The Financial Consequences of Pretrial Detention

Abstract

In the United States, a significant number of criminal defendants are held in pretrial detention and face substantial financial burdens. Matching individual-level criminal case records to household-level financial data, we exploit the quasi-random assignment of court commissioners to study how pretrial detention affects household solvency. We find that pretrial detention results in higher rates of household insolvency, driven by higher rates of Chapter 7 bankruptcies and judgment liens, and higher foreclosure rates during periods of decreasing house prices. We document that the effects spill over to family members and show that home equity can cushion households from insolvency.

Keywords: pretrial detention, bail bonds, bankruptcy, solvency, foreclosures

JEL Classification: D14, K41, K42