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Traffic Tickets, Civil Fines and Penalties in Bankruptcy - Avant Law

Traffic Tickets, Civil Fines and Penalties in Bankruptcy

November 15th, 2013 by

Although many debts are discharged in Chapter 7 Bankruptcy, allowing an individual the promised “fresh start,” there are certain debts that are not discharged. Traffic tickets fall under the category of a civil penalty and cannot be discharged in Chapter 7 pursuant to U.S.C. section 523(a)(7).

1 Chapter 7 Bankruptcy

The relevant bankruptcy code section for traffic tickets and other related civil fines and/or penalties is 11 U.S.C. section 523(a)(7), stating that the the debt is non-dischargeable:

“…to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty- (A) relating to a tax of a kind not specified in paragraph (1) of this subsection; or (B) imposed with respect to a transaction or event that occurred before three years before the date of the filing of the petition…”

The second portion of this describes situations that would deem a tax penalty dischargeable (I’ll leave this for another post). Thus, a civil or criminal penalty or fine would be deemed non-dischargeable in Chapter 7 bankruptcy under this section.

2 Contrary Result in Chapter 13 Bankruptcy

In Chapter 13, the determination of dischargeability hinges on whether the debt is considered a criminal fine or a civil penalty/infraction. Section 1328 excludes from discharge, after the successful completion of the debtor’s plan, debts for a criminal fine. The omission of debts related to a civil penalty has been interpreted to allow these debts to be successfully discharged at the completion of a debtor’s Chapter 13 plan (i.e. included with the rest of the unsecured creditors). Depending on the jurisdiction, civil penalties could include minor offense like parking tickets, failing to stop at a stop sign, or speeding tickets.

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