BANKRUPTCY, KEEPING YOUR DRIVER’S LICENSE AND DISCHARGING NEW JERSEY AUTOMOBILE INSURANCE SURCHARGES

In my last post I explained what New Jersey Automobile Insurance surcharges are. Here’s what the New Jersey Motor Vehicle Commission (http://www.state.nj.us/mvc/Violations/Surcharges.htm) has to say about failure to pay these surcharges:

Not paying surcharges?

Drivers failing to pay surcharges are sent a notice indicating when their license will be suspended and another notice confirming suspension for non-payment. Moving out of state or failing to maintain a current address with the MVC does not excuse surcharge debts.  After suspension, surcharges and a $100 restoration fee must be paid to restore the license privilege.  If the surcharge remains unpaid a Certificate of Debt is filed in Superior Court.   The court issues a judgment, which allows the state to collect unpaid surcharges through involuntary means.  The judgment amount (surcharge debt) must be paid before personal property can be transferred or sold.  Judgments include a collection cost and interest charges calculated on the judgment balance.  Unpaid judgments are assigned to collection agencies and law firms.  Credit bureaus are made aware of unpaid accounts.

So just when you think the saga of your motor vehicle stop is over, there is a new problem and expense plus the risk of a negative report to a credit bureau affecting your credit score.

Clients are always surprised when I tell them that the Bankruptcy Code will allow them to discharge and avoid having to pay New Jersey Automobile Insurance surcharges imposed for a violation that happened before they filed for bankruptcy. “Discharged” means the State of New Jersey is forbidden to collect the debt and must restore your license to you once you pay a restoration fee.

Here is the NJ MVC’s official policy, taken from the State’s website:

I filed for bankruptcy. How does that affect the surcharges that I owe?

If you have a surcharge assessment and have filed for bankruptcy, a copy of your bankruptcy petition needs to be forwarded to the Surcharge Administration Office, P.O. Box 136, Trenton, NJ, 08666 or faxed to (609) 633-8273.  After the MVC receives the petition, a hold will be placed on your surcharge account and any surcharge suspensions will be satisfied. If an MVC restoration fee is due, you will be responsible for that payment.

Once your bankruptcy case is discharged, the Surcharge Administration has the ability to write-off the entire balance on all pre-petition event violations.  However, you will be responsible and billed for all post-petition surchargeable violations.  These are violations you incurred after filing for bankruptcy.  Please note that only surcharge assessments are dischargeable.  Judgments are non-dischargeable.  To have the judgments satisfied, you will need to pay them in full, or petition the Superior Court, a year after your discharge, to have the judgments vacated.

If your bankruptcy case is dismissed, you will be responsible and billed for the entire balance of your surcharge account. If you re-file or your case is re-opened, you will need to mail or fax the Surcharge Administration.  Please contact the Bankruptcy Unit at (609) 292-7500, extension #5025 for further information.

Certainly, a bankruptcy filing will not help your credit score. But it is a step in the direction of improving it by cleaning up debt and sweeping away the wreckage on your path to a fresh start in life.

Do you want to know more? Please contact us.