May 31, 2016

Using Bankruptcy to Reinstate a Suspended Driver’s License

Under certain circumstances, the filing of a bankruptcy case can help reinstate a suspended driver’s license.  Oregon law provides that a driver’s license can be suspended for a variety of reasons.  The types of suspensions relevant to this discussion include those for:

  • Failing to settle a judgment resulting from a motor vehicle accident while driving uninsured within sixty days after its entry (ORS 809.415(1)); and
  • Failing to pay traffic tickets (ORS 809.210).

Fortunately, Oregon law (ORS 809.470(1)(d)), bankruptcy law (11 U.S.C. §525), and applicable case law (Perez v. Campbell) all state that the discharge in bankruptcy of a judgment relating to an uninsured motor vehicle accident will allow the judgment debtor to reinstate his or her driver’s license.  However, it is important to keep the following facts in mind when attempting to reinstate your license following the discharge of a judgment:

  • You will still need to apply for reinstatement with DMV and pay the applicable fees;
  • You will still need to provide proof of insurance to DMV;
  • Judgments for personal injury related to drunk driving are not dischargeable in bankruptcy (11 U.S.C. §523(a)(9)); and
  • If the judgment is for personal injury or property damage and the conduct giving rise to the judgment was intentional, it is possible that the judgment may not be dischargeable if the judgment creditor objects to its discharge (11 U.S.C. §523(a)(6)).
  • In addition, Chapter 13 Bankruptcy can help reinstate a driver’s license for a suspension caused by failure to pay traffic tickets.  Items to keep in mind when attempting to reinstate a license for this purpose include:
  • Chapter 13 must be used for this purpose.  Traffic fines for “violations” are not dischargeable in Chapter 7 (11 U.S.C. §523(a)(7)) whereas they can be in Chapter 13 (11 U.S.C. §1328(a)).
  • The traffic ticket at issue must be for a “violation” as opposed to a “crime” (i.e., a felony or a misdemeanor).  For example, Driving While Suspended can be either a violation, a misdemeanor, or a felony, depending on why the license was originally suspended.  If the citation is for either misdemeanor or felony Driving While Suspended, Chapter 13 cannot be used to reinstate a driver’s license.  You will need to obtain a driving record printout from DMV for me to review to determine the type of offense involved.
  • As with the discharge of judgments discussed above, you will have to apply for reinstatement, pay all applicable fees, and provide proof of insurance.
  • DMV usually requires that the Court which initially requested the suspension to “clear” the suspension.  Sometimes, it can be difficult to convince state court judges unfamiliar with bankruptcy law to clear the suspension, and the process to obtain a reinstatement can therefore be a lengthy one.
  • Finally, it is important to remember that using bankruptcy to reinstate a suspended driver’s license can only be done in the circumstances discussed above.  Here are some examples of situations the bankruptcy cannot help with:
  • Suspensions based on failure to appear on a traffic ticket (ORS 809.220);
  • Suspensions based on being in a motor vehicle accident while driving uninsured (regardless of the fault for the accident) (ORS 809.417(2));
  • Suspensions based upon failing to file an accident report (ORS 809.417(1)(a)); and
  • Suspensions based on convictions for particular crimes (e.g., reckless driving, hit and run, and attempting to elude) (ORS 809.411).

This post is intended to be purely informational in nature, and cannot be considered legal advice.  If you have any questions related to the use bankruptcy to reinstate a suspended driver’s license, please call our office at (503) 253-7777 (Oregon cases) or (360) 882-7777 (Washington cases) to schedule a free initial consultation.

Article written by
Bankruptcy Law Center

Request a Free Consultation

Get all of your Bankruptcy Questions Answered
during a free call with our expert team of Bankruptcy lawyers.

Related Posts