Chapter 7 Can Prevent Your Drivers License From Being Suspended
The main objective behind allowing a person to file for bankruptcy is to provide that individual with a fresh start in life. The Bankruptcy Code clearly prevents the government from discriminating against a debtor by suspending, denying or revoking their driver's license soley because they failed to pay a motor vehicle related judgment that would be dischargeable in their bankruptcy. Otherwords, if the debt is dischargeable in bankruptcy, then the license cannot be denied. Likewise, the State is prohibited from creating any licensing or other type of requirements simply because a person filed for bankruptcy. The whole idea behind the prohibtion against discrimination is that a person with a discharged debt should be treated the same way as a person who never had any type of debt.
However, it should be pointed out that if other reasons exists for the government's action, then such action may be permissable and not be a violation. An example of such a sitiation would be where a license has been suspensed or revoked due to a certain number of points being assessed after various traffic violations. If the law that is being applied to you is not designed to coerce the payment of a debt that would be dischargeable in bankruptcy and requires the same actions from debtors and non-debtors alike, then there is no violation.
In order to have your license restored there are certain documents that will need to be provided to the Pennsylvania Department of Transportation:
- Proof that the Bankruptcy was filed (a certfied copy of the cover sheet to the bankruptcy petition),
- Copy of the bankruptcy schedule that list the motor vehicle judgment to be discharged,
- Affidavit stating that the judgment is not for personal injuries or death caused by the debtor's operation of a motor vehicle while intoxicated, and
- Proof of current financial responsibility for any vehicle titled in the debtor's name, or an affidavit stating that the debtor does not have any vehicles titled in his or her name.
Once all of this documentation has been provided to the State, then your license will be restored. The Pennsylvania Department of Transportation will not mail your license to you. It will still be necessary to go to your local license branch to reapply and have the license reissued. Sometimes a person fails to provide this information to the State while their bankruptcy is still active. Even if you provide all of the above-mentioned documentation after your bankruptcy has been discharged and closed out your license can still be restored.
Chapter 13 Is Your Best Alternative, If the Debt Is Of The Type That Is Non-Dischargeable In A Chapter 7
The typical type of debt that causes a person's driving priviledges to be suspended is where a money judgment has been entered against them due to a motor vehicle accident. Upon filing a chapter 7 bankruptcy that type of debt can be discharged and you can have your license restored. However, there are times where an individual's driver's license is suspended due to the non-payment of traffic fines. Traffic fines are generally not dischargeable in a chapter 7. The filing of a chapter 13 bankruptcy may allow you to disharge certain debts that would not be dischargeable in a chapter 7 bankruptcy. For instance, traffic fines are generally dischargeable in a chapter 13. If the debt is of the type that will be discharged upon the successful completion of the chapter 13, then the debtor is entitled to have their license renewed during the pendency of the chapter 13. Should the debtor's chapter 13 bankruptcy get dismissed or it becomes necessary to convert their case to a chapter 7 bankruptcy, then the State would be able to again suspend or revoke their driver's license. Criminal fines are clearly not dischargeable in either a chapter 7 bankruptcy or a chapter 13 bankruptcy. However, a debtor may provide for these debts in their chapter 13. The automatic stay would prohibit any collection efforts, which could include the revocation of your driver's license.