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Priority Debt for Intoxicated Driving

March 16th, 2020 at 7:00 am

If you injured someone by unlawfully driving while intoxicated, the resulting personal injury debt would be a priority debt in bankruptcy.   

Priority Debts

For many weeks our blog posts have been considering how bankruptcy deals with “priority” debts. Examples of these special debts that we’ve covered include child/spousal support, income taxes, and wages owed employees. Sections 507(a)(1),(4), and (8) of the U.S. Bankruptcy Code.

There’s one more kind of priority debt. It does not come up often but if it affects you, you need to know about it.

Priority Debts vs. Non-Dischargeable Debts

But first we need to clear up something that could be quite confusing.

Some debts cannot be discharged (legally written off) in bankruptcy, or can’t in certain circumstances. For example, bankruptcy never discharges child/spousal support debt, and discharges income taxes only under certain conditions. So the issue is whether or not you will owe the debt after the bankruptcy case is over. See Sections 523 and 524 of the Bankruptcy Code.

Whether or not a debt is a priority debt is a different consideration. Those are debts that the law treats with greater priority during the bankruptcy case itself.  For example, in an asset Chapter 7 case—one in which the bankruptcy trustee has assets to distribute to creditors—priority debts receive payment in full before general unsecured debts receive anything. Similarly, in a Chapter 13 case, the debtor must pay priority debts in full during the payment plan. General unsecured debts usually receive payment only to the extent you can afford to pay them after the priority debts.

The confusion comes from the fact that most, but not all, priority debts also cannot be discharged in bankruptcy. But that’s not absolutely always true. The considerations are sometimes different. In any event, priority and dischargeability are different considerations that have different consequences in different situations. You and your bankruptcy lawyer need to consider them separately.

Specifically with debts related to driving while intoxicated, the law makes those debts nondischargeable in many situations. See Bankruptcy Code Section 523(a)(9). But those situations are not exactly the same ones as the ones determining priority. The rules are a bit different. And again, the discharge of drunk driving debts vs. whether they qualify as priority are separate considerations with different consequences. We’re focusing today on the priority question.

Debts from Unlawful Operation of a Vehicle because Intoxicated

The Bankruptcy Code says that a debt is a priority debt if it is

for death or personal injury resulting from the operation of a motor vehicle or vessel if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance.

Section 507(a)(10).

Under this language there are three key issues:

  1. It covers debts related to death or personal injury. The statutory language doesn’t cover property damage. Those would not be priority debts. However, in most accidents the personal injury side of the accident debts is much larger than the property damage side.
  2. The debt must come from your unlawful operation of a vehicle. So, the issue is whether you met your state’s standards of unlawful intoxication.
  3. Debts arising from other forms of unlawful operation of vehicle not involving intoxication are not priority debts. For example injuries resulting from speeding or reckless driving would not qualify as a priority debt.

The Consequences of Being Priority Debt

The consequences of having a personal injury debt being priority are different under Chapter 7 and Chapter 13.

Under a Chapter 7 “straight bankruptcy” case it only matters if it’s an asset case. As mentioned above, those are ones in which your trustee has assets with which to pay some of your debts. In that case he or she would pay your priority debts before paying other debts. So if you had a priority personal injury debt, it would receive payment before all non-priority debts. There’s a good chance the assets the trustee is distributing would not be enough to pay off the personal injury debt. Then you may or may not owe the balance depending on the discharge considerations mentioned above.

Most Chapter 7 cases are no-asset ones. All of your assets are “exempt,” protected from bankruptcy trustee liquidation. So the trustee has no assets to pay any creditors, including the priority personal injury debt. So there’s no practical effect from that debt being a priority debt. Again, whether or not you continue to owe the debt after the case is over turns on the separate discharge issue.

Under a Chapter 13 “adjustment of debts” case, your court-approved payment plan must “provide for the full payment” of all debts “entitled to priority.”  Bankruptcy Code Section 1322(a)(2).  Therefore you must budget enough to pay off a priority personal injury debt during the payment plan. You’d have 3 to 5 years to do so. You’d pay that in full before paying anything on non-priority unsecured debts. However, if that priority debt is huge, you may not have enough money to pay it off within that time. If so, a Chapter 13 case would likely not be a feasible solution. Therefore, determining whether the personal injury debt is or is not a priority debt would likely be very important.


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.


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.


