How Does Declaring Bankruptcy Affect Outstanding Traffic Tickets?

What debts can lead to license suspension and how suspension can be avoided.

You might be surprised to find out that most license suspensions aren't the result of a DUI conviction but due to unpaid tickets and failure to comply with insurance requirements. If a traffic ticket for a minor traffic infraction goes unpaid or is ignored for too long, the state will typically suspend the driver's license. Unfortunately, a suspended license will only make things harder for persons struggling to pay off traffic fines.

This article explains the suspension process for unpaid tickets and debts and how declaring bankruptcy can eliminate these debts and result in the reinstatement of driving privileges.

How Unpaid Tickets and Debts Can Lead to License Suspension

Driving is considered a privilege, not a right. So, when drivers fail to comply with the rules of the road or other legal obligations, the state can take away their driving privileges. Here are a few debt-related examples of when a state might suspend a person's driving privileges.

Traffic Tickets Can Result in License Suspension

When a driver is issued a traffic citation, he or she generally has a few months to either appear in court or pay the assessed fine. If the driver does neither, the Department of Motor Vehicles (DMV) generally will at some point suspend the driver's license.

Suspensions related to unpaid traffic tickets typically will remain in effect until the fine has been fully paid. Drivers who do appear in court for the ticket might be able to arrange a payment plan. However, failure to make the scheduled payments could lead to suspension, especially if the driver doesn't notify the court that he or she is having problems making the payments.

Issues With Auto Insurance Can Lead to License Suspension

Drivers are generally required to carry vehicle insurance in case of a collision. If a driver involved in an accident doesn't have insurance, the DMV typically can suspend the driver's license until the DMV receives proof that all damages from the accident have been fully paid.

Unpaid Parking Tickets Can Result in the Loss of Driving Privileges

Similar to a traffic citation, parking tickets that are unpaid can result in license suspension. However, many states have passed laws prohibiting the DMV from suspending a driver's license for unpaid fines related to parking violations.

Failing to Pay Child Support Can Lead to License Suspension in Some States

Though unrelated to driving, many states authorize license suspension for excessive child support delinquency. In these states, the agency in charge of child support sends a notice to the DMV of the delinquency. The DMV will then suspend the driver's license until the issue is resolved.

Debt Collection Agencies Can't Suspend a Driver's License

Government agencies will often refer debts that go unpaid for a certain period of time to a collection agency. Collections agencies might inform the driver that an unpaid debt can result in license suspension, but collection agencies themselves can't suspend a driver's license. Only the state has the authority to suspend driving privileges.

How Bankruptcy Can Eliminate Debt and Result in Driver's License Reinstatement

All of the above-mentioned suspension methods stem from the driver's inability to fully pay some form of debt—parking tickets, traffic fines, or collision damages. Logically, the driver's license would be reinstated if that debt no longer existed. However, declaring bankruptcy won't always discharge the types of debts that result in the loss of driving privileges.

Chapter 13 Bankruptcy Typically Will Result in License Reinstatement

Courts have said that any debt that's included in a Chapter 13 bankruptcy plan can't be the basis for suspending or continuing to suspend a driver's license.

Although not all states have legislation exempting dischargeable debts from DMV consideration, most DMVs will lift any suspension related to a dischargeable debt in a Chapter 13 bankruptcy plan.

Chapter 7 Bankruptcy Generally Won't Help With a Suspended License

Unlike Chapter 13, Chapter Seven bankruptcy doesn't include long-term payment plans and doesn't discharge secured debts. So, traffic fines, parking tickets, and collision-related debts aren't discharged with Chapter Seven bankruptcy. Consequently, declaring Chapter Seven bankruptcy won't result in license reinstatement.

Suspensions Related to a Failure-to-Appear in Court Can't be Resolved Through Bankruptcy

Chapter 13 will discharge any outstanding debts associated with traffic citations but will not resolve traffic citations that required the offender to appear in court. A suspension that results from a failure-to-appear in court isn't directly related to the payment of fines. So getting rid of the debt associated with the fine doesn't resolve the issue. The offender must first go to court and deal with the ticket. Once the offender appears in court and pleads guilty, the assessed fine can then be included in the bankruptcy plan.

Talk to an Attorney About Your Situation

Aside from bankruptcy, there may be other options for paying down unpaid tickets and getting your license back. The legislatures in many states have recognized the downward spiral caused by suspending the licenses of those already struggling financially. So, some states have legislation that's aimed at helping drivers who are in these types of situations.

Check with a local attorney or your driver's license office to see what options may be available. Of course, if your debts are in the thousands or are no longer manageable, it may also be a good idea to meet with a bankruptcy attorney.

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