From Bail Bonds to Foreclosures: The Financial Consequences of Pretrial Detention
53 Pages Posted: 28 Oct 2022
Date Written: October 24, 2022
In the United States, a significant portion of inmates in local jails are detained awaiting trial. Given the direct and indirect costs associated with pretrial detention, detained individuals and members of their households may find it difficult to meet their financial obligations. Matching individual case-level data from the criminal justice system to household-level data on foreclosures, bankruptcies, and lien judgments, we examine how pretrial detention affects household solvency. Exploiting the quasi-random assignment of court commissioners to cases for identification, we find that pretrial release results in lower rates of household insolvency. This effect is driven by a reduction in the incidence of foreclosures during periods of decreasing house prices and by a reduction in the incidence of Chapter 7 bankruptcies. Subsample analyses show that the overall insolvency effects are more pronounced among younger defendants, suggesting spillovers to older household members. Lastly, we provide suggestive evidence that the insolvency effects are exacerbated when defendants borrow funds from commercial bail bondsmen.
Keywords: Pretrial detention, bankruptcy, solvency, foreclosures
JEL Classification: D14, K41, K42
Suggested Citation: Suggested Citation