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Foreclouser with lady

You may not realize that your financial problems may cause you to have your driver’s license suspended. If you don’t pay a judgment from a motor vehicle accident while driving uninsured, that will do it. If you don’t pay traffic tickets, that will do it.

Judgment from a Vehicle Accident While Driving Uninsured

Let’s make clear how license suspensions happen in this situation. A person gets into a car accident while driving uninsured. The accident results in some property damage and/or personal injury for the other driver(s) or for passengers. The other driver or somebody else involved sues the person (usually through their insurance company). The person sued then gets a judgment against him or her from that lawsuit. That judgment legally establishes that the uninsured driver owes damages arising out of the accident. The judgment determines that the driver was at least partially at fault and must pay those damages.

If such a judgment was taken against you, your state’s laws likely gave you a very limited amount of time to pay that judgment. So what happens if you don’t pay it off within that time?

Your driver’s license gets suspended. The idea is that you failed to fulfill your financial responsibilities as a driver. You legally owe a debt from an accident that you were at least partially at fault for. And it’s a debt that you didn’t pay, probably because you didn’t have insurance.

Bankruptcy Wipes Out the Debt, No More Reason for the Suspension

The good news is that by filing bankruptcy you can discharge (legally write off) that debt. As soon as you no longer owe that debt, the reason that your license got suspended is gone. So the license can be reinstated.

State vs. Federal Laws

But wait a minute. Doesn’t your state have the right to make laws about this and have them be respected by federal bankruptcy laws?

Yes, the state has a legitimate interest in keeping its roads safe. It can help do that by requiring drivers to have liability insurance. That way, vehicle accident victims are more likely to be compensated for their property damages and personal injuries. So states can use license suspensions as part of its incentive for drivers to have insurance.

But what if a state’s law specifically says that it can suspend a person’s driver’s license even if the person has discharged that debt in bankruptcy? Doesn’t that conflict with federal bankruptcy law’s granting of a full discharge of that debt? Discharging debt is of limited benefit if you still can’t get your license back for not paying the debt.

What is at issue here is the power of a State to include as part of this comprehensive enactment designed to secure compensation for automobile accident victims a section providing that a discharge in bankruptcy of the automobile accident tort judgment shall have no effect on the judgment debtor’s obligation to repay the judgment creditor, at least insofar as such repayment may be enforced by the withholding of driving privileges by the State.

Conclusion

If your driver’s license was or is about to be, suspended because of an unpaid debt arising from an uninsured motor vehicle accident, see a bankruptcy lawyer. There’s a good chance you can reinstate your license—or prevent it from being suspended—through bankruptcy. Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida. For more information, go to our web site www.BankruptcyforTampa.com or call 727-254-1704.

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