Bankruptcy’s Role If You Have Criminal Debts
Jan. 15, 2018
Bankruptcy doesn’t discharge criminal debts—criminal fines or restitution. Still, consider bankruptcy if you owe, or will owe, these debts.
The Practical Purpose of Bankruptcy
Bankruptcy isn’t a legal procedure used only for wiping out all of your debts. The main purpose for filing bankruptcy often is to get rid of some debts so you can pay other debts. That’s especially true of the debts you want to pay are extremely important to pay. That’s especially true if what’s at stake are your personal reputation and your freedom. That’s what you’re dealing with when dealing with a criminal charge or conviction.
Many bankruptcy cases do not discharge—write off—all your debts. In a Chapter 7 “straight bankruptcy,” there’s often a debt or two that you either legally can’t discharge—like a recent income tax debt–or you choose to pay—like a mortgage or vehicle loan. In Chapter 13 “adjustment of debts,” your payment plan favors certain special debts while paying less—maybe nothing—on others. Also, a big reason for bankruptcy is to stop paying creditors so you’ll have the money for crucial expenses.
So, bankruptcy can discharge most of your debts so that you have the money to pay criminal expenses and debts. If you’re fighting to avoid a criminal conviction, you have no more important expenses than your criminal defense costs. If you already have a criminal conviction requiring you to pay a criminal fine or restitution, you have no more important debts than these. And if you have ongoing expenses related to your conviction or probation, you absolutely must have the money for them.
After Being Charged with a Crime
Have you been charged with a crime? If so you need to fixate on paying for your defense attorney and related costs. You need to be creative and do everything you can to come up with the necessary funds. That may well include selling assets or not paying your creditors. Sometimes it’s best to get rid of your debts and quickly improve your cash flow by filing Chapter 7 bankruptcy.
After a Criminal Conviction
Have you already been convicted of a crime? Then you have some financial obligations you absolutely must pay to the criminal justice system. You could owe a criminal fine, restitution, probation/supervision fees, community service fees, drug treatment costs, and/or electronic monitoring charges. The fine and restitution could be significant and overwhelming to pay. Any ongoing fees and costs could be very challenging as well. If you don’t pay what your conviction judgment requires, you risk getting incarcerated. Or you risk getting re-incarcerated if you have been paroled or conditionally released. A Chapter 7 or Chapter 13 case could discharge your other debts so that you could pay the criminal obligations.
Paying Required NON-Criminal Debts and Expenses
Sometimes the criminal court will directly or indirectly require you pay other kinds of debts or expenses. These would be related to your criminal conviction but not owed directly to the criminal system.
For example, you may have to be consistently employed or do community service. You may have to meet with your parole or probation officer, and/or attend treatment or classes. These may require you have a vehicle. That means keeping current on your vehicle payments and insurance, and paying repairs and maintenance on that vehicle.
Filing bankruptcy can enable you to pay these kinds of debts or expenses when you could not afford to do so otherwise. Doing so may prevent breaking your conditions of parole or probation.
Filing bankruptcy can allow you to concentrate your financial energy where it needs to be—your criminal case. That allows you to focus your emotional energy there as well. If you’re being charged with a crime, bankruptcy can be an unexpected but necessary part of your game plan. Same thing if have already been convicted.
These are all very delicate issues which need to be thoroughly explored with an experienced and conscientious bankruptcy lawyer. Either meet with one yourself or make sure your criminal defense lawyer is in close discussions with one