particular respondent, their most recent stay was only one month. So, to Morrison’s point, it could be possible that not enough time had elapsed for money management and personal banking to become a major obstacle.

‘Banking’ behind bars

When in jail or prison, inmates enter a much more restricted world of personal finance. Things like making credit card payments with the simple click of a button or transferring your landlord rent money aren’t possible anymore, and inmates are left not knowing how to pay their bills while in jail.

“There is no mobile banking of any kind,” says Marie Pier Lécuyer, communications advisor for Correctional Service Canada.

When we asked JHS clients if they were able to bank while in custody, (e.g. transfer money between accounts and pay their bills), 83% of respondents to this question said no.

“You’re really cut off,” says Kellen. “It’s a very isolating kind of experience.”

In jail and prison, “banking” takes on a whole different form. Every purchase, every deposit, every transfer must be done in accordance with specific directives.

In the provincial system, inmates have just one account, called a “trust account.”

“This money may be used by the inmate to purchase canteen items while in custody,” says Morrison.

If they’re admitted into custody with money, they’ll have that money placed in the trust account. Similarly, any money inmates receive while in custody, either via mail or when someone comes to visit them gets deposited into this account as well. When they’re released from jail, MCSCS withdraws the funds and gives them to the inmate.

In the federal system, Correction Service Canada (CSC) manages inmates’ money “in trust” using something called the Inmate Accounting System Replacement (IASR), which was implemented in April 2014. Inmates don’t have access to this system.

Under the IASR, each inmate has a “current” account and a “savings” account. Money in the current account can be used for buying non-health related items from the canteen (like clothing and arts and crafts materials), buying personal property, family assistance, and temporary absences, which can be granted for things like community service work, medical examination or treatment, having contact with family and attending to legal matters, among others. Savings funds, which must remain at a minimum of $80, can be used for things like paying legal fees, supporting an inmate’s family, or using the telephone.

69% of respondents said their finances fell into arrears

According to a Toronto Star article, every time an inmate makes a phone call from a federal correctional facility, it costs $1.50, even if all they do is get an answering machine. In this article, an inmate’s mother estimates she spends around $300 a month to talk to him on the phone.

And because inmates are not allowed cash, all transactions must be made using either the IASR or the canteen point-of-sale (POS) system, which withdraws the money directly from the inmate’s current account. When an inmate wants to buy something, though, they have to first fill out an Inmate Purchase Order Form.

Similarly, when federal inmates want to move money around, say, from their savings account to their current account, they need prior approval from the institution, which then does it on their behalf.

One aspect similar to outside-world banking: federally sentenced inmates are given bank statements every month.

Earning money in jail or prison

In the provincial system, sentenced inmates can choose to participate in a correctional facility work program, but they don’t get paid for their work. “An inmate may be entitled to income from external lawful sources while in custody,” says Morrison.

In the federal system, sentenced inmates get a living allowance based on a number of factors, including how financially responsible they demonstrate themselves to be, whether they’re eligible for alternative income sources, and how motivated they’ve shown themselves to be in finding employment or participate in a treatment program, among others.

They can also earn money on work release or while on conditional release, from a third party for work performed in an institution, an inmate-operated business that’s approved by CSC, selling hobby crafts or custom work, and by receiving an ongoing income from a private or government source. However, both provincial and federal inmates stop receiving the GST/HST credit if they go to jail or prison for 90 consecutive days or more.

Our results showed that many wind up couch surfing, living in a shelter or respite centre, or on the street

Ninety percent of a federal inmate’s income, after deductions, is deposited into their current account. The remaining 10% goes into their savings account. Inmates can also work in the institution’s food services, grounds keeping, and building maintenance departments.

But payment for work is scant, with inmates earning between $5.25 and $6.90 a day, according to Lécuyer. The compensation an inmate receives is based on how engaged they are in their own rehabilitation. That includes how much progress they’ve made in meeting the objectives of their Correctional Plan, how much time they’ve spent participating in correctional programs, and how accountable they’ve proven themselves to be. Pay levels are reviewed at least once every six months.

“Outside money from your personal bank account can be brought into the institution either through cash or cheque,” says Lécuyer of the federal system. “Cash would be deposited in your IASR current account quickly, but a cheque would need to clear, so a delay of up to one week could be possible.”

Family members can also transfer money to an inmate as long as it’s coming from a verifiable source (i.e. not proceeds of crime). This money would go into an inmate’s savings account.

Financial setbacks upon release

Managing money from jail or prison is extremely challenging, but offenders face even more obstacles once they’re released.

Applying for credit, for instance, becomes very difficult, as does obtaining proper pieces of identification, such as a driver’s licence and health card. As Kellen says, “You need ID to get ID.”

Our JHS survey revealed that the top barrier inmates faced upon release was trouble getting approved for credit (e.g. obtaining a credit card, loan, or mortgage), followed by trouble finding housing and employment. Results also showed that many wind up couch surfing, living in a shelter or respite centre, or on the street.

“The majority of clients that we serve, particularly coming out of the provincial justice system, are homeless upon release,” says Kellen. “So one of the main things that we do is try and help individuals access housing. That’s almost always the first step.”

When inmates leave a provincial or correctional institution, they don’t leave with a great shot at financial prosperity. Their economic mobility is stunted. Their chances of obtaining any form of credit or even opening a bank account are slim.

Many return to a world in which they now have to start over again.