The law aims to reach a balance between the goal of helping a debtor get out of debt and protecting creditors and injured victims whose interests might outweigh a debtor’s need for a fresh start. This is exemplified by what some would argue is a rather harsh treatment of criminal restitution judgment debt. This balance, or struggle, between protecting debtors and enforcing the judgments of creditors, has resulted in black letter law that prevents debtors from discharging (eliminating) a restitution judgment resulting from a criminal proceeding.
How is a Criminal Restitution Judgment Treated in Bankruptcy
A restitution judgment resulting from a criminal case generally cannot be discharged in a bankruptcy in San Diego. The rule is slightly different depending on whether you have a Federal criminal restitution judgment or a state restitution judgment. With both Federal criminal judgments and California or other state criminal judgments, the victim’s restitution portion of the judgment cannot be included in your filing. The same is true with criminal fines. With California criminal restitution judgments, the portion of the judgment that is to compensate the government for actual pecuniary (financial) loss can be included in your filing.
A criminal fine also cannot be eliminated. In fact, criminal fines are nondischargeable when you file bankruptcy, whether you file in San Diego or in any other part of the country for that matter. The same rule is followed by all courts. For this reason, a San Diego bankruptcy lawyer will advise you that you must continue to pay your criminal fines notwithstanding your bankruptcy filing.
Actual Financial Loss
With California and other state criminal restitution judgments, the part of the judgment that is to compensate the government for actual financial loss, can be included in a bankruptcy filing. This again strikes a balance between debtors and creditors and aims to help the unfortunate debtor get out of debt and get a fresh financial start.
Government Economic Loss
Not all criminal judgments are fines. For example, with criminal restitution judgments for DUI cases, part of the judgment may include a restitution order that is for the purpose of compensating the government for the costs of running its DUI program or other related programs.
If, or to the extent that, the judgment is not criminal restitution but is purely economic compensation for the government’s financial loss, such as expenses in running a DUI program, then the portion of the judgment that is to compensate the government for its economic loss can be discharged. But if it is criminal restitution to compensate an injured victim, the law protects the injured victims by preventing discharge of such an obligation in a bankruptcy proceeding.