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Bankruptcy Writes Off Vehicle Accident Claims, Unless Intoxicated

March 25th, 2019 at 7:00 am

Bankruptcy writes off claims against you from a vehicle accident for personal injuries and property damage, IF you weren’t intoxicated. 

 

Vehicle Accident Claims

If you had a vehicle accident, you could owe many kinds of debts from it.  You could be liable for any injured party’s current and future medical bills, loss of wages, pain and suffering, and other forms of damages. You could owe for property damage to vehicles and also to any building or traffic barriers or signs.

Your insurance may cover all of these obligations. Of course if you have no insurance, it’s all on you. More likely you have insurance but not enough. Especially if you have only the legal minimum coverage, a major accident and/or one with multiple vehicles could easily result in damages more than your insurance limits.  Then you’d be on the hook for everything insurance doesn’t cover. That could amount to tens or even hundreds of thousands of dollars.  

Bankruptcy would usually write off (“discharge”) whatever you’d owe.

Accident Claims of Unknown Amounts

It doesn’t matter if you don’t know how much you’ll owe. Often you don’t until many months or sometimes even years after the accident. As long as you file bankruptcy after the accident, all claims from the accident are covered by your bankruptcy case.  

Bankruptcy law makes that clear.

Bankruptcy discharges most debts. The U.S. Bankruptcy Code defines a “debt” as a “liability on a claim.”  In other words, you have some legal obligation to somebody.

But that legal obligation does not need to be reduced to a fixed dollar amount. A “claim” is defined as a “right to payment, whether or not… liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed… 

“Unliquidated” means that the amount of the claim is unknown. For example, medical expenses are still accruing. “Contingent” means that the event that triggers whether or not you are liable has not yet happened. For example, a dispute about whether somebody else’s insurance covers the claim has not yet been resolved. “Disputed” means that a question remains whether the claim against you is legally valid. For example, the cause of the accident is still being litigated.

In all these non-fixed-debt situations, bankruptcy would still usually discharge any debts related to claims arising out of the accident.

The Intoxication Exception

However, bankruptcy does not write off accident claims if you were driving intoxicated.

Specifically, regular Chapter 7 bankruptcy “does not discharge an individual debtor from any debt… for death or personal injury caused by the debtor’s operation of a motor vehicle… if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance.” Section 523(a)(9) of the U.S. Bankruptcy Code.

This applies just as much to Chapter 13 “adjustment of debts” because it incorporates the same language. Section 1328(a)(2) of Bankruptcy Code.

3 Practical Twists

1) Only Applies to Unlawful Operation

Notice that this exception only applies if your alleged intoxication made your “operation of a motor vehicle… unlawful.” So this raises some questions if you were arguably intoxicated but weren’t so charged. Your bankruptcy lawyer could argue your operation of your vehicle was not “unlawful.” So the resulting accident claims should be written off in bankruptcy.

On the other hand, there may be circumstances in which a person isn’t charged but was still intoxicated under the law. The accident may have happened in an isolated place and the police didn’t arrive until hours later. Even if you weren’t cited, the injured party could still try to bring evidence that you were driving unlawfully. For example, there could be convincing evidence based on how much you drank and when.

2) Property Damage

The Bankruptcy Code language that creates this exception to discharge refers only to debts “for death or personal injury.” This language does not cover property damage. So can you discharge property damage debts from an intoxicated accident?

Maybe. But there is another exception to discharge that does apply to property damages. Bankruptcy law excludes from discharge any debt “for willful and malicious injury by the debtor to another entity or to the property of another entity.” Section 523(a)(6) of the Bankruptcy Code.

But if you have an accident while intoxicated the injuries caused weren’t intentional. So they weren’t willful, right?

It may depend on your specific facts, and especially on how the bankruptcy courts interpret the law locally. Bankruptcy is federal law but on close questions could be applied differently in different regions of the country. If you have any debts from any accident make sure you have a particularly experienced bankruptcy lawyer representing you. He or she will advise you about the law in your bankruptcy court.

