Arizona’s Leading Bankruptcy Attorneys Discuss Which Fines Can Be Discharged In Bankruptcy
Bankruptcy allows people struggling with debt to clear it away realistically, under the court’s supervision. The goal of bankruptcy is to discharge as many of your debts as possible. When debts are discharged, you are no longer legally obligated to repay them. This allows the debtor to “start over” in a financial sense, and begin rebuilding their credit history.
There are two types of consumer bankruptcy that are most popular in the United States- Chapter 7 and Chapter 13. While each offers unique benefits and disadvantages, you may only qualify for one due to your income, the value of your assets, or prior bankruptcy filings. Chapter 7 bankruptcy is the most common form of consumer bankruptcy, and it wipes away unsecured debts. This process typically takes about 4 to 6 months. Chapter 13 bankruptcy is a debt reorganization payment plan that lasts 3 or 5 years. The amount the debtor pays in the plan depends on their debts, as well as their disposable monthly income, and some unsecured debts may be discharged through the plan with minimal repayment. You should consult with an experienced Phoenix bankruptcy attorney to figure out which chapter of bankruptcy will best suit your needs.
Debts That Are Dischargeable In a Phoenix Bankruptcy
Unlike what many people assume, not every debt can be discharged in bankruptcy. Bankruptcy was designed for people whose expenses have gotten out of hand- not so much for those who have significant criminal justice fines. These debts will be wiped away by a Chapter 7 bankruptcy filing.
If you file Chapter 13 bankruptcy and have these types of debts, they will be the last category of debt paid in your plan, and often don’t need to be paid in full to be discharged.
- Medical bills
- Personal loans
- Secured loans for an asset you wish to surrender
- Taxes that meet certain requirements
- Utility bills
- Back rent
- Repossession deficiencies
- Some government benefit overpayments
- Junior mortgages (Chapter 13 only)
- Some court fines
Debts That Are NOT Dischargeable In a Phoenix Bankruptcy
Whether you have court fines, these types of debts won’t be dischargeable in bankruptcy. If the majority of your debts fall into these categories, you may want to consider an option besides bankruptcy. Contact our bankruptcy firm for your free debt evaluation if you are unsure about how to categorize your debts.
- Child support
- Spousal maintenance
- Student loans (most of the time)
- Secured loans for an asset you wish to keep
- Debts incurred through fraud, false pretenses, etc.
- Excess credit card spending before your bankruptcy
- Some court fines
Can I Discharge Court Fines In Bankruptcy?
You’re probably reading this article because you need to know if you can discharge court fines by filing bankruptcy. The short answer is, it depends. Criminal fines can be collected using more severe methods than standard debts, like jail time, license suspension, and losing the right to vote.
There are several types of court fines. You may have fines from traffic citations, fines for violating codes, fines that serve as victim restitution, and more. One main factor you will want to look at is whether the fine is a penalty, or a reimbursement to another party. Reimbursement fines typically are dischargeable in bankruptcy, while penalty fines generally are not.
The Other Ways Filing Bankruptcy Can Help You With Court Fines
Just because your court fines won’t be discharged by a bankruptcy filing, doesn’t mean that filing bankruptcy may help you with this situation in some other way. You should discuss your circumstances with an experienced Tucson bankruptcy attorney to determine if your court fines are dischargeable, or if bankruptcy will otherwise help your financial situation.
Chapter 7 Bankruptcy In Phoenix, Arizona
Chapter 7 bankruptcy will indirectly help you with nondischargeable court fines if you are struggling with other unsecured debts. It will also provide a temporary protection period against your creditors. Chapter 7 discharges unsecured debts, like credit cards, medical bills, and personal loans, fairly quickly. When these debts are cleared, you may find it easier to pay off court fines that aren’t discharged in your bankruptcy. This is especially true if your wages are currently being garnished from a debt besides your court fines. Chapter 7 bankruptcy will stop your wage garnishment (unless it stems from a domestic obligation) for the lifespan of your bankruptcy, and permanently if the debt is discharged in bankruptcy. However, if the majority of your debt comes from court fines that can’t be discharged in bankruptcy, a Chapter 7 may not do you much good. You might not even qualify for Chapter 7 bankruptcy in the first place. You may want to consider Chapter 13, or some other form of debt relief, if this applies to you. Contact our bankruptcy law firm for your free debt evaluation to see if bankruptcy is a good fit for you.
Chapter 13 Bankruptcy In Phoenix, AZ
Even if you can’t clear away your court fines with a Chapter 7 bankruptcy, Chapter 13 could provide you with a more reasonable path to pay your fines than what is currently available to you. Secured debts and priority debts are paid over the course of 3-5 years when you file Chapter 13 bankruptcy. This gives you more time to pay off nondischargeable debts like child support, spousal maintenance, and criminal court fines. This can also be useful if you are behind on your car or mortgage payments, and are facing a repossession or foreclosure. You will be protected from your creditors by the Automatic Stay as long as your bankruptcy is in good standing, which is either 3 or 5 years in a Chapter 13 bankruptcy.
What Criminal Defense Fines Can a Bankruptcy Help?
Even after paying all your other dues to society, you may be left with criminal justice fines that you are unable to pay. Depending on your circumstances, your fines may actually be broken down into several categories. For example, let’s say you owe $10,000 in total. To break it down further, you owe $3,000 in penalties, $1,000 in victim restitution, $5,000 in detention fees, and $1,000 in court costs and interest. The first two fines on this list would not be dischargeable in bankruptcy. However, the last two fines would fall into the dischargeable category. That means that you could discharge $6,000 of your fines in your bankruptcy, leaving you with a balance of $4,000. If your criminal fines come from several sources, you should review them for dischargeability with an experienced bankruptcy attorney.
Consult An Experienced Phoenix Bankruptcy Attorney With Your Questions
When you have staggering fines from a criminal incident, your situation may feel hopeless. It will be difficult to truly move forward in life until your criminal fine balance is resolved. Depending on the structure of your criminal fines, bankruptcy may provide you an avenue to clear them away, or pay them off in a more reasonable time frame. This can also help you address any other looming debt issues that you may also have. You will be protected from your creditors while your bankruptcy is pending, and have the opportunity to move forward with a cleaner slate. To learn more about how bankruptcy could help you with your criminal court fines, call or use our online form to schedule your FREE consultation with one of our dedicated Arizona bankruptcy lawyers today.