[Online] Pablo Slutzky, University of Maryland

Coautor: Sheng-Jun Xu

Abstract: 

In the United States, a significant portion of inmates in local jails is 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 detention results in higher rates of household insolvency. This effect is driven by an increase in the incidence of foreclosures during periods of decreasing house prices and by an increase in the incidence of Chapter 7 bankruptcies. Subsample analyses show that the overall insolvency effects are more pronounced among younger defendants living in houses they do not own—suggesting spillovers to older household members and when households have less equity in the home. Lastly, we provide suggestive evidence that the insolvency effects are exacerbated when defendants borrow funds from commercial bail bondsmen.