By Kitty J. Lin
Have you ever parked somewhere and come back to your car and find a parking ticket on your windshield because you were just 1 minute past the allotted time on the parking meter? Or parked somewhere you were not supposed to? Or just drove a little faster than the speed limit posted on the road? If you have received a parking or speeding ticket you are not alone. Most likely you or someone you know has received one or more parking or speeding tickets in your lifetime. Some of the fines are manageable, but if you are already in a tight financial situation this ticket may be the straw that breaks the camel’s back. If you do not pay the fine the penalty accrues until even the once manageable fine has now exploded out of control. The question on a lot of people’s mind as they are deciding to file for bankruptcy is whether their parking and/or speeding tickets are dischargeable in bankruptcy.
As with most answers you may receive from a bankruptcy attorney, the answer is “it depends.” Whether your parking tickets are dischargeable in bankruptcy depends on what chapter of bankruptcy you are filing for protection under. Parking and speeding tickets are non-dischargeable in a Chapter 7 bankruptcy filing pursuant to 11 U.S.C. §523(a)(7). This section of the Bankruptcy Code indicates that a debt is non-dischargeable if it meets all three of these requirements: 1) the debt is for a fine, penalty, or forfeiture, 2) the debt is payable to and for the benefit of a governmental unit, and 3) is not compensation for actual pecuniary loss. Parking and speeding tickets are considered fines to the government and therefore not dischargeable in a Chapter 7 case. You would therefore still be responsible for the payment of the ticket after your other debts are discharged in your Chapter 7 case.
One silver lining is that these tickets are dischargeable in a Chapter 13 bankruptcy case pursuant to 11 U.S.C. §1328(a). This section of the Bankruptcy Code does not incorporate §523(a)(7) as part of the debts that are non-dischargeable. That means that once you complete the payment of your Chapter 13 plan payments (whether you are in a 3 year plan or 5 year plan depends on your particular circumstances) the rest of your debt that has not been paid will be discharged. This includes the parking and speeding tickets. The amount you pay to your unsecured creditors in your Chapter 13 plan may range from 0 to 100% of your debt depending on your circumstances. One thing to note is that your parking and speeding tickets are only discharged if you successfully complete your Chapter 13 plan payments. If you are unable to continue in a Chapter 13 because you need to convert your case to a Chapter 7 or if you receive a hardship discharge in your Chapter 13 case, those speeding and parking tickets remain not dischargeable.
You also need to be careful in the classification of your fine. If the debt you owe is for a fine that is criminal in nature then it would not be dischargeable in your Chapter 13 case. If your speeding ticket is considered criminal in nature then it would also not be dischargeable. Whether your speeding ticket is considered criminal or not depends on your particular’s state’s laws.
You should consult with an experienced bankruptcy lawyer to determine how to proceed in your bankruptcy case. The bankruptcy attorney can help you determine whether it is advisable to file a Chapter 7 or Chapter 13 bankruptcy case depending on your circumstances.