Sec. Trans 128.10 - Effect of bankruptcy on vehicle registration

ยง Trans 128.10. Effect of bankruptcy on vehicle registration

(1) BANKRUPTCY THAT PRECEDES TVRP SUSPENSION. In any case in which the department is notified of a pending bankruptcy proceeding and applicability of a stay under 11 USC 362, the department shall release any registration suspension imposed under this chapter affecting the vehicle registration of the debtor. The authority may not refile its notice of unpaid judgment, citation or towing and storage charges associated with a parking citation until the stay is no longer in effect.

Note: The co-debtor stay under 11 USC 1301 applies only to consumer debt. Fines, forfeitures, and towing and storage charges associated with parking citations are not consumer debt. Therefore the co-debtor stay of 11 USC 1301 does not impact TVRP cases involving a non-bankrupt person who is liable with a bankruptcy person.

(2) EFFECT ON VEHICLE REGISTRATION.

(a) Reinstatement. A vehicle owner whose vehicle registration is suspended or subject to refusal under this chapter who files a petition in bankruptcy, and from whom collection of a pre-bankruptcy debt arising prior to the filing of the petition is stayed under 11 USC 362, may reinstate his or her vehicle registration. The person shall be subject to all the same reinstatement, filing and fee requirements as any other person seeking registration reinstatement following a registration refusal or suspension.

Note: Liability for forfeitures is not "consumer debt" under 11 USC 101(8). Therefore, Ch. 13 co-debtor stay does not prohibit collection against non-bankrupt persons who are liable on a debt with a bankrupt person.

(b) Release of suspension ordered in violation of automatic stay. If the department is notified that a stay prohibiting action against a debtor under 11 USC 362 was in effect at the time the department suspended a debtor's vehicle registration under this chapter, the department shall reinstate the bankruptcy debtor's vehicle registration without any reinstatement fee.

(c) Reimposition of suspension. The department may suspend or refuse a debtor's vehicle registration that was released under sub. (1) or this subsection upon a subsequent TVRP case filing by a suspending authority. Such a filing shall be deemed a representation by the authority that the debt described in the filing was not discharged or satisfied within the bankruptcy proceeding and that no bankruptcy stay is in effect.

Note: While forfeitures are not generally dischargeable under 11 USC 523(a) (8), towing and storage charges would ordinarily be discharged in a bankruptcy proceeding. Authorities and delegated agencies are encouraged to consider each type of debt separately in deciding whether to order the department to suspend or refuse registration.

(d) Proof. The department may require satisfactory proof that a registrant's debts from a forfeiture or towing and storage charges associated with a parking citation have been discharged in a bankruptcy proceeding in any case where a debtor seeks to reinstate a vehicle registration after the bankruptcy case is closed or dismissed, a discharge has been granted, the automatic stay has been lifted, terminated, annulled or modified, or a suspending authority has filed a subsequent notice under par. (c). Acceptable proof may include copies of the schedules for the bankruptcy case listing the suspending authority as a claimant in the bankruptcy, proof of the filing date, such as the notice of bankruptcy filing mailed by the bankruptcy court or a copy of the petition containing the clerk's file stamp showing the date the petition was filed, and an affidavit that the debt is dischargeable under the United States bankruptcy code and has been discharged.

Note: Forfeitures and fine debts are not dischargeable in Ch. 7 bankruptcies. 23 USC 527(a) (7). Criminal fines are not dischargeable in Ch. 13 bankruptcies either. 23 USC 1328(a) (3).

(e) Disputes. In any case where a debtor registrant and a suspending authority dispute whether a discharge has affected debt for which registration refusal or suspension is requested, or in any case where a debtor registrant claims a forfeiture was discharged in a ch. 7 bankruptcy or a criminal fine was discharged in any bankruptcy proceeding, the department may require one or both parties to obtain a court order that decides whether the debt is discharged.

(f) Court determinations. The department shall accept court findings or orders regarding discharge of a claim in an action between the registrant and the suspending authority as determinative, and may impose or release a registration suspension or refusal in accordance with the determination of the court.

Note: While the Department does not have authority to require debtors to provide a certain type of notice of bankruptcy filing to it under federal law, debtors who are subject vehicle registration suspensions under s. 345.28(4) (a)2, Stats., will find that the Department's reaction to a bankruptcy filing is faster and more predictable under this section if the Department is listed on the mailing matrix for the proceeding with an address of Wisconsin Department of Transportation, Uninsured Motorists Unit, P.O. Box 7919, Madison, WI 53707-7919.

(3) VOLUNTARY PROCEEDINGS BY WAGE EARNERS FOR AMORTIZATION OF DEBTS. The department may not release a registration refusal or suspension based solely upon a court order entered under s. 128.21, Stats.

(CR 07-065: cr. Register December 2007 No. 624, eff. 1-1-08.)

Voluntary wage earner proceedings affect only executions, attachments or garnishments, and do not affect suspensions of vehicle registration. s. 128.21(1), Stats.

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