You can write off claims against you for others’ personal injuries and property damage from a vehicle accident. Unless you were intoxicated.
Writing Off Debts from Vehicle Accidents
When you think of debts you want to write off through bankruptcy, credit cards, medical bills, vehicle loans, and such come to mind. These are debts of specific amounts owed on obligations that you entered into voluntarily. But debts can also arise out of more ambiguous obligations, such as claims against you from a vehicle accident.
If you are in an accident, you could be responsible for paying an injured person’s accrued medical bills, future medical bills, loss of income, and maybe compensation for pain and suffering. You could be responsible for property damage to repair or replace vehicle(s) and any stationary object that was damaged like street signs and buildings.
If you didn’t have enough insurance or none at all, you’d have to personally pay the uninsured part of those claims for which you were found to be at fault. You could owe a tremendous amount of money.
You can usually discharge (legally write off) those claims against you by filing bankruptcy.
You Can Discharge a Claim Even If the Amount Is Not Yet Known
A “debt” is defined as a “liability on a claim” under the federal Bankruptcy Code.
A “claim” is a “right to payment, whether or not… liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed… .” See Section 101(12) and Section 101(5) of the Bankruptcy Code.
So when bankruptcy discharges “all debts. .. and any liability on a claim,” it doesn’t matter if the amount of that debt or claim is unknown, or “unliquidated.” As long as the accident happened before the bankruptcy was filed, “any liability on a claim” is discharged.
So not knowing the amount of medical expenses, lost wages, and other related claims usually does not prevent you from discharging all the claims related to the accident.
The Exception for Driving While Unlawfully Intoxicated
The Bankruptcy Code “does not discharge an individual debtor from any debt… for death or personal injury caused by the debtor’s operation of a motor vehicle… if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance.” Section 523(a)(9).
So if someone is injured or killed in a vehicle accident caused by your illegal driving under the influence of an intoxicant, you cannot discharge the debts related to that injury or death.
Exception Applies to Both Chapter 7 and Chapter 13
There are a few kinds of debts that can’t be discharged in a Chapter 7 “straight bankruptcy” case but can be discharged in the much more time-consuming Chapter 13 “adjustment of debts.” Under Chapter 13 certain debts are discharged after you pay as much as you can afford to pay to all of your creditors during a 3 to 5 year period of time. After that the remaining portion of some categories of debts are discharged.
But debts from driving under the influence are not among those that can be discharged only under Chapter 13. The Bankruptcy Code makes that clear. See Section 1328(a)(2). Debts from driving under the influence can’t be written off under either Chapter 7 or 13.
If Not Charged with a DUI
This exception to discharge only applies if your “operation of a motor vehicle was unlawful” because of your intoxication. So if you ingested an intoxicant and were in an accident without being charged with driving under the influence, you may be able to discharge debts arising from the accident. Your argument would be that your driving was not “unlawful.”
But careful because you could have driven unlawfully even if you were not cited. The injured party could still argue that you were driving unlawfully by presenting evidence about how much you had to drink and when. If have concerns about this, discuss it thoroughly with your bankruptcy attorney.
If Charged But Not Convicted
If you’re cited for a DUI offense but you succeed in not getting convicted, then you may also be able to successfully argue that your “operation of a motor vehicle” wasn’t “unlawful.” And so debts arising from the accident should be discharged.
But again, be careful. The standard of proof for a criminal offense is significantly higher than in the civil courts. It may be possible for someone injured in the accident to establish “by a preponderance of the evidence” that you were driving unlawfully as a result of your impairment even though in your criminal case there wasn’t quite enough evidence to show that to be true “beyond a reasonable doubt.” The injured person could win under the “preponderance of the evidence” standard simply by showing that there is at least slightly more evidence that you were driving unlawfully than there’s evidence that you were not.
Property damage claims are usually not as large as personal injury ones. But besides the replacement costs of vehicles, as mentioned above there could be damage to governmental property such as road signs and barriers, and to private property struck during an accident. These claims could be surprisingly large.
The Bankruptcy Code section referred to above speaks only of debts from “death or personal injury.” There’s no mention of property damages there. But there’s another exception to discharge beyond the “death or personal injury” one, and this one does apply to property damages. Section 523(a)(6) excludes from discharge any debt “for willful and malicious injury by the debtor to another entity or to the property of another entity.”
The question is whether causing an accident while driving impaired constitutes a “willful and malicious injury”? Is property damage from drunk driving a “willful and malicious injury” if you knew or should have known that you were driving while impaired but certainly did not intend to have an accident or to cause any property damage?
The answer to this may depend on where you live, on how the federal appeals courts have ruled on the question in your region.
In some parts of the country the answer is yes: the voluntary acts of drinking and driving while intoxicated can constitute conduct that’s intentional enough to be considered “willful and malicious.” If so then drunk driving claims would not be discharged. See an experienced and conscientious local bankruptcy lawyer to find out the law in your area.
Drunk Boating and Flying
The Bankruptcy Code section we keep referring to, Section 523(a)(9), on unlawful driving under the influence, includes both drunk boating and flying as well : bankruptcy does not “discharge an individual debtor from any debt. .. for death or personal injury caused by the debtor’s operation of a… vessel, or aircraft… if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance.”
The caution here is that boating law and what constitutes unlawful operation of a boat is often quite different than the law about unlawful operation of a motor vehicle. For example, in some states it’s legal to operate a boat while the occupants drink alcohol or other legal intoxicants but not for the person operating the boat. The blood alcohol concentration amounts may be different, as well as the effect of the operator’s age.
Drunk flying laws are even stricter, as to be expected. Under federal law it is illegal to operate an aircraft 1) “within 8 hours after the consumption of any alcoholic beverage,” 2) with a blood alcohol concentration of 0.04% or more, and 3) while under the influence of alcohol or any drug “that affects the person’s faculties in any way contrary to safety.” See the Code of Federal Regulations, Title 14, Section 91.17
There are obvious reasons not to drink and drive (or boat or fly). We’ve added one more reason: if you do so while unlawfully intoxicated you can’t discharge any of the resulting death/personal injury debts in bankruptcy, and maybe none of the resulting property damage debts either.