Thousands of Illinois residents residing in or near Chicago have their cars being held in impound lots due to having unpaid tickets. Until a person pays his or her tickets, the city can refuse to release the vehicle from impound. However, a recent court ruling allows those individuals who have filed for Chapter 13 bankruptcy to collect their cars without paying the debt upfront or possibly at all.
Chapter 13 allows for ticket debt forgiveness. That is not new. The city of Chicago, though, found a way around this bankruptcy protection by claiming it had liens on each of the vehicles being held. This means that even after filing for bankruptcy, vehicle owners would not be allowed to collect their cars unless the unpaid tickets became debts that were to be paid off as part of their bankruptcy payment plans. This matter was taken to court, and the 7th U.S. Circuit Court of Appeals issued a ruling against this practice.
According to a recently released article, the court found that the city’s actions violated bankruptcy protection laws. If the city wishes to fight bankruptcy filings, it may do so on a case-by-case basis. To be successful, it would be necessary to prove that such a filing was done in bad faith.
Filing for Chapter 13 bankruptcy is not and should not be a person’s first line of defense when dealing with unpaid tickets. However, when monetary issues prevent one from paying this and other debts, it is certainly worth looking into. Illinois residents who would like to learn how a Chapter 13 filing may benefit their situations can turn to an experienced bankruptcy attorney to get any questions they may have answered.