BANKRUPTCY AND MICHIGAN DRIVERS LICENSE RESTORATION
One of the great advantages of filing a Chapter 7 or Chapter 13 bankruptcy in Michigan is that it will often allow you to restore your suspended driver’s license.
It is important to remember, however, that a driver’s license is suspended in Michigan for a variety of reasons.
A license can be suspended as a specific criminal penalty, such as when it is suspended or even revoked as part of a sentence for drunk driving.
A license can be suspended for administrative reasons, also. This can happen when, for example, you have too many parking tickets or, formerly, when your driver’s responsibility fees reached a certain point.
This distinction between criminal penalties and administrative suspension is crucial to the understanding of when bankruptcy can help you with your driver’s license suspension—and when it cannot.
BANKRUPTCY AND CRIMINAL PENALTIES
Neither Chapter 7 nor Chapter 13 bankruptcy will discharge a monetary debt that is owed as a criminal penalty.
This is true for a restitution award, a judgment of criminal contempt, for parking tickets, and for everything in between.
There are bankruptcy attorneys in Southeast Michigan who will tell you, particularly with regard to tickets issued by the City of Detroit, that parking tickets are dischargeable in bankruptcy. This is incorrect. They are not. There is a key difference between failing to enforce a ticket due to the occasional confusion a bankruptcy discharge can create in a creditor of any sort and actually discharging it legally.
The US Bankruptcy Code (the Federal statute governing the bankruptcy process in the U.S.) is quite clear: criminal governmental penalties are not dischargeable in bankruptcy. A local municipal speeding ticket, failure to yield ticket, and even parking tickets are criminal penalties for civil infractions, misdemeanors, and felonies, once you mix drink or drugs or bodily harm into the mix.
Further, the City of Detroit and the 36th District Court in particular have improved their administrative and collection processes over the past handful of years. A parking ticket that might have once been “forgotten” because a court clerk stuck into the wrong pile of paper after receiving notice of a bankruptcy is far less likely to occur now than a decade ago.
Do not put stock in such advice.
If the only reason your driver’s license is suspended is that you owe money for a fistful of parking tickets or because you didn’t pay restitution as ordered by a Michigan court, bankruptcy will not discharge that penalty and will not automatically restore your license.
If you need help paying such non-dischargeable fines, a Chapter 13 bankruptcy will still allow you to pay the fine or penalty in priority over other debts, such as credit card or medical debts. You will pay it in full at 0% interest before being required to repay anything to credit card or other unsecured debts.
That will be the limit of what bankruptcy will due for your license restoration.
BANKRUPTCY AND ADMINISTRATIVE GOVERNMENTAL FEES
Governmental fees of an administrative nature, on the other hand, are not “criminal penalties” and are dischargeable in bankruptcy.
What does this mean with regard to driver’s license restoration in Michigan?
A driver’s license can be suspended, in addition to criminal penalties, for an accumulation of fees or fine’s owed not to a court or as part of a court’s criminal sentencing but to the Michigan Secretary of State.
The Michigan Secretary of State is a not a judicial office. Its offices are, obviously, not courts.
The fees charged by the Secretary of State, including the now thankfully defunct and much despised Driver’s Responsibility Fees, are administrative fees and penalties.
Administrative fees are dischargeable in bankruptcy.
Chapter 7 and Chapter 13 bankruptcy will restore your license if you have paid all of your court fines, tickets, restoration orders, and other criminal penalties and the only thing preventing restoration of your driver’s license is money owed to the Secretary of State.
If you are filing a Chapter 7 bankruptcy, presentation at a Secretary of State office of your Order of Discharge , will usually result in restoration of the license. Some of my clients have been able to get their driver’s license restored shortly after the filing of the bankruptcy simply by presenting the Official Bankruptcy Notice to a local Michigan Secretary of State branch. Some branches require that the Discharge Order be entered by the Court before restoring the license, even if the fines and/or penalties have not yet been paid to the local State of Michigan Courts. Debtor’s who are able to have their license restored without having paid the underlying fines or penalties are often under the mistaken belief that those fines or penalties have been discharged by the bankruptcy court. This is not the case. Debtor’s should follow up with the court to which the fine is owed and pay or make payment arrangements to avoid a later suspension of their driving privileges.
If you are filing a Chapter 13 bankruptcy, the discharge is not issued until the successful end of this 3-to-5-year process. It has been this attorney’s experience that a driver’s license can be restored after the case is filed and prior to discharge if the Notice of Commencement of the Chapter 13 case is presented along with a Chapter 13 Plan that specifically provides for repayment of the debt.
This may vary from case to case.
DRIVERS LICENSE RESTORATION & MICHIGAN BANKRUPTCY: THE BOTTOM LINE
The bottom line with regard to restoration of suspended Michigan driver’s licenses and Chapter 7 and Chapter 13 bankruptcy is that, you may not-so-neatly owe a combination of criminal penalties and administrative fines and fees.
If you are hoping to restore your license with the filing of a bankruptcy, you need to consult with a Michigan bankruptcy attorney who is familiar not only with the bankruptcy process but also with the laws of the State of Michigan concerning driver’s licensing.
Walter Metzen is a Board-Certified bankruptcy expert with more than 20 years of experience practicing in the City of Detroit.
The Law Offices of Walter A. Metzen & Associates offers free consultations for those interested in the bankruptcy process and is experienced in determining and advising as to the best course of action when filing Chapter 7 or Chapter 13.