The Marshalsea Underwater: Natural Disasters and Legal Debt Defaults

National estimates suggest that a large fraction of the low-level traffic violation fines and fees are unpaid before their due date. At the same time, natural disasters are increasing in frequency, intensity, and duration with ever-expanding destruction potential. Using exposure to natural disasters, I examine if defendants are more likely to default on their legal financial obligations (LFOs). Constructing a novel dataset of defendants with traffic citations in Oklahoma, I find that natural disaster exposure increases the likelihood that the defendant defaults on their legal debt. The effect appears immediately after the disaster exposure and persists for more than 100 days following the natural disaster. Increased default likelihood is more pronounced for poorer and non-White defendants. My estimate reveals a statistically significant increase in arrests resulting from warrants issued due to defaults on legal debt for low-level traffic violations, suggesting these defaults are a contributing factor to the pipeline-to-prison. Finally, my mechanism analysis rules out cognitive demands in the aftermath of natural disasters and suggests liquidity constraints as the likely mechanism leading to LFO defaults. These estimates suggest that interventions designed to provide reprieve for legal debt repayment may alleviate defendants getting entangled in the criminal justice system, a phenomenon that is extremely costly economically and socially.