Michigan Bankruptcy Lawyer

This is probably one of the common questions I receive from potential bankruptcy clients. And the short-answer is no, you cannot discharge traffic tickets in bankruptcy. This is what you will generally find in the “FAQ” section of many bankruptcy attorneys’ websites. However, there is a little more to it than that.

That short-answer really applies to Chapter 7 bankruptcy in particular. Under Chapter 7, traffic tickets are non-dischargeable under Section 523(a)(7) of the Bankruptcy Code, 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.

Under  Chapter 13, however, some of these debts may be effectively dischargeable. Some restitution debts imposed by courts—those included in a sentence for the conviction of a crime—are non-dischargeable, but other restitution debts may be discharged. Fines imposed directly (not as a condition of probation or imposed in pre-trial hearings, etc.) as a criminal penalty are non-dischargeable. The question here is whether the fine is imposed as part of a sentence for the conviction of a crime. The definition of and associated penalties for traffic (and most other non-Federal) crimes is a matter of state law. Thus, it is largely a question of state law where the offense occurs whether a traffic fine can be discharged in a Chapter 13 bankruptcy. Some states define “crimes” as only misdemeanors and felonies and not civil infractions, moving-violations, and other categories of offense for which run-of-the-mill traffic tickets may be issued.

In Michigan, where I practice, this is the case. Traffic offenses in Michigan are divided into 2 categories: crimes and civil infractions. Crimes are misdemeanors and felonies only. Criminal traffic offenses are, as one would expect, serious violations such as reckless driving, leaving the scene of an accident, driving with a suspended license, fleeing and eluding police, operating while intoxicated, and “felonious driving.” (Reckless and felonious driving are often charged as lesser-included offenses of other misdemeanor or felony charges.) Additionally, even if charged with a civil infraction only, failing to answer a summons or to follow the directives of the ticket received can incur a more serious criminal penalty.

When such fines are dischargeable under Chapter 13, they may be allocated a category of debt in the Chapter 13 payment plan along with other unsecured debt, which is generally paid secondarily to secured debt and other priority debts, although this is not always a certainty. Some governmental debt may be entitled to priority payment status. However, even non-dischargeable criminal fines or governmental penalties may still be provided for in a Chapter 13 plan, although they will not be able to be discharged through the plan. Otherwise, general unsecured debt which may include dischargeable traffic fines, is afforded a lower priority payment status than other types of debt, and the priority debt and secured debt must be paid first, allowing the unsecured, non-priority debt to be discharged.

If you have any questions about traffic penalties in bankruptcy or if you would like to defend yourself against such charges in court, contact me to schedule a free, initial consultation.