Bankruptcy Can Get Your Driver’s License Back!

by Kevin Gipson, New Orleans Bankruptcy Attorney

October 1, 2011

Filing a Chapter 7 or Chapter 13 bankruptcy can get your Driver’s License back for you when you have lost your license because of no have insurance!

Many States require people that own cars to have motor vehicle liability insurance.   These laws, often called compulsory motor vehicle liability laws, generally require that if you own a car, that you maintain at least a minimum amount of insurance on your car so that if you are involved in an accident and you cause damage to someone else’s car or injure them, that they can recover from your insurance for their damages.

Unfortunately, car insurance is expensive, and when someone is having financial problems, they may decide to stop paying for their car insurance and let the policy be cancelled.  Debt collectors will call and yell, but nobody calls to yell at you if you don’t pay your insurance bill.

To give teeth to these vehicle liability laws, many States may also suspend a Driver’s License upon notice by an insurer of the cancellation of the policy or upon notice of an accident with no insurance available to pay for the damages.

While it is never a good decision to drive a car without insurance, the good news is that you can get your Driver’s License back by filing a bankruptcy.

In 1971 the U. S. Supreme Court in the case of Perez v. Campbell stated under 11 U.S.C. 525(a) of the Bankruptcy Code, if the debt that caused the suspension of the license was discharged in a bankruptcy, then the license reinstatement could not be denied.

However, even though you may be able to get your Driver’s License back, you may still be responsible for the fine associated with the accident.  Generally speaking, the fine itself is not dischargeable in a bankruptcy since fines owed to a “governmental unit” are nondischargeable.  You will also likely be required to pay any State required reinstatement fees.   Often whether the fine itself can be discharged will depend upon whether the fine is treated as a civil or criminal matter by your state.  In New Orleans, Louisiana where I practice, we have both civil traffic tickets and criminal traffic tickets.  The following articles discuss the specific rules that apply to reinstatement of a Driver’s License in North Carolina and Kansas.

Also, debts incurred as a result death or personal injury that resulted from drunk driving or driving under the influence of a drug or other substance are not dischargeable.

 

 

Related Posts Plugin for WordPress, Blogger...
The following two tabs change content below.
I've been a consumer bankruptcy lawyer for nearly 25 years. Since that time I have helped many people resolve their financial problems. I have been practicing law since 1986 and I am licensed to practice in all state and federal courts in the State of Louisiana. Because I am a sole practitioner, you know that your debt matters are being handled by me personally. In addition to my work with consumers, I am also frequently asked to speak at local seminars on bankruptcy law. I am member of the following organizations: • Louisiana Bar Association • National Association of Consumer Bankruptcy Attorneys • Bankruptcy Law Network My office is located at: 3920 General DeGaulle Drive, New Orleans, LA 70114 Telephone: (504) 368-4101

Last modified: October 1, 2011