Creditor Bankruptcy Rights

In City of Chicago v. Marshall, the 7^th Circuit recently issued an opinion holding that vehicular fines incurred during the course of a Chapter 13 bankruptcy are administrative expenses that must be paid promptly and in full. In a previous appeal, the 7^th Circuit held that the confirmation of a Chapter 13 payment plan causes the debtor’s assets, including vehicles, to revert to the debtor’s personal ownership unless the judge has made a debtor-specific finding under 11 U.S.C. 1327(b). In this case, after their Chapter 13 plan was confirmed, the debtors incurred fines for offenses including running red lights, illegal parking, and others. Previously, the debtors had argued that the automatic stay of 11 U.S.C. 362 prevented their vehicles from being towed or booted. The debtors principal argument is that they need their vehicles to earn the money promised to creditors by the Chapter 13 plans. The Court observed that this is true, but that it does not justify allowing debtors to avoid the costs of operating their vehicles. Debtors must pay for gasoline and insurance, and similarly must pay for parking, whether acquired legally or illegally.