Chapter 7 bankruptcy will undo a driver’s license suspension depending on why the license was suspended states Steger bankruptcy lawyer. If the individual was suspended for driving without insurance and it caused an accident, then their license can be unsuspended with the filing of a Chapter 7 bankruptcy. The exception would be in the case of an accident caused by DUI driving. In that case, the license would not be unsuspended once the Chapter 7 case completes.
There are also Chapter 7 situations where the license would be unsuspended for the duration of the case but yet will become suspended again after the case. One such example of that is for parking tickets suspensions. Parking tickets are a non-dischargeable debt, so they don’t go away. If your license is being suspended for failure to pay parking tickets, that suspension can be lifted during the duration of the Chapter 7 bankruptcy case which is approximately 110 days or so. After the 110 days or so has passed and you have received a discharge in bankruptcy, your license could be suspended once again if those parking tickets are not paid for. That is how it is handed in a Chapter 7. Thus, if you have a high amount of parking tickets, you may have a problem paying them off during the pendency of the bankruptcy process to prevent your license from being suspended once again.
In those cases, I would recommend a Chapter 13 bankruptcy. Parking tickets could be listed on a Chapter 13 bankruptcy and paid back over a three to five year period. During that three to five year period, provided the case stays active, the driver’s license suspension will remain on suspended. If, however, during the Chapter 13 the case is dismissed for whatever reason, then the suspension can be put back on if those parking tickets had not been previously paid during the pendency of the Chapter 13.
There are other instances where driver’s licenses are suspended and those are for moving violations and traffic fines. In a Chapter 7 case, I have found that most of the traffic courts do not honor the bankruptcy laws. They somehow believe that they are running independent of bankruptcy and that they do not have to abide by the automatic stay. In those cases, the state court is going to continue to suspend the driver’s license of individuals who have outstanding fines and tickets. I recommended the fine or ticket is small, the debtor pay that separately outside of the bankruptcy.
Those moving violation and traffic fines can also be re-organized in a bankruptcy Chapter 13 bankruptcy but that doesn’t guarantee that you are going to actually pay those back during your bankruptcy. I just had a case recently where the Chapter 13 was almost over, it’s been approximately three to five years since the case was filed and there were two moving violations or traffic tickets listed on the bankruptcy. Well, it turns out when the individual went to get his driver’s license again; the court was telling him that he still had outstanding balances on those parking tickets. What happened in his case is not uncommon. What happened was the court; the clerk of the court did not file a proof of claim to get paid for what he owed for those traffic violations. Thus, he pretty much completed his Chapter 13 and the traffic violations were not paid.
Now, this is something that could be fought in the bankruptcy court, however it is probably not worth it so I advised my client to go ahead and pay those traffic fines separately because they were not paid through the Chapter 13. There was no concern that they were going to be paid twice. The only concern was that if they weren’t going to be paid separately, he would not be able to get his license back again.
So commonly in a Chapter 7 we can undo a license suspension while the debtor is in the Chapter 7 and depending on what it is, he may be able to get his license back after the Chapter 7. And in Chapter 13, typically the parking tickets and things like that can be paid through the Chapter 13 plan. However, there is no guarantee that the municipality or the local court is going to actually file a proof of claim. If they don’t file a proof of claim bankruptcy, then the debtor must make separate payments to pay those traffic fines, otherwise he can be suspended going forward after the Chapter 13 is completed.