3) Boating and Flying Accidents

We’ve been discussing driving while intoxicated but the discharge exception also applies to intoxicated boating and flying.

Bankruptcy does not “discharge an individual debtor from any debt. .. for death or personal injury caused by the debtor’s operation of a… vessel, or aircraft… if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance.”

Boating and flying are covered by completely different laws, so what’s unlawful is completely different. In state boating laws the blood alcohol concentration amounts may be different, as well of the effect of the operator’s age. Under federal aviation law it is illegal to operate an aircraft:

  • “within 8 hours after the consumption of any alcoholic beverage”
  • with “an alcohol concentration of 0.04% or or greater in a blood or breath specimen”
  • “while using any drug that affects the person’s faculties in any way contrary to safety”

Code of Federal Regulations, Title 14, Section 91.17

 

The Surprising Benefits: Reinstating Your Driver’s License Suspended for Unpaid Tickets

May 24th, 2018 at 7:00 am

You may be able to reinstate your license in spite of one or more unpaid traffic tickets. It mostly depends on the traffic laws violated. 

 

We’re deep into a series of blog posts about powerful, less familiar benefits of bankruptcy. One important one is getting your suspended driver’s license reinstated. Whether you can get your license reinstated through bankruptcy depends a lot on the reason for the suspension. Last week we covered suspensions for not paying a judgment from a motor vehicle accident while driving uninsured or underinsured. Today we cover suspensions for not paying one or more traffic tickets.

License Reinstatement Depends on Discharge of the Traffic Ticket(s)

Our last blog post showed how bankruptcy reinstates a license suspended because of an unpaid debt from an accident. These suspensions usually come from not paying a court judgment or debt from an uninsured motor vehicle accident. Usually such a debt can be legally written off (“discharged”) through bankruptcy. After bankruptcy takes away the reason for the suspension, the driver’s license can be reinstated.

It works about the same way with traffic tickets. If your license was suspended for not paying traffic tickets, a bankruptcy can sometimes discharge what you owe on those tickets. That could enable you to reinstate your license.

Not Available Under Chapter 7

Chapter 7 (“straight bankruptcy”) doesn’t work with traffic ticket suspensions. Chapter 7 doesn’t discharge “a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit.” See Section 523(a)(7) of the U.S. Bankruptcy Code.  A debt owed for a traffic ticket is a “fine” or “penalty” that you owe to the state, city or other local “governmental unit” whose police issued it to you. Because Chapter 7 doesn’t discharge traffic tickets, it cannot reinstate a driver’s license suspended for nonpayment of those tickets.

Need to File Under Chapter 13

However, Chapter 13 is different. It may be able to discharge the debt from your tickets. That’s because Chapter 13 does NOT exclude “a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit” from discharge. See Section 1328(a)(2) of the Bankruptcy Code. That Subsection lists the kinds of debts that Chapter 13 does not discharge. It refers to some but not all of the kinds of debts that Chapter 7 cannot discharge. The kinds of debts listed do NOT include the “fine” and “penalty” one referred to above—Section 523(a)(7). This means that Chapter 13 CAN discharge such “fines” and “penalties,” including certain traffic ticket debts. Since Chapter 13 can discharge traffic tickets, it may enable you to reinstate your license suspended for that reason.

Traffic Crimes vs. Violations or Infractions

Whether Chapter 13 can discharge the ticket debt depends on the nature of the law(s) you violated. Neither Chapter 7 nor Chapter 13 can discharge criminal fines or restitution. So the traffic ticket(s) must not be for a crime, but rather for a traffic violation or infraction. It can’t be for a misdemeanor or felony.

Chapter 13 specifically excludes from discharge “any debt… for restitution, or a criminal fine, included in a sentence on the debtor’s conviction of a crime.” See Section 1328(a)(3). So did your license suspension came from breaking a traffic law requiring you to pay restitution or a criminal fine? If so that restitution or fine could not be discharged in bankruptcy, thereby not enabling your license to be reinstated. But if your ticket(s) are from traffic violation(s) or infraction(s), those could be discharged and your license reinstated.

