Criminal Debt In Bankruptcy

: Chris Lee Law Firm

  Filed under: Bankruptcy

There are many types of debt that are not dischargeable through bankruptcy. Further, other types of debts may be considered top priority for repayment in a Chapter 13 plan. For many individuals that have broken the law, they may be court ordered to pay restitution for their crimes. It is not uncommon for some to find themselves unable to pay these fines once released from custody; causing even more financial trouble than before they were incarcerated. Regardless of circumstance, restitution payments are rarely dischargeable and, at the very least, would take top priority if they were approved for a Chapter 13 bankruptcy.Criminal Debt In Bankruptcy

Making Amends

The intent of restitution is to pay for the physical, financial and emotional damages, caused by the result of a crime. These payments are ordered by the court as part of the offender’s sentence. As a general rule court ordered payments, such as restitution, are not dischargeable through bankruptcy. Examples include debts or missed restitution payments ordered as a result of a criminal act causing injury or death of another person, fraud, embezzlement or larceny.  Some non-criminal court ordered payments, such as child or spousal support, unpaid taxes and student loans, are also rarely dischargeable through bankruptcy.

In some cases, restitution payments may be approved by the bankruptcy court to be repaid through a Chapter 13 bankruptcy plan. Since these debts are legally required to be paid in full; reduction or elimination of these debts through a Chapter 7 bankruptcy is not an option. A Chapter 13 bankruptcy plan would allow for the restitution payments to be combined into a payment that the offender could afford.  However, these restitution payments would take priority over repayment of any other type of debt reorganized as part of the Chapter 13 plan. Any secured debts like credit cards, medical or utility bills would not be repaid through the Chapter 13 plan until the restitution payments were satisfied first


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