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Am I right in thinking that the sentance will thus extinguish the debt, her debt being paid by the custodial sentence?
No the debt will remain.
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so much for 'having paid their(her) debt to society' which is the normal refrain when your average 'con' is released and is being hounded out of town or similar
Seems she would have paid off her debt to society but not to the council !
(assuming someone hadn't stuck their oar in and paid it for her)