Filing Bankruptcy on a Court-Ordered Judgment: Lift Suspended Car License for a Car Accident

Written by James Hirby | Fact checked by The Law Dictionary staff |  

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One person stated it very well by writing that what a person says he or she is going to and what is going to happen, and what actually does happen, is often a world apart.  There is a rather funny aspect to of all of this.  A person can file a bankruptcy in an attempt to avoid paying a court-appointed judgment penalty, that penalty being for a suspended license when convicted of damages in a car accident.  However (… wait for it …), that person will fail to get the satisfaction sought in bankruptcy.  Why?  These penalties cannot be discharged by bankruptcy.  It is a part of federal bankruptcy law.  In some states it is backed up by supplemental state law.  So the filer will submit an application and pay the submission fees and then be told that the penalty is excluded by law, with the bankruptcy being dismissed.  The law can be a beautiful thing.  Minimally, the filer will have to list this penalty as a liability and name the person who is owed this money.  At the 341 hearing, the person owed the money can file a complaint if the penalty is going to be discharged.  Bringing recognition that this penalty is from a court order, it will have to be excluded from discharge.  Then, depending on what was said at the 341 hearing, the debtor could be in greater trouble if the debtor lied about the debt in any way.

One way to foil this person’s bankruptcy attempt is to send the information to that state’s bankruptcy court to inform them, as a “friend of the court” of potential abuse of federal bankruptcy law.

By filing bankruptcy, the person required to pay this penalty is effectively stating that he or she has little intention of paying the penalty.  This leads to another odd but funny thing.  All of the states in the United States will extradite a criminal to the state where a crime occurred.  It would have to be an interesting conversation between the trustee and the debtor who is trying to avoid paying a court-ordered penalty and trying to reverse a court-ordered license suspension.  Having likely paid none of the penalty, the debtor is asked effort

In many states a claimant can file for liens, seizures, garnishments, and the like, when the debtor makes no effort to pay the penalty.  One needs to weigh the cost of pursuit.  If the cost of pursuit can be made a liability against the pursued, it is worth it.  Several people expressed the wish that when a court applies a penalty for damages in a car accident, that the convicted person should have to prove how this penalty would be paid, even to the point of relinquishing assets to do so, or allowing a lien on as yet unsecured property or assets.  While the arrangements are being made, the convicted person should be held in jail.  Many people have received little relief from those penalized and owe the claimant money.  They have had difficulties getting monies due to them, by arrogant people like this one seeking to avoid paying by abusing bankruptcy.

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