Many of my clients have issues with medical debt, credit card debt, student loans, repossessions, etc. These are the typical types of debt that I encounter. Occasionally I have a client who has none of those debt issues but has one particular area of concern: A suspended driver’s license due to driving without insurance.
This client has usually had an automobile accident and at the time they, knowingly or unknowingly, had no insurance coverage. The plaintiff in this scenario must get coverage for the accident from their own insurance carrier. In turn, the insurance carrier turns to the debtor to recoup that loss.
Most times the debtor cannot pay this debt due to low income and the insurance company for Plaintiff puts a hold on the debtor’s driver’s license. This is supposed to create such an inconvenience to the debtor that they will be encouraged to repay the debt. However, what I see happening is the debtor can no longer operate normally in their daily life, cannot get to work, puts others out in order to get rides, or lives in fear of being pulled over on a suspended license. This debtor could get caught in a Catch-22 where they cannot get to work due to the license suspension and therefore cannot make money to get their license back. To add insult to injury, the Bureau of Motor Vehicle (BMV) will require reinstatement fees to be paid in addition to satisfying the debt to the insurance company.
There is light at the end of the tunnel for this debtor. With a few caveats, this is a type of debt that is dischargeable in bankruptcy. Not only is the debt to the insurance company dischargeable, but the reinstatement fees are also discharged.
Once a bankruptcy case is filed, the debtor is given a copy of portions of the bankruptcy petition as well as Notice of Bankruptcy filing. The client will take the paperwork to the BMV who will send the paperwork to Columbus. The BMV in Columbus will respond as to what will be required to reinstate the license in addition to the bankruptcy paperwork. The additional requirements usually entail procuring an SR-22 from an insurance company (this is proof of meeting the insurance requirements of the state) and depending on how long your license has been suspended, retaking the driver’s test. If you already have your SR-22 and do not have to take the test, you could have your license back same day.
There are, however, a few exceptions to the general rule of dischargeabiity. If the debtor was intoxicated at the time of the accident the debt may not be dischargeable. Also, if the conduct of the debtor was proven to be intentional, dischargeability could be called into question.
If you are experiencing an economic downturn and cannot make progress on paying the debt to reinstate your license, contact Susan Browning (513.797.2857) at Finney Law Firm for a FREE consultation.