Skip to Content
We Speak English, Spanish and Farsi 213-344-0043
Drivers’ licenses may be revoked for a variety of reasons. Some may get their licenses suspended for failing to pay parking tickets, failing to appear in court or failing to pay child support. Others, however, get their licenses suspended for financial reasons, including being unable to pay for damages in an auto accident they caused.It is not uncommon for an individual’s driver’s license to be suspended if they do not pay a judgment stemming from an auto accident. In this situation, an individual may be able to get a driver’s license reinstated by getting the judgment discharged in bankruptcy.Debts from Car Accidents

Sometimes, drivers are at fault for accidents that cause more damage than their insurance policy covers. When this happens, drivers are still responsible to pay for damages after their insurance runs out. In some cases, the state may decide to suspend the license of the at-fault driver until his or her debt to the injured party is paid. This circumstance can leave drivers without a way to pay, since most people rely on their car to earn a paycheck.

Reinstating a Driver’s License Through Bankruptcy

Fortunately, it may be possible to reinstate a driver’s license by filing for bankruptcy. Bankruptcy allows individuals to either discharge their debt under Chapter 7 bankruptcy or develop a realistic repayment plan under Chapter 13 bankruptcy.

Chapter 7 bankruptcies allow eligible individuals to erase dischargeable debts including those arising out of certain civil lawsuits as well as any monetary damages owed to injured parties. Once the debt has been discharged in bankruptcy, the California Department of Motor Vehicles can release the suspended license.

Individuals who do not qualify for Chapter 7 bankruptcy can pursue Chapter 13 bankruptcy. Chapter 13 plans utilize a payment plan for a period of three to five years. Individuals will make a monthly payment period to the bankruptcy court for that time. Any debt that remains at the end of that time is discharged.

Chapter 13 is also helpful for those individuals whose debts are not dischargeable. People can use the Chapter 13 plan to pay off those debts while being protecting themselves from garnishments and levies.

During this time, if the Department of Motor Vehicles or a judge sees that an individual is making good faith payments under their new repayment plan either party could reinstate the individual’s license. However, if the individual falls behind on payments, the Department of Motor Vehicles may re-suspend the license.

Some Debts Are Unaffected by Bankruptcy

There are limits to bankruptcy’s powers. Bankruptcy courts will not discharge a debt caused by an individual driving under the influence. This includes damages for personal injury, property claims, punitive damages and restitution. They also may not discharge debt from parking tickets or money owed in fines or penalties to the government.

The state of California also has a mandatory driver’s license suspension requirement for drivers who fail to purchase car insurance and are involved in an accident or cause a crash due to driving under the influence.

Many people do not realize the many ways bankruptcy can help them. If you or a loved one has had your license suspended due to failure to pay debts or your family is simply struggling to find a way to make ends meet, you should speak with an experienced Los Angeles bankruptcy attorney to review your options.