March 14, 2017

One issue that can arise during the bankruptcy process is determining whether court fines, court costs, and court fees are discharged in a bankruptcy case.  

There are some specific and limited debts that are not discharged in bankruptcy.  These are defined in the bankruptcy code.  One specific kind of debt that survives discharge is for certain fines and penalties related to court proceedings.  11 USC 523(a)(7) reads:

 

(a)          A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt

(7)          to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty[.]

If the fine or cost is of a criminal nature it would not be subject to discharge in a bankruptcy proceeding.  The court costs will be categorized as “criminal court costs” if the costs are “penal in nature.” In other words, the primary purpose of the court costs is the protection of the public. Mitchell v Supreme Court of Ohio, ___F Supp 3d___; 2015 U.S. Dist. LEXIS 44694, at *9 (ND Ohio, Apr. 6, 2015) (finding attorney disciplinary court costs are non-dischargeable). 

In contrast, when the court costs are not designed to protect the public, they will often be characterized as dischargeable. If the costs have no relationship or connection to a criminal or disciplinary proceeding they can often be discharged in a bankruptcy proceeding.  This issue can be fact specific and nuanced.  It is important to talk to an attorney regarding this issue if you believe it might apply. 

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