Podcast #10: Auto Accident

Disclaimer

While the information given in this podcast is instructional, it is not intended to be taken as legal advice for your particular legal or financial situation. The recommendations that we give to one person may not be appropriate to your particular situation. The information contained in these podcasts is also not intended to replace the advice that you would receive from an actual consultation with a competent legal professional practicing in the area of consumer bankruptcy law.

Welcome

Welcome to Morsebankruptcy.com, the podcasts. These podcasts, we take different bankruptcy topics from different sources and today’s source comes from visitors from our website who leave questions for us. In this case I’m Todd Morse, the owner of Morse Law.

Viewer Question

What I was asked this time, a person wrote I’ve got a judgment to pay for an auto accident and they wanted to know what bankruptcy would do for that.

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You know it is kind of interesting, these auto accident judgments. In the past, oh, 7 or so years I think I can probably count maybe two or three of them that we’ve had come in to the office where people were looking to file bankruptcy because of judgment specifically from an auto accident. We’ve had probably over half a dozen so far in 2012 alone so I have to assume that the collections on these judgments have really stepped up significantly in the last year, year and half or so.

But here is how generally has gone, at least with the clients that I have represented so far this year have told me about. An auto accident happens at some point. And now we are not talking about drunken driving and we are not talking about alcohol related damages, and we are not talking about anything criminal for that matter either where they’re not at fault or there’s restitution or things like that.

This is sort of one of those things where the car drives over somebody’s $20,000 snowman and now they’re getting sued for crunching the snowman and so there’s a judgment out there. More likely it is for damaging another person’s car. I just would like to see a $20,000 snowman. But we have got a certain amount of damages out there from a car accident and insurance has paid whatever they are going to pay. And one way or another there is several mechanisms that can happen through but a judgment has been entered in against our individual for some type of damage from the auto accident.

Now, what’s become the more acceptable way of collecting on this, or I guess the preferred way to collect on it here lately, is to then go and put a lien on our person’s driver’s license. Essentially making it where they can’t get a driver’s license unless this particular debt is paid off. Now, you can imagine that’s a pretty effective way to do it. If you don’t have a license you can’t really get yourself to work, back and forth, very well and any other numbers of areas in your life where that’s going to impede.

So you’ve given the person one heck of an incentive to pay off their judgment. Problem is if you know you got a judgment in the neighborhood of $20, $30, $40,000 it doesn’t matter that you can’t drive. That doesn’t make you any more likely to spend money on a judgment that you don’t have to begin with. So it’s sort of a catch 22. I mean it certainly incentivizes the person enough to try deal with the debt but it certainly doesn’t make them any more capable of paying for the debt.

So, what we do in those cases is like in the other bankruptcy. You’d have to sit down and go through a consultation first to find out what chapter bankruptcy you do qualify for. But then once the bankruptcy has been filed, whether it is a chapter 7 or a chapter 13, the automatic stay order would have gone into place. So, the automatic stay order makes any collections or continuation of collection activities illegal and thus far it’s been within the definition of collection activity that the continuation of the denial of license is a collection activity.

So what we have done with those folks is we have usually printed off their stay orders been filed. And the local DMV seems to be very interested to see the lien holder’s name on something so we have also been printing off the creditor schedule even though there’s not a great deal legal significance to it in my opinion. But that what’s they’re happy seeing, then we’re more than happy to print off those pages so they can look at them. And we just have our clients go in after filing, present those papers to the DMV and get their licenses freed so that they can go about their normal lives where they’re able to drive to work and take the kids to school and maybe to the hospital, unfortunately, if that’s what required.

But it’s all something that can be dealt with you just need to first figure out what chapter you can file, once you know that get all your ducks in the line file the case and then take the proper documentation to the DMV where you can free your license and get on to the next chapter in your life so not a very long question but still a very good question.

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