The Chicago City Council’s finance committee approved a measure Monday that would forgive ticket debt for some city motorists, but only those who file for Chapter 7 bankruptcy.
The move is meant to steer indebted drivers away from Chapter 13 bankruptcies that rarely eliminate their debt. The proposed reform, which comes amid growing calls to overhaul the city’s ticketing and debt collection practices, was drafted by the Law Department and included in the 2019 budget package approved by the finance committee.
The measure would wipe away unpaid tickets, fines and fees issued more than three years before debtors file for a Chapter 7 bankruptcy, as long as their bankruptcy plan is successful and they complete a city payment plan for more recent ticket debt. Late penalties and other fines, including boot and impound fees, would also be forgiven.
The measure seeks to address a significant problem uncovered in a ProPublica Illinois report in February: that thousands of mostly black and low-income motorists are filing for Chapter 13 bankruptcy to cope with the consequences of unpaid parking and automated-traffic-camera tickets that often lead to license suspensions and vehicle seizures.
Chapter 13 is the only kind of bankruptcy in which municipal debt, such as unpaid tickets, can be forgiven. But it is rarely a good long-term solution for many people, particularly those with ticket debt. That’s because this type of bankruptcy requires debtors to hand over their disposable monthly income for up to five years, which people with limited incomes often find challenging.
If they stop making payments and their bankruptcy cases get dismissed, debt collectors can come calling again, and threaten license suspension and vehicle seizure. Fewer than one in four of these cases end with debtors successfully completing a payment plan and emerging from bankruptcy, ProPublica Illinois found.
Chapter 7 bankruptcies, on the other hand, almost always end with debt relief. But motorists in Chicago don’t often go that route for two reasons: Ticket debt can’t be forgiven using this kind of bankruptcy, and most lawyers require their fees to be paid in full before they file for bankruptcy protection…
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