How New Jersey EZ Pass Violations For Unpaid Tolls, Fines & Penalties And The Threat Of Registration Suspension and Auto Impoundment Is Handled In Bankruptcy
I have handled bankruptcy cases involving clients that have incurred a surprisingly substantial amount of EZ Pass debt. Peculiarly, most bankruptcy lawyers do not know how to handle EZ Pass Debt in a New Jersey Bankruptcy.
Also, good luck finding a state employee that understands how such debt is administered in bankruptcy.
New Jersey residents may not realize that relatively minor EZ Pass violations may result in an enormous debt after the New Jersey Turnpike Authority adds their collection fees and costs.
I have handled bankruptcy cases, wherein about 92% of the EZ Pass debt represents collection costs and fees. For example, a client’s total debt of $15,500, represents violation fines of $1,240.00 and collection costs of $14,260.00. Unfortunately, the Turnpike Authority does not treat the actual fines differently from the collection fees and costs.
The Turnpike Authority may send unnerving letters advising that if the debt is not paid, they will suspend your registration and impound all of your vehicles. The letters may provide payment options that are financially unfeasible
In general, debt that is owed to NJ E-ZPass is considered and treated as unsecured debt in bankruptcy. Unsecured debt is debt that is owed to a creditor that is not holding a lien on any property, such as credit card or personal loan debt.
This means that a person who is entitled to a chapter 7 discharge, could discharge (eliminate) this debt.
E-ZPass debt is treated as unsecured debt in a chapter 13, which means that any unsecured debt that is not required to be paid under the bankruptcy code, is eliminated and discharged.
Immediately upon the filing of any bankruptcy case, the New Jersey Turnpike Authority must immediately cease any and all collection efforts. This means that if a bankruptcy case is filed, there is an automatic stay that prevents the debtor’s registration suspension and vehicle impoundment.
If the registration was suspended prior to the bankruptcy filing, the turnpike authority must reinstate the registration, after the filing. However, the turnpike authority may charge reasonable fees and costs associated with the reinstatement.
I have never experienced any difficulty in discharging E-ZPass debt. However, debt that is obtained through fraud may not be discharged.
Therefore, theoretically, if E-ZPass successfully contested a discharge as a result of fraud, the debt would not be discharged and would continue to be due and owing at the completion of the case.
In other words, if E-ZPass proves, in court, that the debtor incurred the toll charge with no intention of ever paying the toll, the charge would not be discharged.
Please note that I have never heard of E-ZPass contesting a discharge. Also, the cost of pursuing such an action, would likely deter the action altogether.
If you have questions about your debts, give me a call at (866) 503-5655 and we can discuss privately and for free.
Rare Circumstances with Bankruptcy & NJ EZ Pass
As I said, although unlikely, the State of New Jersey may take the following actions in connection with EZ Pass debt;
The state may commence a lawsuit against the debtor and obtain a judgment lien. The state may also suspend the debtor’s license and/or suspend or restrict the registration of a vehicle.
The following explanation in this and following paragraph, is based on the state not having entered a judgment lien, against the debtor, by way of a lawsuit. In general EZ Pass debt is considered unsecured debt, in a chapter 13 and/or a chapter 7 bankruptcy case. Typically, all unsecured debt is treated the same. The most common type of unsecured debt is credit card debt and a personal loan. If a bankruptcy debtor meets the criteria of a chapter 7 discharge, all of the EZ Pass debt is eliminated and discharged in the chapter 7.
This paragraph deals with EZ Pass debt, in a chapter 13, when no judgment lien was entered. I have written numerous blogs on how unsecured debt is treated in a chapter 13. All types of unsecured debt must be paid equally, if at all, in a chapter 13 bankruptcy case. Depending on the debtor’s financial circumstances, he may not be required to pay any money, whatsoever, towards the EZ Pass debt. However, if the debtor is required to pay any funds toward the EZ Pass debt, he must pay all his other unsecured debt, the same pro rata amount. You may review my other blogs that explain how unsecured debt is paid in a chapter 13.
If the state entered a judgment lien against the debtor, typically, the debt is still discharged in a chapter 7. However, all or a portion of the lien may not be eliminated, depending on the debtor’s circumstances. In other words, the discharge of a debt means that the creditor is not permitted to collect money for the debt. However, if the lien may not be eliminated, the lien must be paid when the debtor’s real estate is sold.
A lien may attach to the debtor’s real estate, under certain circumstances. Also, the lien may, possibly, be eliminated based on the value of the house, the mortgage payoff and any other judgment lien payoffs. In order to eliminate the lien in a chapter 7, an additional document must be filed with the court, requesting same. In a chapter 13, all or a portion of the lien may, possibly, be eliminated based on the debtor’s house value, mortgage payoff and the value of other liens. Any portion of the lien that may not be eliminated in a chapter 13, may be paid through the chapter 13 bankruptcy plan
Based on the debtor’s circumstances, the filing of a chapter 13 and/or chapter 7 case may permit the reinstatement of their driver’s license and the release of the vehicle’s registration suspension/restriction, after payment of the required costs. I would be interested in explaining how bankruptcy may benefit you with your EZ Pass debt.
Contact Robert Manchel at 866 503 5644 to discuss your EZ Pass debt and bankruptcy.