Can I Discharge Michigan Driver’s Responsibility Fees with Chapter 7 Bankruptcy?

Michigan’s driver responsibility fees are an egregiously expensive form of “administrative” punishment for those who have committed driving-related offenses that are separate from criminal penalties or fines assessed as part of a criminal sentence for an offense and separate from crime victim compensation or REPARATIONS. These fees, which are assessed after a Michigan driver receives 7 points or more against his or her license, if not paid within 30 days of assessment, can result in the loss of driving privileges. The amounts vary from offense to offense and can increase greatly if the amount owed becomes seriously delinquent.

The loss of a driver’s license is a serious financial issue in Michigan. Particularly in the Detroit area, where I practice, there is not much in the way of viable public transportation available. Without a driver’s license, job loss can also result, along with it the inability to find new employment. Without employment, it becomes more and more difficult to raise the funds needed to pay the driver’s responsibility fees—not to mention every other financial obligation a Michigan citizen may face.

In this attorney’s opinion, driver’s responsibility fees only compound the economic problems of the state of Michigan and do not “encourage” drivers to drive more responsibily in a manner that outweighs the damage done to individual livelihoods and, on a macro level, to Michigan’s economy.

Fortunately, Michigan driver’s responsibility fees are generally dischargeable in Chapter 7 bankruptcy, as well as Chapter 13 bankruptcy.

Criminal penalties are not dischargeable in bankruptcy. However, Michigan driver’s responsibility fees are, as explained above, not “criminal penalties.” They are administrative fines levied by the Secretary of State’s office, not as a sentencing judgment or criminal statutory penalty by a criminal court conviction. Thus, they should not fall into the “criminal penalty” non-dischargeability exception to the list of debts dischargeable under the US Bankrutpcy Code as traffic tickets, parking tickets, and other fines may.

Thus, the filing of a Chapter 7 bankruptcy should discharge a driver’s responsibility fee arrearage, after which the Secretary of State’s office should return a driver’s license. However, that said, the State of Michigan has taken various stances on such issues at various times, including the position that such fees are non-dischargeable “criminal penalties.”

Thus, if driver’s responsibility fees are one of the primary reasons you are considering filing for bankruptcy, it is wise to retain an experienced Michigan bankruptcy attorney to represent you in the case that litigation with the State of Michigan is required to get the fees discharged.

If you are a southeast Michigan resident considering filing for bankruptcy, please contact me at (866) 674-2317 or john@hillalaw.com to schedule a free, initial consultation.

4 responses to “Can I Discharge Michigan Driver’s Responsibility Fees with Chapter 7 Bankruptcy?

  1. Pingback: Can I Discharge Michigan Driver's … – Michigan Bankruptcy Lawyer | Should I Go Bankrupt?

  2. Pingback: Can I Discharge Michigan Driver's … – Michigan Bankruptcy Lawyer | Information About Bankruptcy

  3. jayfleischman

    John, I’ll preface this with the obvious – I’m not in Michigan. That said, I’m curious as to where your driver responsibility fees fall on the spectrum of government penalties. Parking tickets and speeding ticket fines aren’t discharged in a Chapter 7 in most places, so how are these fines different?

  4. Hi, Jay–Thanks for the reply!

    The Secretary of State has made noise about non-dischargeability on this basis from time to time, but, since it’s classified as an administrative penalty by the Secretary of State’s office and not as a component of criminal sentencing or any kind of criminal penalty (they’re automatically applied once a driver incurs a number of “points”), the SoS has of late not been making that argument or contesting the dischargeability of the fees. So, not a tax and not a criminal penalty, the SoS has apparently agreed at least tacitly that they are dischargeable.

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