Criminal Restitution and Bankruptcy

Criminal restitution is a term used to describe funds a convicted criminal is required to pay, according to the court, for the crime committed. In many cases, an individual who is required to pay these funds may wish to file bankruptcy in the hopes of no longer having to pay these funds. However, in most situations, criminal restitution is not able to be repaid during the bankruptcy process.

Bankruptcy and Criminal Restitution

During the bankruptcy process, many types of unsecured debts are discharged (in Chapter 7 bankruptcy) or restructured (in Chapter 13 bankruptcy.) However, according to bankruptcy law, some types of debts cannot be discharged through the bankruptcy process. In many cases, this includes criminal restitution. The following are some examples of when an individual must repay this debt and discharge cannot erase that debt.

• Any and all types of debts for personal injury caused by drunk driving.
• Debts caused by restitution paid due to the result of a death of an individual from drunk driving
• Debts related to embezzlement funds
• Debts required to be paid from conviction of malicious injury to another person or to another person’s property, willful acts
• Debts associated with breach of trust
• Debts from larceny convictions
• Debts from nonpayment of child support or spousal support
• Debts from unpaid taxes
• Debts from unpaid student loans

This is not an exhaustive list. Speak with an attorney to determine which other debts may not discharge in bankruptcy.

In these situations, the individual may have gone to court over the debts. The court may have ruled that the debt must be repaid, even back payments in some situations. When this occurs, these debts cannot be discharged through Chapter 7 bankruptcy. In many cases, these debts will remain legally binding as they stand.

In some situations, it may be possible to work these types of debts into a Chapter 13 bankruptcy. This type of bankruptcy simple reorganizes most debts like this, to make them more affordable to pay back. However, unlike some types of unsecured debts, debts related to criminal restitution cannot be reduced or minimized in the bankruptcy case. Individuals must repay this debt in full, according to the requirements of the court.

When to Hire an Attorney

Those who are considering bankruptcy and their ability to obtain discharge should speak with an attorney. The attorney can determine the options available to the individual, which may include discharge or restructuring of the debt. With the aid of an attorney, the individual can be assured that the best possible outcome is achieved.