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 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.
Even if you can’t clear the fine, filing for bankruptcy might help in other ways. Getting rid of qualifying debt in Chapter 7 bankruptcy will free up more money to pay your obligation. Or, you can get additional time to pay by filing for Chapter 13 bankruptcy.
Most of us are familiar with fines resulting from traffic tickets. But other fines exist too, such as victim restitution or building code violation assessments. Many fines don’t go away in bankruptcy—especially court fines. Here’s how you figure out whether yours will qualify for a discharge.
Your first step will be to determine 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 figure out what the issuing agency hoped to achieve by assessing the fine.
The government sends out bills for many things, and sometimes it can be hard to tell what type of fine you’re dealing with. And, even if you can, the rules aren’t always clear.
For instance, suppose that you apply for public assistance. Months later, you receive a bill because the agency overpaid you. That debt would be dischargeable in bankruptcy. By contrast, suppose that you were reimbursed too much for moving expenses while in the military. That debt would not be dischargeable.
If you’re not sure 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.
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.
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.