In Michigan, having a driver’s license isn’t just about convenience—it’s often necessary for daily life, from getting to work to accessing basic services. Yet, financial challenges can sometimes lead to license suspension, compounding existing difficulties.

Bankruptcy offers a potential solution. Whether through Chapter 7 or Chapter 13, it can help manage debts and potentially restore your driving privileges.

License Suspensions in Michigan

License suspensions are a punishment for breaking traffic laws or committing certain offenses. It means your driving privileges are temporarily taken away, which can disrupt your daily life by making it harder to commute, work, or do personal activities. Here are a few reasons you might get your license suspended in Michigan.

• Multiple DUI convictions
• Reckless driving
• Habitual traffic offenses
• Failure to pay traffic tickets or fines
• Driving with an expired license
• Accumulating too many points on your driving record

It can be very  inconvenient to have a suspended license and it may restrict the ability to commute to work or perform job duties that involve driving.  

How Bankruptcy in Michigan Can Help Restore a Driver’s License

Bankruptcy can potentially help you regain your suspended driver’s license in specific situations where the suspension is directly linked to unpaid debts that can be discharged through bankruptcy. Here are key scenarios where bankruptcy might assist:

• Unpaid Debts Leading to License Suspension: If your license was suspended due to unpaid debts such as unpaid parking tickets, bankruptcy could provide relief. This and other debts can typically be discharged in bankruptcy, which means that once discharged, the reason for your license suspension may no longer apply.
• Automatic Stay Protection: Filing for bankruptcy triggers an automatic stay, which halts most collection actions against you, including lawsuits, garnishments, and efforts to suspend your driver’s license for unpaid debts. This stay gives you time to address your financial situation without immediately threatening your driving privileges.
• Debt Discharge and License Reinstatement: Once your bankruptcy case concludes and debts are discharged, certain types of debts are legally erased. If your license suspension was solely due to these discharged debts, the state may be required to reinstate your license, provided you meet any additional state-specific requirements.

The U.S. Supreme Court’s decision in Perez v. Campbell established that debts related to accidents leading to license suspension can be discharged in bankruptcy, regardless of state laws allowing suspension for such debts. This precedent applies nationwide, potentially aiding individuals seeking to restore their driving privileges through bankruptcy. 

Getting Your License Back After Chapter 7 Bankruptcy

Reinstating a suspended driver’s license following Chapter 7 bankruptcy isn’t always immediate, but it can be a viable path depending on your financial circumstances:

• Financial Evaluation Post-Bankruptcy: Upon filing Chapter 7 bankruptcy, your trustee assesses your financial status. Once the court finalizes your case and discharges most unsecured debts, your financial outlook improves.
• Application for Reinstatement: To restore your license, you’ll need to apply to your state’s Department of Motor Vehicles or similar authority. This process typically involves demonstrating compliance with any outstanding requirements and paying reinstatement fees.
• Timing Considerations: Despite debt discharge, reinstatement may not be instant. It could take several months after satisfying non-dischargeable debts and fulfilling necessary procedures.

Alternative for Getting Your Suspended Driver’s License Back: Chapter 13 Bankruptcy

Chapter 13 bankruptcy offers another avenue, especially beneficial for specific types of license suspensions:

• Debts Addressed: Chapter 13 addresses debts like parking tickets, traffic fines, and violations that aren’t dischargeable in Chapter 7.
• Repayment Plan Advantages: Under Chapter 13, a structured repayment plan allows immediate steps toward license reinstatement without waiting for a discharge. Compliance with the plan terms is key for maintaining reinstated driving privileges.
• Consultation with Legal Counsel: Eligibility and suitability for Chapter 13 vary. Consulting with a bankruptcy lawyer in Michigan ensures understanding of options tailored to your circumstances and navigating the reinstatement process effectively.

Both Chapter 7 and Chapter 13 bankruptcies offer potential routes to regain a suspended driver’s license in Michigan. 

When is Bankruptcy Ineffective for Resolving License Suspension in Michigan?

Bankruptcy can be a powerful tool for resolving many types of debt-related issues, including some instances of license suspension. However, there are specific scenarios where bankruptcy may not provide relief for license suspension in Michigan:

Non-Dischargeable Debts: Certain types of debts cannot be discharged (wiped out) through bankruptcy. These typically include:

• Debts incurred through willful or malicious conduct
• Debts from personal injury caused by driving under the influence (DUI)
• Debts arising from fines or restitution orders in criminal cases

If your license suspension is due to non-dischargeable debts like fines for DUI or criminal restitution, bankruptcy will not eliminate these obligations, and your license may remain suspended until these debts are satisfied.

• Non-Financial Reasons for Suspension: Bankruptcy primarily addresses financial issues related to debts. If your license suspension is due to reasons unrelated to financial debts, such as medical reasons, point accumulation on your driving record, or failure to meet state-specific requirements (like maintaining valid insurance), bankruptcy won’t affect these non-financial aspects.
• Failure to Comply with State Requirements: Even if certain debts are discharged through bankruptcy, reinstating your license may still require compliance with other state-specific requirements. For example, Michigan may have specific procedures or fees that need to be fulfilled independent of debt discharge.
• Pending or Ongoing Legal Actions: If there are pending lawsuits, judgments, or garnishments related to your license suspension that were initiated before you filed for bankruptcy, these actions may continue unless otherwise stayed or resolved through the bankruptcy process.

If you are facing license suspension as a result of financial challenges, be aware of the limitations of bankruptcy as a remedy. Seeking guidance from a bankruptcy attorney can provide clarity on the application of bankruptcy laws to your unique circumstances and determine if it can aid in the restoration of your driver’s license in Michigan.