No, you cannot file bankruptcy on court-ordered restitution and have it wiped out. Federal law bars the discharge of criminal restitution in every chapter of bankruptcy, and that has been the settled rule since the Supreme Court addressed it in 1986. Bankruptcy can still help your situation by eliminating other debts and freeing up income for restitution payments, but the restitution balance itself will come out of the case untouched.
Why Restitution Survives Bankruptcy
Two provisions of the Bankruptcy Code lock restitution out of discharge. Section 523(a)(7) bars discharge of any debt that is a fine, penalty, or forfeiture owed to a governmental unit and is not compensating an actual financial loss.1Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge The Supreme Court in Kelly v. Robinson held that criminal restitution serves the state’s interest in punishment and rehabilitation, not just the victim’s interest in compensation, and so falls within this exception regardless of who actually receives the money.2Justia US Supreme Court. Kelly v. Robinson, 479 U.S. 36 (1986)
Congress removed any remaining ambiguity in 2005 by adding Section 523(a)(13), which blocks discharge of “any payment of an order of restitution issued under title 18.”3Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge State restitution orders are covered by the Kelly framework under Section 523(a)(7), and courts have consistently held state criminal restitution to be equally nondischargeable.4National Consumer Bankruptcy Rights Center. Criminal Restitution Is Nondischargeable
The underlying logic is simple. Restitution is part of a criminal sentence, not a private debt between two parties. Allowing a bankruptcy court to erase it would let people use a civil process to undo a criminal court’s judgment, and courts refuse to permit that even when payments go directly to the victim.
What Chapter 7 Does and Doesn’t Do for You
Chapter 7 liquidates your non-exempt property, distributes the proceeds to creditors, and discharges most remaining unsecured debts.5United States Courts. Chapter 7 Bankruptcy Basics Restitution is not among them. You leave the case still owing the full amount.
You also do not get the usual protection of the automatic stay. The Bankruptcy Code specifically exempts criminal proceedings from the stay, so the government or a victim can keep enforcing a restitution order while your bankruptcy case is open.6Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay
What Chapter 7 can do is clear the ground around restitution. If you are juggling credit cards, medical bills, and a restitution obligation, discharging the consumer debts frees up income to put toward what you still owe. The restitution amount does not shrink. The competing demands on your paycheck do.
What Chapter 13 Does and Doesn’t Do for You
Chapter 13 lets people with regular income propose a three-to-five-year repayment plan, with a trustee distributing monthly payments to creditors.7United States Courts. Chapter 13 – Bankruptcy Basics At the end of the plan, most remaining unsecured balances are discharged.
Restitution is explicitly carved out. The Code states that a Chapter 13 discharge does not apply to any debt for “restitution, or a criminal fine, included in a sentence on the debtor’s conviction of a crime.”8Office of the Law Revision Counsel. 11 USC 1328 – Discharge Whatever balance remains when the plan ends is still owed in full.
Chapter 13 helps in two practical ways. Credit cards, personal loans, and similar debts can be paid at a fraction of their face value through the plan, with the rest discharged. And your restitution payments can be built into the plan itself, giving you a structured schedule instead of ad hoc collection pressure.
Collection Continues During and After Bankruptcy
Federal restitution is not a passive debt. It operates as a lien against your property with the same force as a federal tax lien, attaching to all property and rights to property from the moment the judgment is entered.9Office of the Law Revision Counsel. 18 USC 3613 – Civil Remedies for Satisfaction of an Unpaid Fine The government can garnish wages (subject to Consumer Credit Protection Act limits) and seize non-exempt assets.
The timeline is long. Collection authority lasts for 20 years from the judgment or 20 years after release from imprisonment, whichever comes later. If you die before paying, the balance becomes a claim against your estate, and the lien continues until the estate settles the liability or receives a written release.9Office of the Law Revision Counsel. 18 USC 3613 – Civil Remedies for Satisfaction of an Unpaid Fine
Meanwhile, the balance grows. Any federal restitution order over $2,500 accrues interest automatically unless paid within 15 days of judgment, at a rate tied to the one-year Treasury yield for the preceding week. A delinquent balance picks up a 10 percent penalty on the overdue principal, and a default adds another 15 percent on top of that.10Office of the Law Revision Counsel. 18 USC 3612 – Collection of Unpaid Fine or Restitution A $50,000 order that falls into default can grow by $12,500 in penalties alone before interest is counted.
Courts can waive or cap interest when a defendant genuinely cannot afford it, by eliminating the requirement, setting a fixed-dollar cap, or limiting how long interest accrues.11United States Courts. 18 U.S.C.A. 3612, Post Judgment Interest Rates That relief comes from the sentencing court, not the bankruptcy court. State restitution orders have their own rules on interest and collection fees, which vary widely.
Watch Out for Probation and Parole Consequences
If you are on probation or supervised release, falling behind on restitution can trigger revocation proceedings, because restitution is almost always written in as a condition of supervision.
The Supreme Court set a limit on this in Bearden v. Georgia. A court cannot revoke probation simply because you failed to pay. Before revoking supervision for non-payment, the court must determine whether the failure was willful, meaning you had the resources and chose not to pay or did not make genuine efforts to obtain them. If you truly cannot afford to pay, the court must consider alternatives to imprisonment.12Justia US Supreme Court. Bearden v. Georgia, 461 U.S. 660 (1983)
Bankruptcy cuts both ways here. Filing is itself evidence of financial distress and supports an argument that non-payment was not willful. But once your consumer debts are cleared, your post-bankruptcy budget has more room in it, and a defendant who then still fails to pay has a weaker inability-to-pay argument than before.
DUI and Intentional-Injury Debts Also Survive
Some crimes generate overlapping layers of nondischargeable debt beyond the restitution order itself, and it is worth knowing about them before you file.
Section 523(a)(9) bars discharge of any debt for death or personal injury caused by operating a vehicle, vessel, or aircraft while intoxicated. A civil judgment from a DUI crash survives bankruptcy right alongside the criminal restitution. Section 523(a)(6) does the same for debts arising from willful and malicious injury to another person or their property.1Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge Assault, arson, and similar acts can produce both a restitution order and a separate civil judgment, and bankruptcy clears neither.
The Real Path to Relief: Go Back to the Sentencing Court
Since bankruptcy cannot reduce restitution, the only realistic route to lowering what you pay each month is the court that imposed the order. You can petition the sentencing court to modify the payment schedule based on changed financial circumstances. A job loss, serious illness, or other hardship may justify reducing monthly payments or temporarily suspending them.
Federal courts have explicit authority to modify interest obligations when a defendant lacks the ability to pay, and many state courts have similar discretion over payment schedules. Documentation is what moves these requests: bank statements, pay stubs, a list of monthly expenses, and evidence of the financial setback. Courts respond better to defendants with a track record of making payments who then hit a genuine change in circumstances than to those who have never tried to pay.
A bankruptcy filing can strengthen a modification request. It demonstrates that your financial situation is severe enough to warrant judicial intervention, and your bankruptcy schedules give the criminal court a detailed snapshot of your income, assets, and obligations. Many defendants run both tracks at once: Chapter 7 or Chapter 13 to clear consumer debt, and a motion in the criminal case to adjust restitution payments to match the new budget.