Parking tickets – one of the nightmares of having a car in the city.
People filing chapter 7 bankruptcies find tickets can be like a bad movie, they just won’t go away.
Here’s the problem: The U.S. Congress enacted the bankruptcy code, so we can’t be surprised that the law protects many units of the government. One of many examples is student loans. Such loans, backed by the federal government, are rarely dischargeable unless extreme circumstances legally categorized as ‘undue hardship’ are proven to a bankruptcy judge.
Parking Tickets and Bankruptcy
The provision of bankruptcy law giving parking tickets life after chapter 7 is the section stating what debts are discharged, and which are not. This section of the law excludes debts from discharge
“to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit”.
U.S. Bankruptcy Code. 11 U.S.C. § 523(a)(7).
So, the common view is that parking tickets survive Chapter 7. The only good news here is that the city or town may not push the collection while the chapter 7 case is open. The stay of bankruptcy stops collection as long as the case is pending.
Sometimes a valid argument is made that if the parking ticket is not a fine, and is subject to civil enforcement only as a revenue measure rather than a police power matter, then it would be discharged.
Practical Matter – Pay the Tickets?
Meanwhile, if you fail to pay the ticket, there is the possibility a bench warrant could issue, and next time you get stopped for a broken tail light or anything else, you could have problems. Unless the ticket is for a high amount, as a practical matter, it might be best to pay it.
Parking Tickets in Chapter 13 Bankruptcy
So far the focus has been on chapter 7 bankruptcy. But, parking tickets can be discharged in a Chapter 13. Here, municipal fines including parking tickets are considered unsecured debt. They are treated like all other unsecured debts. For example, if the chapter 13 plan requires payment of ten (10%) per cent of unsecured debt and you have $150 in parking tickets, you’ll pay $15 towards the tickets. After all plan payments are made and the discharge is issued, the remaining amount of the tickets goes away.
Deciding whether chapter 7 or chapter 13 is best, or whether any bankruptcy filing is a viable alternative depends on many factors. My office handles consumer bankruptcies in Massachusetts and New Hampshire. In those two states, call for a free consultation.