Accident Claims from Driving While Intoxicated

April 22nd, 2016 at 7:00 am

You can write off claims against you for others’ personal injuries and property damage from a vehicle accident. Unless you were intoxicated.


Writing Off Debts from Vehicle Accidents  

When you think of debts you want to write off through bankruptcy, credit cards, medical bills, vehicle loans, and such come to mind. These are debts of specific amounts owed on obligations that you entered into voluntarily. But debts can also arise out of more ambiguous obligations, such as claims against you from a vehicle accident.

If you are in an accident, you could be responsible for paying an injured person’s accrued medical bills, future medical bills, loss of income, and maybe compensation for pain and suffering. You could be responsible for property damage to repair or replace vehicle(s) and any stationary object that was damaged like street signs and buildings.

If you didn’t have enough insurance or none at all, you’d have to personally pay the uninsured part of those claims for which you were found to be at fault. You could owe a tremendous amount of money.

You can usually discharge (legally write off) those claims against you by filing bankruptcy.

You Can Discharge a Claim Even If the Amount Is Not Yet Known

A “debt” is defined as a “liability on a claim” under the federal Bankruptcy Code.

A “claim” is a “right to payment, whether or not… liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed… .” See Section 101(12) and Section 101(5) of the Bankruptcy Code.

So when bankruptcy discharges “all debts. .. and any liability on a claim,” it doesn’t matter if the amount of that debt or claim is unknown, or “unliquidated.” As long as the accident happened before the bankruptcy was filed, “any liability on a claim” is discharged.

So not knowing the amount of medical expenses, lost wages, and other related claims usually does not prevent you from discharging all the claims related to the accident.

The Exception for Driving While Unlawfully Intoxicated

The Bankruptcy Code “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).

So if someone is injured or killed in a vehicle accident caused by your illegal driving under the influence of an intoxicant, you cannot discharge the debts related to that injury or death.

Exception Applies to Both Chapter 7 and Chapter 13

There are a few kinds of debts that can’t be discharged in a Chapter 7 “straight bankruptcy” case but can be discharged in the much more time-consuming Chapter 13 “adjustment of debts.” Under Chapter 13 certain debts are discharged after you pay as much as you can afford to pay to all of your creditors during a 3 to 5 year period of time. After that the remaining portion of some categories of debts are discharged.

But debts from driving under the influence are not among those that can be discharged only under Chapter 13. The Bankruptcy Code makes that clear. See Section 1328(a)(2). Debts from driving under the influence can’t be written off under either Chapter 7 or 13.

If Not Charged with a DUI

This exception to discharge only applies if your “operation of a motor vehicle was unlawful” because of your intoxication. So if you ingested an intoxicant and were in an accident without being charged with driving under the influence, you may be able to discharge debts arising from the accident. Your argument would be that your driving was not “unlawful.”

But careful because you could have driven unlawfully even if you were not cited. The injured party could still argue that you were driving unlawfully by presenting evidence about how much you had to drink and when. If have concerns about this, discuss it thoroughly with your bankruptcy attorney.

If Charged But Not Convicted

If you’re cited for a DUI offense but you succeed in not getting convicted, then you may also be able to successfully argue that your “operation of a motor vehicle” wasn’t “unlawful.” And so debts arising from the accident should be discharged.

But again, be careful. The standard of proof for a criminal offense is significantly higher than in the civil courts. It may be possible for someone injured in the accident to establish “by a preponderance of the evidence” that you were driving unlawfully as a result of your impairment even though in your criminal case there wasn’t quite enough evidence to show that to be true “beyond a reasonable doubt.” The injured person could win under the “preponderance of the evidence” standard simply by showing that there is at least slightly more evidence that you were driving unlawfully than there’s evidence that you were not.

Property Damage

Property damage claims are usually not as large as personal injury ones. But besides the replacement costs of vehicles, as mentioned above there could be damage to governmental property such as road signs and barriers, and to private property struck during an accident. These claims could be surprisingly large.

The Bankruptcy Code section referred to above speaks only of debts from “death or personal injury.” There’s no mention of property damages there. But there’s another exception to discharge beyond the “death or personal injury” one, and this one does apply to property damages. Section 523(a)(6) excludes from discharge any debt “for willful and malicious injury by the debtor to another entity or to the property of another entity.”

The question is whether causing an accident while driving impaired constitutes a “willful and malicious injury”? Is property damage from drunk driving a “willful and malicious injury” if you knew or should have known that you were driving while impaired but certainly did not intend to have an accident or to cause any property damage?

