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Fines and Penalties in Municipal Court are Dischargeable in Chapter 13 Bankruptcy

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Debtor filed for Chapter 13 Bankruptcy and listed the Neptune Township Municipal Court as a creditor.

Debtor’s driver’s license was suspended by the Municipal Court for non-payment of fines and penalties.  The Bankruptcy Court entered  an order voiding the Municipal Court’s suspension of Debtor’s driver’s license.

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

Municipal Court continued to pursue collections in violation of the automatic stay and discharge order and even threatened to suspend the Debtor’s driver’s license.   The Debtor reopened the bankruptcy case and filed an adversary proceeding against the Municipality seeking damages.  


The Bankruptcy Court found in favor of the Debtor. 

Municipal Courts cannot continue to collect pre-petition fines and penalties .  However, punitive damages could not be assessed to the Municipality.   However, NJ Tort Claims Act was not barred against the municipality.

If you have municipal court fines and penalties, these can be discharged in a Chapter 13 Bankruptcy.   When you file bankruptcy, your suspended license must be restored.