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DRIVER RESPONSIBILITY ACT AND BANKRUPTCY DISCHARGE
Q: CAN A DEBTOR DISCHARGE THE FINES UNDER A DRIVERS RESPONSIBILITY ACT IN CHAPTER 7 BANKRUPTCY?
In Michigan Driver Responsibility penalties are found in MCL 257.732 (a) Public Act 165 of 2003 taking effect 10/01/2003 and amended Public Act 52 of 2004 and Public Act 460 of 208.
The Acts purpose is to act as a deterrent to bad driving and to fund the marginal cost to society. Violations for drunk driving or not having proper insurance trigger the fees.
Several states have these types of fines.
In Michigan the act makes drivers who reach certain points against their driving record, do not have proof of insurance, or ticketed for drunk driving and other acts to pay an extra $100-500 annual fee to maintain their license in addition to other costs.[nc 2005]
In most cases failure to pay the yearly assessment on time results in license suspension. The license re instatement will cost another $125.00.[nc 2005]
Driver responsibility programs mean big money for the states who have tried them.[nc 2005]
Several of the Michigan Fees are;
These fines are not dischargable in Bankruptcy.
In a Texas Bankruptcy Court the drivers responsibility surcharge was found to no be dischargable. In a CHapter 7 the debtor had scheduled the penalties as an unsecured creditor not a priority.
In Texas a surcharge is imposed on persons convicted of traffic violations. Sec. 708.102 and 708.13. The debtor pled that the $5,960 surcharge was dischargable and the State had violated the automatic stay.
The Bankrutcyu court relied on 11 USC 523 ( a) (7) and that Drivers Responsibility surcharges have been identified by previous decisions as fines and penalties.