Will Bankruptcy Court Clear Court Fines?

Financial difficulties resulting from a criminal matter are one of the many reasons that people file for bankruptcy. Clearing criminal court fines—or any fines owed to a government agency—can be a great way to solve the problem, but it isn't always possible. Whether you can discharge a fine in bankruptcy will depend on why you were assessed the fine to begin with and whether bankruptcy law will allow it (the rules aren't always straightforward).

Even if you can't erase or "discharge" the fine, filing for bankruptcy might help in other ways. Eliminating qualifying debt in Chapter 7 bankruptcy will free up more money to pay "nondischargeable" debts you can't wipe out in your bankruptcy case. Alternatively, you can get additional time to pay by filing for Chapter 13 bankruptcy.

Can I Eliminate Court Fines in Bankruptcy?

Many fines don't go away in bankruptcy, especially court fines. Most of us are familiar with court fines resulting from traffic tickets. But other fines exist too, such as victim restitution or building code violation assessments.

How to Clear Court Fines in Bankruptcy and More

Here's how you figure out whether your fines will qualify for a discharge.

Your first step will be determining whether you owe the fine to a governmental entity. It could be from one of many federal, state, or city government organizations or an entity acting on behalf of the government, such as a tollway authority.

Next, you'll determine what the issuing agency hoped to achieve by assessing the fine.

Punishment fines. Fines intended to punish you for some action aren't dischargeable in Chapter 7 bankruptcy. For instance, traffic tickets and restitution payments are penalties for violating the law and wouldn't be discharged. By contrast, fines and penalties owed to a government agency are dischargeable in Chapter 13 bankruptcy—even if the debt was due to fraud. However, there's an exception: You can't discharge fines or restitution included in criminal sentencing in any type of bankruptcy case.

Reimbursement fines. Fines that seek reimbursement for expenses are dischargeable. Let's say the city sends you a notice stating that your overgrown lawn is in violation of the city code, but you ignore it. The city has it mowed for you and sends you the bill as a fine. The fine is the city's way of recouping the mowing expense, and the debt should be dischargeable.

Another example of a reimbursement fine would be a bill for government property you accidentally damaged. For example, suppose you received a bill for a broken piece of furniture after staying in a county-owned family camp. You could likely discharge the debt in bankruptcy.

Is My Fine a Punishment Fine or a Reimbursement Fine?

The government sends bills for many things, and sometimes, it can be hard to tell what type of fine you're dealing with. Even when the situation seems clear, the rules don't always apply logically. This is a fairly common situation in bankruptcy, and it's one of the reasons most people benefit from hiring a knowledgeable bankruptcy lawyer.

For instance, assume you apply for public assistance and receive a bill months later because the agency overpaid you. That debt falls under the reimbursement category and would be dischargeable in bankruptcy.

By contrast, suppose you were reimbursed too much for moving expenses while in the military. Although it would seem to be a reimbursement fine, that debt would not be dischargeable.

Check with the fining agency. If you're unsure whether your fine will get wiped out in bankruptcy, you might want to call the issuing agency. They're often knowledgeable and willing to provide you with the information you need. The other option, of course, is to speak with a local bankruptcy attorney.

Other Ways Bankruptcy Can Help With Court Fines

Chapter 7 and Chapter 13 bankruptcy each provide a different benefit. So even if you can't discharge a fine, filing for bankruptcy might help in another way.

• Chapter 7 bankruptcy. If your income is low enough to qualify for Chapter 7 bankruptcy, you can eliminate other types of debt, such as credit card balances, personal loans, and medical bills. After three to four months (the average time it takes to get through this chapter), you should have less debt and more funds to pay your fine. Learn more about Chapter 7 bankruptcy.
• Chapter 13 bankruptcy. If your fine is hefty, or you have other nondischargeable debt, a Chapter 13 bankruptcy can give you additional time to pay it off. You'll propose paying off the debt in full over a three to five-year repayment plan. If you can prove you have sufficient income to make the payments, the court will likely confirm your plan.

Here's another tip. If your driver's license has been taken away for failing to pay fines, a Chapter 13 bankruptcy filing might help. Some states will allow you to get your license back if you can show that you have a repayment plan in place. Competent bankruptcy counsel will be able to help you through the process.

Need More Bankruptcy Help?

Did you know Nolo has made the law easy for over fifty years? It's true, and we want to ensure you find what you need. Below you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.