Can Criminal Fines Be Discharged In Bankruptcy?
Almost any debt can be discharged in bankruptcy. But one very important category of debt that cannot be discharged is criminal restitution, or fines or penalties related to criminal activity. Don’t worry though–bankruptcy can still help you pay those fines in other ways.
What is a Criminal Fine?
You may be aware that if you are convicted of a crime, or plead guilty to a crime, there can be severe monetary fines involved, along with things like jail time, probation, or other restrictions on liberty. Certainly, restrictions on liberty are the most serious penalties. But the monetary penalties should not be overlooked.
Monetary penalties can follow someone around, even after they have otherwise completed probation or prison time. They can impair someone’s ability to assimilate back into society. Many communities of color and minority communities have also noted that these fines tend to affect their communities unfairly or disproportionately.
That means that the ability to discharge these fines would help in allowing people to go back into society, which in turn, often keeps people from committing more crime.
The Benefits of Bankruptcy
But bankruptcy law doesn’t allow criminal penalties to be discharged (although it does allow fines that come from the government that you owe as reimbursement to the government to be discharged). So is there something that bankruptcy can do to help with criminal penalties? There may be.
The first benefit is the automatic stay. Although criminal fines can’t be discharged, the government must stop all collection activities when you file for bankruptcy. This can help avoid any penalties, and provide you some extra time to pay these fines.
So why file for Chapter 7 if the fines can’t be discharged? One reason may be to clear up money. If you are paying on debts that are dischargeable, that money can now be applied to the criminal penalty payments. You have more disposable income to apply to the penalties.
Chapter 13 May Help
Fines cannot be discharged—but they can be included in a Chapter 13 repayment plan. Your Chapter 13 payment plan will allow you to make the restitution of criminal fine payments over the course of five years, which could be a much lower payment than you are paying right now.
The only negative is that with normal debts, at the end of your plan, any debt that isn’t fully paid off is discharged. But criminal fines won’t be discharged. You’ll still owe whatever wasn’t paid off during the plan.
But the amount that you owe after that time could be so small, you would then be able to pay it off, or make more reasonable payments than you would not have been able to make if you never filed for Chapter 13 bankruptcy. Or, at the end of the five years, your income may have increased enough that you can pay off the balance of the restitution.