Bankruptcy does not clear criminal restitution. Whether the order came from a federal or state criminal court, and whether you file under Chapter 7 or Chapter 13, the restitution obligation survives your case in full. The automatic stay doesn’t pause the criminal court, the discharge order doesn’t reach the debt, and the government keeps every collection tool it had before you filed.
Why Restitution Is Protected From Discharge
Two provisions of the Bankruptcy Code lock restitution in place. Section 523(a)(13) excepts from discharge “any payment of an order of restitution issued under title 18” of the federal criminal code, which covers federal restitution orders directly.1Office of the Law Revision Counsel. 11 U.S.C. 523 – Exceptions to Discharge
State restitution reaches the same result through Section 523(a)(7). In Kelly v. Robinson (1986), the Supreme Court held that restitution imposed as part of a state criminal sentence qualifies as a “fine, penalty, or forfeiture payable to and for the benefit of a governmental unit.” Even though a victim receives the money, the Court reasoned that restitution serves the state’s goals of punishment and rehabilitation, and the victim doesn’t control whether it’s imposed or how much it is.2Justia U.S. Supreme Court Center. Kelly v Robinson
So the court that ordered the restitution doesn’t matter. Federal or state, misdemeanor or felony, the debt follows you out the other side of bankruptcy.
Chapter 7 and Restitution
Chapter 7 liquidates non-exempt assets and discharges most unsecured debts like credit card balances and medical bills. Restitution is not among them.
The automatic stay that stops most creditor activity when you file a petition does not stop criminal proceedings. Section 362(b)(1) carves out an exception for “the commencement or continuation of a criminal action or proceeding against the debtor.”3Office of the Law Revision Counsel. 11 U.S.C. 362 – Automatic Stay Your credit card company has to stop calling. The criminal court can keep enforcing its restitution order the whole time your case is pending.
When the discharge order enters at the end of a Chapter 7 case, it simply doesn’t reach the restitution balance. The full amount remains owed, and you continue paying on the schedule the criminal court set.
Chapter 13 and Restitution
Chapter 13 lets you keep your property and repay debts through a court-approved plan that runs three to five years.4United States Courts. Chapter 13 – Bankruptcy Basics Before 2005, Chapter 13 offered a broader discharge that could wipe out some debts Chapter 7 couldn’t. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 closed that door. Section 1328(a)(3) now expressly excepts from Chapter 13 discharge any debt “for restitution, or a criminal fine, included in a sentence on the debtor’s conviction of a crime.”5Office of the Law Revision Counsel. 11 U.S.C. 1328 – Discharge There is no version of bankruptcy where restitution disappears.
One point of confusion is worth clearing up. Restitution is not a “priority debt” under Section 507, so your Chapter 13 plan does not have to pay the full balance during the plan period in order to be confirmed.6Office of the Law Revision Counsel. 11 U.S.C. 1322 – Contents of Plan Whatever remains unpaid when the plan ends is not discharged. You still owe every dollar the criminal court ordered, and collection resumes once your bankruptcy case closes.
What Collection Looks Like After Bankruptcy
The tools available for unpaid federal restitution are the same ones that back a federal tax lien. The restitution order creates a lien against all your property and property rights, and the government can file notice of it the way the IRS files a tax lien, making it enforceable against future purchasers and creditors.7Office of the Law Revision Counsel. 18 U.S.C. 3613 – Civil Remedies for Satisfaction of an Unpaid Fine
Federal wage garnishment limits still apply. The Consumer Credit Protection Act caps garnishment at 25% of disposable earnings. Within that limit, the government can pursue the debt using the civil enforcement practices available for any federal judgment. State enforcement varies but often includes wage garnishment, bank levies, and interception of tax refunds.
Federal restitution has a collection window of 20 years from the entry of judgment or 20 years from the person’s release from prison, whichever is later. The lien on your property runs for the same period. For someone sentenced to a long term, that can mean decades of exposure after release.7Office of the Law Revision Counsel. 18 U.S.C. 3613 – Civil Remedies for Satisfaction of an Unpaid Fine
Death doesn’t erase the debt either. Criminal fines terminate when the person dies; restitution passes to the estate, and the lien continues against estate assets until the estate receives a written release of liability.
What Happens If You Stop Paying
Missing restitution payments can cost you more than money. If you are on probation and the court finds that your failure to pay was willful — you had the ability to pay and chose not to — that alone can be grounds to revoke probation and send you to prison. Before taking that step, the court must look at why you haven’t paid. Genuine inability to pay, such as job loss or medical hardship, is treated differently from someone who simply didn’t bother.
Bankruptcy doesn’t change this calculus. The criminal court keeps full authority over your restitution obligation during and after your case. If anything, showing in a Chapter 13 filing that you have disposable income available could weaken a later claim that you could not afford restitution.
Restitution Compared to Related Debts
People sometimes mix restitution up with other debts that come from the same conduct. The treatment differs:
- Criminal restitution ordered as part of your sentence is nondischargeable in every chapter under Sections 523(a)(7) and 523(a)(13).
- Criminal fines payable to the government are also nondischargeable under Section 523(a)(7).8United States Courts. Discharge in Bankruptcy – Bankruptcy Basics
- A civil judgment a victim wins against you in a separate lawsuit may or may not survive. A judgment based on “willful and malicious injury” is nondischargeable under Section 523(a)(6). A judgment based on ordinary negligence can be dischargeable.1Office of the Law Revision Counsel. 11 U.S.C. 523 – Exceptions to Discharge
Take someone convicted of assault who is ordered to pay $10,000 in restitution and then loses a separate civil suit for $50,000 in pain and suffering. The $10,000 restitution order is untouchable in bankruptcy. The $50,000 civil judgment likely survives too, because assault is typically willful and malicious, but that question requires a separate analysis by the bankruptcy court.