Is Bankruptcy Protection Available for Municipal Fines?

Do not lose your license for unpaid municipal fines and penalties.   A Debtor’s Municipal Court Fines and Penalties are Dischargeable Debts in Bankruptcy.    Municipal Court debts are treated like any other creditor debts.

Here is an example wherein bankruptcy provides protections to Debtors:

A Debtor had filed for a Chapter 13 Bankruptcy.  Neptune Township Municipal Court is listed as a creditor on the petition.

Shortly thereafter, the Municipal Court suspends the Debtor’s driver’s license.  The suspension is due to non-payment of fines and penalties.  The Bankruptcy Court receives notification.   Immediately, the Bankruptcy Court entered an order voiding the Municipal Court’s suspension of the Debtor’s driver’s license.    

Debtor’s Chapter 13 case was discharged.  The Municipal Court was notified that pre-petition fines and penalties debts could not be pursued.

Again, the Municipal Court continued to pursue collections in violation of the automatic stay and discharge order.  Municipal Courts are creditors.   Creditors have the same rules to follow.   The Municipal Court even threatened to suspend the Debtor’s driver’s license.   To bring this to a conclusion, the Debtor reopened the bankruptcy case.   The Debtor filed an adversary proceeding against the Municipality seeking damages.  

COURT’S FINDING – DETERMINING BANKRUPTCY PROTECTION

After hearing the case, the Bankruptcy Court found in favor of the Debtor. 

Municipal Courts cannot continue to collect pre-petition municipal fines and penalties debts.  Punitive damages could not be assessed to the Municipality.  However, the  NJ Tort Claims Act was not a bar against the municipality.   The Debtor was glad to get his license restored.   The Debtor wanted a fresh start and to be able to move forward.

Call me if you lose your license or are about to have your licensed suspended.    I offer a free bankruptcy consultation.   I will advise you whether bankruptcy protection could be beneficial for you.

If you have municipal court fines and penalties, these are dischargeable Chapter 13 debts.   When you file bankruptcy, your suspended license must be restored.    Debtors have bankruptcy protection.

Know your rights in a Chapter 13 bankruptcy,   Hire a Board Certified Bankruptcy Lawyer.     I am here to help you.    Talk to me – you have bankruptcy protections.