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Collection Actions: 11.4.1 Introduction

Federal and state exemption laws141 allow debtors to retain property and income despite such involuntary collection processes as garnishment, attachment, and execution. Exemption laws may protect from seizure items such as tools of the trade, a homestead, personal earnings, money on deposit, a car, retirement benefits, public benefits, and other personal property.

Collection Actions: 11.4.2 Exemptions at the Imposition Stage

Exemptions apply when judgments are enforced, so they are not generally applicable to the imposition of criminal justice debt.143 Nevertheless, exemptions may provide a framework for ability-to-pay determinations at the imposition stage. For example, any debt that would be collectible only through seizure of exempt income or assets could be considered not within the debtor’s ability to pay.

Collection Actions: 11.4.3.1.1 Overview

Federal criminal justice debt can not only be collected through the criminal justice system, but also through judicial146 and administrative147 wage garnishment and administrative offset of federal benefits, tax refunds, and other payments.148 Federal exemptions limit what can be seized through these collection mechanisms.

Collection Actions: 11.4.3.1.4 Claims Collection Act

The Claims Collection Act, as amended by the Debt Collection Improvement Act,172 gives the federal government an array of extra-judicial collection powers. These include administrative wage garnishment173 and administrative offset of federal benefits, tax refunds, and other payments.174

Collection Actions: 11.4.4.2 Earnings

The Consumer Credit Protection Act’s (CCPA) protections against wage garnishment preempt less protective state law.222 One state court mistakenly held that the CCPA does not apply to state criminal justice debt at all on the theory that the CCPA deals only with consumer finance debt.223 This position is inconsistent with the statute, which applies broadly to garnishment for “any debt.”224 The statute does not make any distinctions about the t

Collection Actions: 11.4.4.4 Student Loan Disbursements

Federal student loan proceeds, grants, and work assistance are protected by federal law from garnishment and attachment to collect any debt, except a federal student loan debt owed to the Department of Education.244 Since the statute explicitly exempts just one kind of debt—federal student loans—there appears to be no reason it should not apply to criminal justice debt.

Collection Actions: 11.4.6 Due Process, Equal Protection, and Exemptions

Due process concerns are implicated if a state, when using judicial or administrative procedures to enforce criminal justice debt, fails to give the debtor reasonable notice of available exemptions and an opportunity to assert such exemptions or other defenses, such as inability to pay.270 For example, a statute that requires a state to misinform debtors about the availability of exemptions may result in denial of due process.271 The Third Circuit reversed the dismissal of a claim that seizu

Collection Actions: 11.5.1 Introduction

For criminal justice debtors, bankruptcy can be a powerful tool. It can eliminate the obligation to repay certain criminal justice debts or provide an orderly mechanism for repaying debts that cannot be discharged in bankruptcy.

Collection Actions: 11.5.3.1 Generally

The principal goal of most bankruptcies is the discharge, which frees the debtor from personal liability on most debts. However, the discharge is not absolute. Some types of debts, including many criminal justice debts, may not be discharged in a chapter 7 bankruptcy.298

Collection Actions: 11.5.3.2 Criminal Fines

Fines—which are financial obligations ostensibly established to serve a wholly punitive function—are not dischargeable in a chapter 7 bankruptcy.305 This includes traffic and parking fines.306 However, collection costs related to state criminal fines that are not for the benefit of a governmental unit may be dischargeable.307

Collection Actions: 11.5.3.4 Victim Restitution

Victim restitution is generally not subject to discharge in a chapter 7 bankruptcy. However, like many other terms in the world of criminal justice debt, the term “restitution” is defined in different ways across jurisdictions. In certain jurisdictions, for example, the term is confusingly applied to all criminal justice debt, including payment to the state of certain costs of the criminal proceeding.

Collection Actions: 11.5.3.5 Juvenile Restitution Owed by Parents

Courts generally hold that juvenile criminal justice debt owed by parents is dischargeable in a chapter 7 bankruptcy. Courts focus primarily on two factors—the action’s non-penal nature and the fact that the obligated parents are not the culpable actor.331 The Ninth Circuit has also rejected the argument that the costs of a juvenile’s incarceration charged to a legal guardian are excepted from discharge as a domestic support obligation.332

Collection Actions: 11.5.3.6 Differentiating Between Various Types of Costs

Until recently, the underlying purpose of a particular cost has rarely been a substantial part of chapter 7 dischargeability analysis. A wide variety of fees and costs, serving many different purposes and paying many different entities, are often lumped together when reviewed for nondischargeability.

Collection Actions: 11.5.3.7 Costs of Prosecution and Indigent Defense Fees

“Costs of prosecution” is a loose term that can include many different amounts chargeable to a defendant, including but not limited to transcripts, depositions, and mileage for witnesses and prosecution staff. When included in the restitution order itself, courts have generally found the costs to be excepted from discharge,340 but when the fees are imposed outside of the restitution order, they are generally dischargeable.341

Collection Actions: 11.5.3.8 Costs of Incarceration

Most courts find jail fees to be nondischargeable in a chapter 7 bankruptcy.345 In general, such fees are nondischargeable whether the costs of incarceration are calculated on a flat periodic rate for room and board or assessed on individualized bases—for example, administrative penalties covering costs for an inmate’s failed suicide attempt,346 destroyed prison property,347 or costs associated with an attempted escape.

Collection Actions: 11.5.3.9 Costs Related to Deferred Judgment

In many criminal sentencing systems, an option exists for the deferred adjudication of a criminal proceeding. In these cases, what is “deferred” is the actual finding of guilt by the court; typically, the defendant pleads guilty and submits to probation and payment of certain costs, and at the end of the term of probation the matter may even be expunged.

Collection Actions: 11.5.3.10 Surcharges

Most if not all states charge, in addition to wholly punitive fines, various surcharges that essentially amount to additional fines earmarked to fund specific initiatives. Whether discharge is permitted varies from jurisdiction to jurisdiction.

Collection Actions: 11.5.3.11 Bail Bonds

In order to secure appearance at trial of a criminal defendant who has been granted pre-trial release, the court may require the payment of an amount of money as security (bail). Bail is generally, but not always, returned at the conclusion of trial, regardless of the outcome.354 If the defendant does not show up for trial, on the other hand, or violates the terms of pre-trial release, bail may be forfeited.

Collection Actions: 11.5.3.12 Interest and Collection Costs

Interest on criminal justice debt has generally been found to be dischargeable only to the extent the underlying debt is dischargeable.360 Flowing from this, to the extent interest is generated upon an indigent defense fee balance that is dischargeable, the interest should also be dischargeable.