Discharge Traffic Tickets? Criminal Penalties Are Not Dischargeable in Chapter 7 or Chapter 13 Bankruptcy
It is generally not possible to discharge traffic tickets in bankruptcy. In a Chapter 7 bankruptcy, you may not discharge traffic tickets due to the inclusion in the US Bankruptcy Code of Section 523(a)(7), which specifically states that fines and penalties owed to and for the benefit of governmental units are non-dischargeable. This includes traffic tickets and other criminal (or punitive) fines. In a Chapter 7 bankruptcy, traffic tickets are simply listed among other "priority" unsecured debts not eligible for discharge, such as recent tax debt or child support arrearages. Although they are not going to be discharged by the bankruptcy, they must still, along with all other debts of any sort, be disclosed in the bankruptcy process. A Chapter 7 bankruptcy will not be helpful in dealing with non-dischargeable "priority" debts of this sort. But that does not mean there is no relief for such debts in bankruptcy.
Pay Non-Dischargeable Traffic Tickets Through Chapter 13 Bankruptcy?
In a Chapter 13 bankruptcy, however, some of these debts may be effectively dischargeable. That is, a debt such as a traffic ticket is not simply "not dischargeable." In a Chapter 13 bankruptcy, which is a "payment plan" or "reorganization" bankruptcy, you construct a payment plan along with your Michigan bankruptcy lawyer which will propose to repay some percentage of the debts that you owe over a period of 3-5 years. Debts are repaid through a Chapter 13 payment plan at varying amounts, depending upon what sort of debt it is. Regular, "dischargeable" unsecured debts, such as credit card or medical debts, receive only what you are able to pay over the period of the payment plan, and any unpaid balances are then discharged the same way they would have been in a Chapter 7 bankruptcy. A "non-dischargeable" debt such as a traffic ticket or other criminal penalty (and child-support arrearages, recent taxes owed, and others) are considered to be "priority" unsecured debts that are paid in higher priority order than those dischargeable unsecured debts. The effect of that classification is that the non-dischargeable traffic ticket must be repaid in full over the lift of the payment plan or the plan will not be approved by the Bankruptcy Court. However, a Chapter 13 will still give you the full 3-5 years to pay that debt off, and the local municipality which issued you the ticket, or even the collection agency collecting the ticket for the municipality (the City of Detroit refers such debts out to a third-party collection agency after a certain point in time), will be unable to harass you for the payment of the ticket in the interim. Note that some sorts of governmental fines and penalties that are of an administrative nature, such as Michigan's driver responsibility fees, are indeed dischargeable and are not considered to be priority unsecured debts in Chapter 13 payment plans. Thus, it is important not to assume that your debt is not something that a Chapter 7 or Chapter 13 bankruptcy can help you handle. Schedule a consultation with The Hilla Law Firm, PLLC to discuss your particular debt situation in detail.
Discharge Traffic Tickets in Bankruptcy: The Bottom-Line
The bottom-line is that, if you have traffic or other criminal penalties, you should still seek the advice of a bankruptcy lawyer. Do not assume that there is nothing that can be done for you. If you are a Michigan resident and would like to explore your options for a Chapter 7 or Chapter 13 bankruptcy with an experienced Michigan bankruptcy attorney, please contact us at (866) 674-2317 or click the button below to schedule a free, initial consultation.
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