It's not easy to discharge most tickets and government fines in bankruptcy. Though it depends on what the tickets or fine was assessed for, many tickets and fines are non-dischargeable debts. That means you have to repay them even if your bankruptcy case is successful in discharging other debts like credit card or medical bills. That said, filing Chapter 13 bankruptcy can be a good way to manage non-dischargeable fines and fees. It can also help you get your driver's license reinstated if it's been suspended due to unpaid fines.
In a Chapter 7 bankruptcy, most unsecured debts are dischargeable. Some examples of unsecured debts include credit cards and personal loans. But not all debts can be discharged in bankruptcy. You'll still be responsible for certain debts, even after a successful bankruptcy. Debts such as student loans, child support, alimony payments, and certain tax debts are not dischargeable under the Bankruptcy Code.
If you owe money to a federal, state, or other government entity, you won't be able to eliminate these debts through bankruptcy. The Bankruptcy Court ensures that filers are held responsible for breaking the law, so it will not wipe out government fines or penalties.
Can Bankruptcy Discharge Traffic Fines?
Sometimes. Bankruptcy can eliminate some traffic fines or tickets, but it depends on what they're for and the specific type of bankruptcy you file.
Chapter 7 Bankruptcy Limitations
Unfortunately, traffic fines can't be discharged through Chapter 7 bankruptcy. This is because they're owed to a government entity. Non-dischargeable fines include:
Traffic violations
Traffic tickets
Parking tickets
Toll violations
Court fines
You may be able to eliminate these debts by filing a Chapter 13 bankruptcy instead.
Managing Fines Through Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a good tool to use when you don't qualify for Chapter 7 bankruptcy or you have debts that aren't dischargeable in Chapter 7. Chapter 13 allows you to pay non-dischargeable debts like fines and tickets in a 3-5 year repayment plan.
So, if you don't have the money to pay these fines right away, Chapter 13 can give you time to get caught up. Depending on the type of fines and other debts you have, you might not even be required to pay the entire amount back.
If you're worried about having your driver's license suspended or you've already had your license suspended, a Chapter 13 repayment plan can be a good option. Chapter 13 filers become eligible to get their driver's licenses back immediately.
Many people who are short on cash find that filing a Chapter 13 bankruptcy is a helpful way to get extra time to repay their fines and violations. If you aren't sure how you'll pay your fines, tolls, or fees and are considering a Chapter 13 bankruptcy, contact a bankruptcy attorney for a free consultation to see if it's a good fit for you.
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Can I Discharge Government Fines in Bankruptcy?
In most cases, bankruptcy will not wipe out fines or penalties you owe to a government agency.
By Cara O'Neill, Attorney
When you owe money to the federal, state, or local government, usually you cannot get rid of the debt in bankruptcy. Fines and penalties owed to government agencies are no exception. For the most part, you cannot discharge (eliminate) government fines and penalties in bankruptcy. There are rare exceptions, however. If the government wants you to pay money for property you damaged, you may be able to discharge the debt in bankruptcy. (Learn more about discharging debts in bankruptcy.)
What Are Government Fines and Penalties?
The government can fine or penalize you as long as there is a written law saying it has a right to do so. All levels of government, including the city, county, state, and federal government have such laws in place. Whether called an ordinance, statute, code, or regulation, these laws help society function in a peaceful way by punishing rule breakers. Each law must tell you what you are supposed to do as well as what will happen if you break the law.
A government fine or a penalty is a punishment for doing something wrong. If you do not wear a seatbelt, or if you refuse to cross in the cross walk, you may receive a ticket and have to pay a fee. The fee serves as an incentive for you to do better next time. Similarly, when a police officer gives you a ticket for breaking the speed limit, the fine you must pay is punishment for driving too fast.
You Cannot Discharge Most Fines and Penalties in Bankruptcy
The purpose of bankruptcy is to help you get rid of financial debt, not to help you avoid punishment. Since fines and penalties are forms of punishment, they are not dischargeable in bankruptcy.
The following list includes examples of common fines and penalties that you cannot discharge in bankruptcy:
traffic tickets and tolls
criminal fines and penalties, including restitution
licensing fines, and
violations of government agency rules, such as the U.S. Environmental Protection Agency or Occupational Safety and Health Administration.
When You Can Discharge Money You Owe to a Government in Bankruptcy
In some cases, however, you might owe money to a government agency that is technically not a fine or penalty. While you cannot discharge government fines and penalties intended to punish you, you can discharge debt that you owe to a government agency because you accidentally damaged or destroyed government property.
It doesn't matter whether you rear-end a government vehicle at a stoplight, start a small grass fire, or run into a telephone pole, if you damage the government's property, a representative will ask you to pay for it. Since asking you to repair or replace damaged property is not a way of punishing you, you can discharge the debt in bankruptcy as long as the damage was an accident.
How to Tell the Difference Between Government Fines and Bills for Property Damage
The tricky part is determining if your bill from a government agency is a fine, reimbursement for property damage, or both. Start by looking at your paperwork. If you are paying a fine, it will likely list the authorizing law. If you like, you can check the law to see if the fine is within the law's guidelines.
If the amount you are paying is more than the total fine amount allowed by law, there may be property damage involved -- though realistically you probably remember if you damaged government property. In addition, most government demand letters specifically state how much they are asking you to pay and why.
If, after reviewing your paperwork, you still are not sure, you may want to call the government agency and ask if the amount is dischargeable in bankruptcy. Agencies are usually happy to answer your question, and if the debt is dischargeable, it will tell you what to do to make sure it knows about your bankruptcy. Another option is to consult with a local bankruptcy attorney.
Can I Discharge Government Fines in Bankruptcy?
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