Even though bankruptcy does not discharge criminal fines, fees, or restitution, it can still help in two very important ways: 1) by discharging other debts so that you can focus financially and emotionally on your criminal defense, and 2) by enabling you to pay crucial expenses and debts, including those related to a conviction.
Considering what’s at stake, if you’ve been charged with any kind of serious crime, you need to focus all your attention on fighting that charge. Even if you were not thinking about bankruptcy before, or even if you’d decided earlier against it, you might want to reconsider. Right when you need to quickly re-prioritize a lot of things in your life, bankruptcy can help by giving your more cash to work with, protecting you from your creditors, and letting you keep only the debt that is important to you going forward.
1. By discharging all or most of your debts, bankruptcy allows you to focus your money and attention on the criminal charge, and on what happens after it is resolved.
Your highest priority after being charged with a crime must be to figure out how to pay your defense attorney. You may have to pull out all the stops to pull the money together. You may have to sell assets. You may have to surrender collateral to your creditors, if you have a mortgage or auto loan. You might have to stop sending payments to ALL your creditors. If you have to take such radical steps, biting the bullet and filing bankruptcy quickly may well be the most sensible way to streamline your finances. A “straight” Chapter 7 bankruptcy may well be able to provide the fast financial relief you need.
If the criminal case against you has already been resolved, especially if you‘ve had to serve some jail or prison time, you’ve probably had a gap in your cash flow. You may well have less income now than before. Yet you likely have some continuing financial obligations to the criminal justice system, ones that you MUST pay to meet the terms of your release or probation. You may have to pay restitution, probation or supervision fees, costs of treatment, and/or maybe drug or electronic monitoring fees. A bankruptcy would write off all or most of your other debts so you would more likely be able to pay these criminal system expenses and avoid the dire consequences of not doing so. Imagine if you couldn’t pay your probation or other fees because you got an unexpected garnishment of your wages by one of your old creditors.
2. By legally re-organizing your financial obligations, bankruptcy enables you to pay necessary expenses and debts, especially those related to a criminal conviction against you.
If your criminal case has already been resolved, the criminal court may have imposed other kinds of conditions on you beyond the court and probation fees referred to above. These conditions may require you to pay or keep current on certain non-criminal obligations. For example, you may have to always keep your vehicle insurance in effect, keep current on child support, or pay income taxes on time. A bankruptcy may be essential for you to be able to consistently fulfill these commitments.
Similarly, your criminal sentence or terms of your probation usually strictly require you to attend scheduled events—for completing community service, attending probation or other meetings, or simply maintaining regular employment. You can’t get to these without reliable transportation. So you need to be able to make your car payments, keep it in decent repair and insured, or pay for public transportation if that gets you to where you need to go. A bankruptcy—under either Chapter 7 or Chapter 13–may be the best way for you to be able to pay for these absolutely necessary obligations.