Filing Chapter 7 Could Get Revoked License Back

Q: My housemate lent me his car when mine was in the shop and I was involved in an accident. Luckily there were no injuries, but the other car was totaled, my housemate’s car was totaled, and there was a significant amount of property damage on top of that. There were no criminal charges, as it wasn’t a DUI or reckless driving, just bad luck. My housemate, as it turns out, did not have insurance on his car. I did have insurance, but it wasn’t enough to cover even a third of the damages. This was the cheapest possible policy that I could get, just to keep me on the road. The other party’s insurance company took me to court and won a judgment for the car’s value and the property damage. It was a new model and didn’t even have 100 miles on it.

I don’t have the money to pay that judgement on top of the deductible, and now my license has been revoked. I am just getting by with my job and enough student loan debt to pay for that car by itself. I don’t want to fall any further behind, and I don’t want to file for bankruptcy, but I am so squeezed right now that groceries from the 99-Cent store are a luxury.  One of my coworkers told me that if I file for Chapter 7, I could get my license back as long as there were no violations. Is this true?

A: I’m very glad that nobody was hurt, and that’s a very expensive lesson to learn about insurance. While your PIP covers you in the event of injuries regardless of fault, that’s where it stops. Moreover, the cheapest insurance policies only cover about $10,000 in property damage liability. I’m guessing that’s what you had. Broadly insurance, cheap insurance can end up costing you a lot more than you ever imagined.

You will need to pass a means test for Chapter 7, otherwise you will have to file a Chapter 13. Once you pass the means test, the automatic stay kicks in and your civil judgement and collection actions are stopped. Once the DMV is advised of this, they should reissue your license. Now, if you do not qualify for Chapter 7, then your civil judgement becomes an item in the Chapter 13 bankruptcy plan, and while it will need to be discharged, it may end up being reduced.

I need to know more details about the case and your finances before I can really give you a complete legal picture, but it sounds as if we could help you on several fronts. First with filing Chapter 7 bankruptcy, second with getting your revoked license back, and third by having a look at those student loans. We’re really good with complex cases here, and the consultation is free. As in really free. No money. Give us a call, and let’s get started in getting you out from under, because answering anonymous inquiries from a mailbag is not a comparable substitute for face-to-face, detailed legal advice.