Brian Hemphill
Last updated: October 23rd, 2020
Reading time: 4 minutes
One breath summary: In Oregon debts related to traffic crimes are not discharged in bankruptcy, and most debts from traffic tickets as well. However there are some exceptions, depending on which kind of debt you owe and the chapter of bankruptcy you file for.
The first step is to identify what kind of debt you owe. In Oregon, all traffic offenses are divided into two categories: traffic crimes and traffic violations. Traffic crimes include felonies and misdemeanors. Common examples of traffic crimes are driving under the influence of intoxicants (DUII) and reckless driving. In contrast, traffic violations are not considered crimes. Common examples of Oregon traffic violations are speeding, disobeying a traffic sign or traffic light, an illegal U-turn, or failing to wear a seat-belt properly.
Debts owed as a result of a sanction for a traffic crime, such as restitution, are not dischargeable in bankruptcy. Debts owed as a result of a traffic violation are also not dischargeable, except in Chapter 13 bankruptcy.
There are four common types of bankruptcy: Chapter 7 (asset liquidation), Chapter 11 (business reorganization), Chapter 12 (family farmer reorganization), and Chapter 13 (wage earner reorganization). In each type of bankruptcy, debts are generally “discharged”, meaning the debts are eliminated or wiped out. However, many exceptions exist. When an exception applies, the debt is considered “non-dischargeable”, meaning it cannot be eliminated by the bankruptcy. Each type of bankruptcy has its own rules about which debts are discharged or not.
Chapters 7, 11 and 12 all refer back to a common list of debts that are not discharged. The list of non-dischargeable debts is found in 11 USC 523(a) and includes 11 USC 523(a)(7), which relates to debts that are a “fine, penalty, or forfeiture payable to and for the benefit of a governmental unit”. A debt from traffic crime or traffic violation is a debt that is owed to the government. As a result, a traffic fines are not dischargeable in Chapter 7, Chapter 11 or Chapter 12.
In contrast, Chapter 13 has its own list of non-dischargeable debts, which is found in 11 USC 1328(a). Under that provision, a Chapter 13 debtor who complete all of the payments required by the payment plan is discharged of all debts that are covered by the plan. Like with the other types of bankruptcies, there are several exceptions to discharge. There is an exception for restitution or criminal fines included in a sentence for a crime. However, there is no exception or exclusion for non-criminal traffic fines. So, as result, traffic fines in Oregon can be discharged in a Chapter 13 bankruptcy proceeding.
It is worth noting that, even a debt is non-dischargeable, the bankruptcy could result in the debt being paid off, rather than discharged. If a debt is included in the bankruptcy payment plan, it will receive payments though the payment plan. Depending on the size of the debt and the amount of the payments, the payment plan could result in the debt being paid in full. However, if the non-dischargeable debt is not paid in full and there is still a balance owed at the end of the payment plan, then the balance due is not discharged and must be paid after the bankruptcy.
If you would like more information about whether you can discharge your debts, including traffic fines, with a bankruptcy filing, please feel free to contact us for a consultation