The answer to this may depend on where you live, on how the federal appeals courts have ruled on the question in your region.

In some parts of the country the answer is yes: the voluntary acts of drinking and driving while intoxicated can constitute conduct that’s intentional enough to be considered “willful and malicious.” If so then drunk driving claims would not be discharged. See an experienced and conscientious local bankruptcy lawyer to find out the law in your area.

Drunk Boating and Flying

The Bankruptcy Code section we keep referring to, Section 523(a)(9), on unlawful driving under the influence, includes both drunk boating and flying as well : 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.”

The caution here is that boating law and what constitutes unlawful operation of a boat is often quite different than the law about unlawful operation of a motor vehicle. For example, in some states it’s legal to operate a boat while the occupants drink alcohol or other legal intoxicants but not for the person operating the boat. The blood alcohol concentration amounts may be different, as well as the effect of the operator’s age.

Drunk flying laws are even stricter, as to be expected. Under federal law it is illegal to operate an aircraft 1) “within 8 hours after the consumption of any alcoholic beverage,” 2) with a blood alcohol concentration of 0.04% or more, and 3) while under the influence of alcohol or any drug “that affects the person’s faculties in any way contrary to safety.” See the Code of Federal Regulations, Title 14, Section 91.17


There are obvious reasons not to drink and drive (or boat or fly). We’ve added one more reason: if you do so while unlawfully intoxicated you can’t discharge any of the resulting death/personal injury debts in bankruptcy, and maybe none of the resulting property damage debts either.


Bankruptcy Timing and the Holidays: Personal Injury Damages from Driving Under the Influence

December 21st, 2015 at 2:00 am

Even bankruptcy cannot help if you drink and drive, cause an accident, and hurt somebody, damage property, or are fined.


There are 3 different kinds of liabilities that can come from driving while intoxicated and getting into an accident: 1) personal injuries to others, 2) property damage, and 3) criminal traffic citation. Today we focus on the first of these.

Personal Injury or Death from Driving while Intoxicated

If you are in a traffic accident and you are injured and there’s not enough insurance to pay for your medical bills, usually you can file a bankruptcy and “discharge”—legally write off—those medical bills. If someone else is injured, you are found to be at least partially at fault, and your insurance doesn’t cover the other person’s medical bills, loss of employment income and any other such damages, you can usually discharge those liabilities by filing bankruptcy.

But not if you drink and drive and hurt somebody. You will not get financial relief from the bankruptcy laws.

The Bankruptcy Code has a list of the types of debts and liabilities excluded from discharge. It includes any debt:

for death or personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance.

See Section 523(a)(9) of the Bankruptcy Code.

So if you operate a vehicle with a blood alcohol level above the legal limit and have an accident causing someone personal injury or death, bankruptcy will not “discharge” your liabilities from that injury or death. Such liabilities could total hundreds of thousands or even several million dollars in the case of a death.

Besides the grave harm caused to the other person, this is a potentially financial life-ruining event for you. You’d be weighed down by a huge debt that you could never get away from, even by using the usual tool of last resort for dealing with serious financial debts, the bankruptcy laws. 

Chapter 7 and Chapter 13

There are a few kinds of liabilities that can’t be discharged through a Chapter 7 “straight bankruptcy” but can be discharged in a Chapter 13 “adjustment of debts after paying all that you can afford to pay of your debts for 3 to 5 years.

But not DUI/DWI debts. The law is clear that this exception to discharge applies to cases filed under Chapter 13 just as it does to those under Chapter 7. (See Section 1328(a)(2) of the Bankruptcy Code.)

Any Chemical Impairment Applies

This exception to discharge explicitly includes being “intoxicated from using alcohol, a drug, or another substance.” As long as the driving “was unlawful” as a result of the intoxication, the resulting personal injury liability won’t be covered by bankruptcy.

Drunk Boating or Flying

This exception to discharge also explicitly applies to injuries “caused by a debtor’s operation of a motor vehicle, vessel, or aircraft.” Again all it takes for the law to make such operation illegal—and it is illegal virtually everywhere to operate a boat or plane while under the influence.


There are plenty of reasons not to drink and drive. Particularly during the holidays it may help to have one more reason that you may have not have known about. 

And besides possibly helping you, this information may be even more important to pass on to your friends and family, and help prevent someone from getting on the road impaired.


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