Are Traffic Tickets Dischargeable in Bankruptcy?

December 9, 2013

The general rule is a bankruptcy does not discharge any fine or penalty payable to a governmental unit. Specifically in Chapter 7 section 523(a)(7) it forbids the discharge of civil penalties or criminal fines. This means that in a Chapter 7 bankruptcy government fines are not wiped out. However in a Chapter 13 case they may be dischargeable.

Bankruptcy Code 1328(a)(3) allows a Chapter 13 debtor to discharge non-criminal government fines if he completes all the court approved plan payments. This can sometimes include minor offenses such as parking tickets, speeding, or failing to stop at a stop sign. Even if the debt would not be dischargeable, some or all of the debt may be paid during the Chapter 13 plan. Furthermore the automatic stay does stop the creditor, in this case the government, from collecting from the debtor during the 3-5 year plan payment. This means that the Debtor can reorganize their other debts and then pay the traffic debt after the bankruptcy has completed if it has not been paid or discharged.

Another exception is a fee might be dischargeable when it is meant to reimburse a governmental entity for money it has actually spent or financial loss it has actually incurred, separate and apart from any related fines and penalties. A good example is when a city bills you for demolishing an illegal structure or clearing derby from your property. The costs of removal would be dischargeable, while any penalties or fines from having the illegal structure on the property would not be. These fees might be dischargeable in bankruptcy because they were an attempt to recover the actual costs involved in clearing, replacing, or demolishing rather than the penalty.

For more information and a free consultation, contact the experienced attorneys at Fears Nachawati by calling 1.866.705.7584 or sending an email to fears@fnlawfirm.com.

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