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Can Chapter 7 Bankruptcy Help Me Get My Drivers License Back?

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Collen Clark Published by Collen Clark

Schmidt & Clark, LLP is not currently accepting these types of cases and has posted this content for information purposes only. We encourage you to seek a qualified attorney, if you feel you might have a case.

Filing bankruptcy is a last resort if you can't afford to pay back debts and you need to start over.

Bankruptcy can also result in getting your driver's license reinstated. There are many ways in which you can get your driver's license suspended, and bankruptcy can help you get your driver's license back.

We are a law firm with more than one experienced bankruptcy attorney who has filed thousands of bankruptcy filing cases and can help you get your driver's license reinstated through Chapter 7 bankruptcy. 

Quick Summary

  • Chapter 7 bankruptcy filing can help you get your driver's license back after a car accident, parking tickets, medical bills, child support debts, and more.
  • There are certain cases in which bankruptcy can't erase a debt, such as property damage and personal injury cases due to drunk driving or other circumstances of the accident.
  • Getting your driver's license back after bankruptcy isn't always immediate and can sometimes take months.

Can Chapter 7 Bankruptcy Help Me Get My Driver's License Back?

A woman computing her debtsChapter 7 bankruptcy can help you get your driver's license back in some cases. Several states allow for a suspended license for unpaid debts.

These debts can include judgments for unpaid parking tickets or traffic tickets, child support, or student loans.

You may also have your driver's license suspended as a result of an auto accident, even if you have insurance coverage. If you were at fault in an auto accident, your car insurance will pay for property damage to the other vehicle.

However, the insurance company will only pay the maximum of the policy. If the insurance company doesn't completely reimburse the other driver for damages, you owe the difference. 

If you are sued for the difference, your driver's license can be suspended. When there is a court order for the debt to be paid, they can garnish up to 25% of each paycheck you make to be applied toward the balance of the debt until it is paid. 

However, if you file for a bankruptcy notice, there will be an automatic stay that stops any actions that a judgment creditor has against you, such as garnishment.

Once you get a bankruptcy discharge, the debt from the insurance coverage and accident will be removed, and your license suspension is reinstated as long as you pay the reinstatement fee and follow the state's rules.

Getting your license back when you file bankruptcy is possible due to the case of Perez v Campbell.

In the case, the Supreme Court ruled that even though Arizona has laws suspending driving privileges due to an auto accident, the debt from the accident can be eliminated with bankruptcy.

However, not every debt can be discharged in bankruptcy, especially for a personal injury case.

"Bankruptcy is about financial death and rebirth. Bankruptcy is the American story rewritten."
- Elizabeth Warren, United States Senator of Massachusetts

How Do I Get My Driver's License Back After Chapter 7 Bankruptcy?

A man filing for chapter 7 bankruptcyFiling bankruptcy can help you get your license back after a parking ticket or accident and give you a fresh start.

However, getting your license back may not be immediate. A bankruptcy trustee has to sort through your financial situation before it can be finalized.

After the court finalizes your bankruptcy case, most of your unsecured debt will be erased, and you will have to apply to the state office of motor vehicles to have your license reinstated; in certain cases, you may have to wait months.

You may also have to pay reinstatement fees to get your license back.

Alternative Option for Getting Your Driver's License Back

A woman holding her driver's licenseFiling for Chapter 13 bankruptcy can help when you have had your driver's license suspended. This could be true, especially if it were suspended due to parking tickets, traffic fines, or traffic violations.

Debts from traffic offenses, drunk driving, and driving without insurance can't be discharged in Chapter 7 bankruptcy, but Chapter 13 bankruptcy can help these situations [1].

In a Chapter 13 payment plan, you may be liable for a small portion of your debt. With Chapter 13 bankruptcy, you don't have to wait for discharge to get your license back.

If you are paying the debts under a payment plan, you may have your license reinstated immediately. 

This alternative won't work for everyone as some individuals may not be eligible for Chapter 13 bankruptcy. It is best to consult with a bankruptcy attorney to understand your options when filing for bankruptcy.

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What Are Two Consequences of Filing for Chapter 7 Bankruptcy?

The two consequences of filing for Chapter 7 bankruptcy include losing property and having the bankruptcy information remain on your credit report for 10 years after filing, which can impact your ability to apply for forms of credit.

What Can't Be Included in Chapter 7 Bankruptcy?

The debts that can't be included in Chapter 7 Bankruptcy include child support, alimony, specific unpaid taxes, or debt from personal injury to another person or property.

Can I Do a Bankruptcy Filing and Not Lose All My Assets?

You can do a bankruptcy filing and not lose all your assets with Chapter 13 bankruptcy.

In Chapter 13, you are likely to keep assets and repay debts, but even when assets are liquidated in Chapter 7, some assets can be protected by state or federal exemption laws, depending on state rules.

Want to Explore Your Chapter 7 Bankruptcy Options?

Chapter 7 bankruptcy can help with a suspended driver's license in certain situations.

There are certain nondischargeable debts that Chapter 7 bankruptcy can't help you with, such as debt from a personal injury case, child support, alimony, or certain taxes. 

If you decide to file for bankruptcy, the experienced lawyers at Schmidt and Clark, LLP are here to help.

In case filing for bankruptcy seems like the only solution for you, feel free to contact our experienced team of lawyers today to schedule a free consultation.