Bankruptcy Protection is 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 suspended the Debtor’s driver’s license 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.    

The 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, violating 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, and the municipality cannot assess punitive damages.  However, the NJ Tort Claims Act was not a bar against the municipality.  The Debtor was glad to get his license restored.  He wanted a fresh start and to be able to move forward.

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

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.