This Can Be Unclear and Feel Arbitrary

What’s the difference between a dischargeable non-criminal traffic violation or infraction and a nondischargeable criminal fine?  This is often not clear.  None of these words are defined in the Bankruptcy Code. Whether breaking a traffic law is considered non-criminal or criminal can be quite arbitrary. It can turn on the coincidence of the words used in your state’s statutes or your local jurisdiction’s ordinances.

Generally, the more serious a violation of the traffic laws, the more likely that violation would be considered criminal. On one extreme, parking tickets are most likely not criminal. On the other extreme are serious violations that would likely be considered criminal, such as reckless driving, hit and run, and evading arrest. Your bankruptcy lawyer has experience with your local and state jurisdictions’ laws to advise you in making this crucial distinction.

License Reinstatement Procedure

Assume that Chapter 13 would discharge your particular traffic ticket debts. Under Chapter 13 the discharge of your debts does not happen until the end of the 3-to-5 year case. You may or may not have to wait that long to reinstate your license. It depends on local procedures.

Those procedures involve a number of authorities—the state or local court imposing the traffic fine, the state motor vehicles department reinstating your license, and the bankruptcy court discharging the traffic fine debt.

Conclusion

So, no question, this is complicated. Your bankruptcy lawyer will help in two huge ways. First, he or she will advise you whether you will be able to reinstate your license. If so, second, your lawyer will be aware of policies and practices of each of the authorities (or can research this), and guide your case through them efficiently. Then your license will be reinstated as quickly as possible.

 

Reclaiming Your Texas Driver’s License through Bankruptcy

April 12th, 2018 at 11:34 pm

Texas bankruptcy attorneyCreditors can take the issue of unresolved debt to court and have a judge issue a judgment against the debtor. In most states, judgments do not severely impact the life of a debtor thanks to existing exemptions that protect against losing homes and other possessions. However, in Texas, an unpaid judgement authorizes loss of driving privileges by suspending a driver’s license. The suspension goes on often indefinitely until there is a proof of repayment, or until the issuance of an automatic stay. Such a blow to one’s independence can wreak havoc on any life. Fortunately, reclaiming your license is one of the many surprising benefits of filing for bankruptcy.

How The Loss of Driving Privileges Turns Into A Catastrophe

Although for some the loss of legal driving privileges is a slight inconvenience, the set back is devastating for many others. Having driving abilities is not just about getting to work on time, it is also family availability and other daily life requirements. Furthermore, many employers require a valid driver’s license to maintain employment, such as in positions requiring travel. The next steps are up to the employer. Sometimes, an employer can choose to relocate an employee to an area that does not necessitate a license (or the handling of money, since financial instability creates a liability for many business operations). If termination of employment is the ultimate decision, the loss of income may affect the following payments:

  • Mortgage or rent;
  • Insurance;
  • Groceries; and
  • Electricity.

Get Your Driver’s License Back

If financial difficulty resulted in the loss of your driver’s license, losing your job only compounds the issue further. Fortunately, bankruptcy can enable you to get your license back. Filing for bankruptcy puts an automatic stay in place, which prevents creditors from pursuing all attempts to collect on debt, enabling the filer to reinstate the license without having to satisfy the obligation. Doing so in a timely manner can prevent job loss and the potential accompanying snowball effect the loss of income can have on bills.

Ask an Attorney

If you lost your license as a result of the inability to pay a bill, the last thing you likely want to happen is to experience a job loss on top of it all. Explore the option of bankruptcy with a San Antonio bankruptcy attorney today. At the Law Offices of Chance M. McGhee, we understand how frightening and embarrassing the thought of bankruptcy is, but we also know that waiting can make matters worse. Discover your options today by calling 210-342-3400 for your free and confidential consultation.

 

Sources:

http://www.govcollect.org/files/Texas_Debt_Collection.pdf

https://www.hrbartender.com/2012/recruiting/ask-hr-bartender-losing-your-drivers-license-can-impact-your-career/

 

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