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.”
What does that mean?
Only certain debts can be discharged under Bankruptcy laws. So, if the debt that caused your license to be suspended can be discharged then you can get your driver’s license reinstated. If the debt that caused your license to be suspended cannot be discharged, then Bankruptcy may not be an automatic fix.
What debts can be discharged?
Debts that are incurred due to a car accident, regardless if funds are owing for personal injury or personal property damage. Debts you may have incurred while driving – while being under-insured or even uninsured.
What debts are not dischargeable?
If your license has been suspended due to multiple driving infractions or crimes (think personal injury from drunk driving) or due to a malicious act (you ran into something/someone on purpose) – you will be liable for this debt. The other main reason driver’s licenses are not reinstated is due to nonpayment of fines.
What should I do next?
If you think that your debt is dischargeable, set your FREE bankruptcy consultation to learn more about your options and see what getting your DL reinstated could mean for you.
If you aren’t sure or think that you are probably going to have to pay the debt back – there is still a chance bankruptcy could help you in the long run. Look at your budget and consider what would happen if you were able to free up income to pay the necessary fines, by eliminating OTHER debt – still might mean putting yourself back in the driver’s seat!