Debts
Can bankruptcy wipe out criminal fines and government penalties?
Generally no. A Chapter 7 discharge does not cover a fine, penalty or forfeiture owed to a government when it punishes you instead of repaying an actual money loss. A completed Chapter 13 plan does not discharge a criminal fine that is part of a sentence. Filing bankruptcy also does not stop a criminal case.1 2 3
Connect to a bankruptcy lawyerBankruptcy is built for debts, not punishments. This guide explains which fines and penalties stay with you after a case, how Chapter 7 and Chapter 13 differ, and what filing does to a criminal case.
General information, not legal advice. Rules and amounts change; check with a lawyer or the court before you act.
In this guide
Which fines and penalties does the rule cover?
The rule covers a debt for a fine, penalty or forfeiture that meets two conditions. It must be payable to and for the benefit of a governmental unit, and it must not be compensation for actual pecuniary loss, meaning money the government is actually out of pocket.1
Governmental unit is a broad term. It takes in the United States, the states, territories and municipalities, and their departments and agencies. A fine set by a city court or a state agency can qualify in the same way as a federal one.4
The rule is not limited to crimes. Its wording reaches fines, penalties and forfeitures in general, so a civil penalty owed to a government can fall under it too.1
What happens to fines and penalties in Chapter 7?
A fine or penalty that fits the rule is not discharged. The government does not have to file anything in the bankruptcy court to keep it, because most exceptions to discharge apply automatically.1 5
Federal criminal fines have a second layer of protection. Federal criminal law says that no bankruptcy discharge under any chapter discharges liability to pay a federal criminal fine, and that a lien filed for the fine is not voided in a bankruptcy case.6
The automatic stay does not help with the case itself. It stops most collection actions, but it does not stop a criminal action or proceeding against you.7 3
What happens in Chapter 13?
Chapter 13 has its own, shorter list of debts that survive a completed plan. That list names restitution and a criminal fine included in a sentence on conviction of a crime. To the extent the plan does not pay such a fine in full, you still owe it after the case.2 8
The Chapter 13 list does not repeat the broader Chapter 7 wording about every government fine or penalty. Whether a particular civil penalty or ticket is discharged at the end of a plan depends on what it is and on how your court reads the law, so ask a lawyer before counting on it.2 8
The difference disappears if you cannot finish the plan. A hardship discharge, which a court may grant when a debtor cannot complete payments for reasons beyond their control, leaves out debts similar to those left out of a Chapter 7 discharge.5 2
| Kind of charge | In Chapter 7 | In Chapter 13 (completed plan) |
|---|---|---|
| Criminal fine that is part of a sentence1 2 | Not discharged | Not discharged |
| Federal criminal fine6 | Not discharged | Not discharged under any chapter |
| Other fine or penalty owed to a government that punishes1 2 | Not discharged | Not named on the Chapter 13 list; depends on the debt and the court |
| Charge that only repays a government for an actual money loss1 | Outside this rule; other rules may still apply | Outside this rule; other rules may still apply |
| Court-ordered restitution in a criminal case1 2 | See the restitution guide; federal restitution is not discharged | Not discharged when it is part of a criminal sentence |
Are tax penalties treated the same way?
No. Tax penalties follow their own rule. The exception for fines and penalties does not reach a tax penalty that relates to a tax that is itself dischargeable, or one imposed for a transaction or event that happened more than three years before the bankruptcy filing.1
That means a tax penalty usually has to be looked at together with the tax it belongs to. The guide on income tax debt covers the timing tests.
What can change the answer?
These questions decide how a charge is treated.
Common questions
Are traffic and parking tickets discharged?
In Chapter 7, a fine payable to and for the benefit of a government that is not compensation for an actual money loss is not discharged. In Chapter 13 the list of surviving debts names criminal fines included in a sentence, so the answer for a ticket depends on what kind of charge it is. Ask a lawyer about your tickets.1 2
Does the government have to sue me in bankruptcy court to keep the fine alive?
No. This exception applies automatically. Only a few kinds of debt, such as debts from fraud, require the creditor to ask the bankruptcy court for a ruling.5 1
Will filing bankruptcy pause my criminal case?
No. The automatic stay does not stop a criminal action or proceeding against the debtor.3
Can I pay a criminal fine through a Chapter 13 plan?
A plan can provide for the debt, but a criminal fine that is part of a sentence is not discharged when the plan ends, and whatever the plan did not pay is still owed. The criminal court's own payment terms are a separate matter to raise with your criminal defense lawyer.2 8
Sources
Official courts & government references- 11 U.S. Code § 523(a)(7) (Cornell LII)
- 11 U.S. Code § 1328(a) (Cornell LII)
- 11 U.S. Code § 362(b)(1), (b)(2) (Cornell LII)
- 11 U.S. Code § 101(27) (Cornell LII)
- Discharge in Bankruptcy - Bankruptcy Basics (uscourts.gov)
- 18 U.S. Code § 3613(e), (f) (Cornell LII)
- Glossary of Legal Terms (uscourts.gov)
- Chapter 13 - Bankruptcy Basics (uscourts.gov)