Over time, many inmates incur large debts due to fines, court and public defender fees, and the like. Added to this burden are previous debt obligations, incurred prior to incarceration. Making timely payments can be challenging (or virtually impossible) due to a lack of income and shortage of family members or friends who are willing and able to keep the debt current. Consequently, most of these debts accumulate late payment fees and eventually end up in default and sent to collections. Upon release, many financial institutions will not lend to returning citizens or those who are justice-exposed because of their poor credit history and resulting low credit score.

Further complicating the situation is the fact that many inmates become victims of identity theft. Credit cards and cell phone accounts may be stolen and used fraudulently, or new accounts may be opened in their names. Once released, returning citizens then have identity theft issues to deal with. In cases where the perpetrator is known, a police report is often required to address the problem. However, many returning citizens are reluctant to report someone whom they know.

The ability to access credit is vital since many returning citizens are unable to find jobs due to hiring policies designed to screen them out. Many are drawn to entrepreneurship which is not dependent upon being hired by others. However, starting a small business requires capital. If returning citizens are unable to qualify for start-up loans, then this avenue is also blocked.

An exorbitant number of Americans are potentially affected by this reality, including between 70 to 100 million Americans who have a criminal record, over 650,000 offenders who are released every year, and a disproportionate number of minorities who are in prison. The route back into the financial mainstream for this population requires special consideration.

Read the full article about how our financial systems stack the odds against returning citizens at The Aspen Institute.