Kentucky Bankruptcy Law

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The Untouchable Debts

A couple of days ago I wrote about how you might lose your driver’s license as a result of non-payment of a judgment debt arising from owning or operating a car involved in an accident. Today I want to elaborate on that by pointing out two categories of such debt that may NOT get discharged in a Chapter 7 bankruptcy:

First, a debt that is  “for willful and malicious injury by the debtor to another entity or to the property of another entity” may be objected to and not discharged. 11 USC Sect. 523(a)(6). So, if you ended up causing a car wreck by purposely driving an extremely reckless manner or with intent to cause harm to another, the debt may not be discharged.

Second, and far more common (too common) if a debt is for “or death or personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance” then it may be objected to and not discharged. 11 USC Sect. 523(a)(9).

If either of these circumstances apply, then it is crucial to let your bankruptcy attorney know so they can help you plan appropriately.

January 30, 2013 Posted by | Bankruptcy, Chapter 7, Discharge, Planning, Pre-filing planning | , , , , , , | Leave a comment

Suspended driver’s license?

Kentucky has a set of statutes known as the “Financial Responsibility Law” which can lead to the loss of your driver’s license based on a debt you owe. Thankfully, it is not just any debt. The debt must arise from a judgment out of a court of law and it must be a debt related to a motor vehicle related damages. Here is the key definition from KRS 187.290(3):

“Judgment” means any judgment which has become final by expiration without appeal of the time within which an appeal might have been perfected, or by final affirmation on appeal, rendered by a court of competent jurisdiction of any state or of the United States, upon a cause of action arising out of the ownership, maintenance or use of any motor vehicle, for damages, including damages for care and loss of services, because of bodily injury to or death of any person, or for damages because of injury to or destruction of property, including the loss of use thereof, or upon a cause of action on an agreement of settlement for such damages.

In combination with other provisions under this same code section, the essence of this law is to discourage people from driving without insurance that meet certain statutory minimums [see KRS 187.290(11)]. So, if you have been sued and a judgment issued as a result of operating or owning a car that was in a wreck, then your driver’s license will likely be suspended after 90 days. There are 30 days in which to appeal the judgment, after which it becomes final. Then, if the judgment is not satisfied within 60 more days, the court clerk sends the judgment to the Department of Motor Vehicles and they suspend your license.

To avoid losing your driving privileges, it is essential to take action within those 90 days. You either must pay the judgment in full, settle with the plaintiff for less, get the court to approve installment payments, or file bankruptcy. If you wait to pursue bankruptcy AFTER your license is suspended, you will have to wait until the Order of Discharge has been entered to get your license reinstated. That can be around five months or more down the road.

If you have received a discharge of the debt causing the loss of license, then you or your bankruptcy attorney simply needs to fax or mail the Order to the Department of Motor Vehicles. Then, go to a field office of the DMV, pay a $40.00 reinstatement fee and take an eye exam.

January 28, 2013 Posted by | Bankruptcy, Chapter 7, Discharge, Documentation, Planning | , , , , , , , , , | Leave a comment