Will Bankruptcy Court Clear Court Fines?

Find out how filing for bankruptcy can help with 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 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.

How to Clear Court Fines in 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.

  • 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 a penalty 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 a 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 city code but you ignore it. The city has it mowed for you and sends you the bill (in the form of a fine). The fine is the city’s way of recouping the mowing expense and the debt should be dischargeable.

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.

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 allow you to qualify for Chapter 7 bankruptcy, you’ll be able to get rid of 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.
  • 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 that 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.

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