One type of debt that is becoming more prevalent is EZ-Pass related debt. Now that many bridges and tunnels in and around New York City have become toll-less and tolls are enforced by camera, more drivers have been accumulating EZ-Pass debt issued by the Metropolitan Transit Authority or the Port Authority of NY & NJ. If the debt goes unpaid, large penalties are added to the toll fees and can easily become overwhelming. If the debt continues to go unpaid, the offending car may have its registration suspended. This can make it even more difficult for the debtor who needs their car to get to work. As this type of debt becomes more common, we are increasingly hearing the question: Can I discharge EZ-Pass debt by filing for bankruptcy?
EZ-Pass debt is comprised of two different components. First, there are the toll fees that are owed for the crossing of a bridge or travelling through a tunnel. Second, there are the penalties that are added on the debt for non-payment. As mentioned above, these penalties can be large and will often comprise most of a debtor’s EZ-Pass debt. These two components are treated differently in the Bankruptcy Code.
EZ-Pass toll fees are dischargeable in bankruptcy, however the penalties imposed for non-payment are not. EZ-Pass penalties are non-dischargeable since they can be considered to be government penalties per § 523(a)(7) of the Bankruptcy Code:
A discharge under section 727, 1141, 1192 1 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt…
to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty.
Since the vast majority of EZ-Pass debt is typically comprised of penalties, a Chapter 7 bankruptcy filing will not discharge most of what is owed to EZ-Pass. However, the filing of a bankruptcy petition will create an automatic stay that temporarily stops collection and will also lift any suspended registration penalty that may have been imposed prior to filing. However, that stay will terminate once a bankruptcy case concludes.
Despite the above, a debtor does have options to resolve EZ-Pass debt through bankruptcy. If a debtor files a Chapter 13 bankruptcy, they can pay any EZ-Pass debt (along with their other debt) in a 60-month payment plan that is interest free on most debt. While the EZ-Pass debt is not discharged by Chapter 13, the debt will be paid in full through what could be up to a 60-month court ordered payment plan. Chapter 13 debtors also receive the benefit of the automatic stay, which will lift a suspended vehicle registration due to non-payment of EZ-Pass debt and may only pay a small percentage of their unsecured debt (such as credit cards, personal loans, and medical bills). For more information on Chapter 13 bankruptcy please click here: https://www.debtlawyer.com/practice-areas/bankruptcy/chapter-13/
If you have any questions regarding the dischargeability of EZ-Pass debt or any other debt, please feel free to contact the Law Offices of David I. Pankin, P.C. at (888) 529-9600 or by using our easy online contact form. We have over 25 years of experience helping debtors get a fresh financial start!