Bankruptcy can’t write off criminal fines or restitution. But it can help in other crucial ways.
Our last blog was about how bankruptcy can help deal with the consequences of a criminal accusation against you, specifically in fighting claims by alleged victims. But bankruptcy can be an essential option in much broader ways.
Focus Your Financial Resources on Your Criminal Defense
The first way bankruptcy can help is by writing off (“discharging”) all or most of your current debts so that you can concentrate all your available resources on defeating the criminal accusations.
If you have been charged with a crime, especially a serious one, you need to focus your mind and pocketbook on it because of everything that’s at stake. If you are facing significant jail time, or going to prison, you need to rethink everything.
You may need to completely change your lifestyle, such as by surrendering a vehicle with high monthly payments to your lender. Maybe even find less expensive housing. Or you may need to stop paying most of your creditors—such as your credit cards, medical bills, and other personal obligations, so that you have money for your criminal defense.
Your vehicle surrender would likely result in a deficiency balance—the amount you owe after the vehicle is sold at auction with the proceeds paying only part of your balance—which would likely turn into a lawsuit against you to collect that amount. And of course not paying your other debts would have the same result. So filing a bankruptcy against such debts could provide you the financial and psychological relief you need.
Help in Meeting the Obligations of Your Criminal Conviction
After the criminal proceedings against you are completed, keeping up with the financial obligations imposed on you by the criminal court can be very challenging. Assuming you have not filed a bankruptcy beforehand, doing so now can make an impossible situation manageable.
You may have had a gap in your income while you were fighting the criminal charges or were incarcerated, and/or now have a job that pays less. Yet you may be facing various financial obligations ordered by the criminal court that you have to pay in order to comply with the terms of your conviction. These can include criminal fines, restitution, probation and supervision fees, costs of required treatment, community service fees, and chemical and electronic monitoring charges. Some of these obligations can be huge, such as restitution. Regardless of the amount, if you do not pay them, the consequences can be severe, including the revocation of your plea deal or terms of probation resulting in incarceration.
Bankruptcy cleans the rest of your financial slate so that you can meet your post-conviction obligations. The last thing you need is some old creditor garnishing your wages or bank account so that you absolutely cannot make that absolutely critical criminal court-ordered payment.
Enabling You to Pay Other Essential Debts
Besides the new financial obligations arising out of your criminal conviction, the criminal court may impose conditions on you directly requiring you to keep current on certain specific debts. For example, depending on your offense, you may be required to keep absolutely current on your spousal or child support payments, or to file and pay your taxes on time. Filing bankruptcy can make it possible for you to fulfill such requirements.
Paying Essential Expenses
A criminal conviction and the resulting probation or parole will often require you to show up at certain scheduled events—for your community service, probation meetings, or sometimes just regular employment—all of which require reliable transportation. If you cannot pay your vehicle loan payments or pay for vehicle insurance, or at least pay for public transportation, you may simply not be able to meet the conditions that keep you out of jail.
Chapter 7 “straight bankruptcy” can quickly discharge other obligations so you can afford these expenses. Chapter 13 “adjustment of debts” may enable you to keep your vehicle through a “cramdown,” reducing both the monthly payments and the long-term cost of the vehicle. Or it may allow you to catch up on the vehicle arrearage over a longer time and give you a lower interest rate. These could both enable you to keep your vehicle and have money for your other obligations. Whichever option is better in your situation, a bankruptcy may be the best way for you to be able to pay for these necessities.
Even when your finances are doing relatively well, coming up with the money to fight criminal charges, or to deal with the financial consequences of a criminal conviction, can be very difficult. It would be even more so if you were financially already on the edge beforehand. When you are understandably fixating on your criminal matters it may be hard to think about the entire different legal arena of bankruptcy, but if you do so you may get just the relief you need to get through this tough time.