Impounds No Longer Retrievable through Bankruptcy

January 5, 2018

By Associate Attorney Jennifer Filipiak

In the past, Chapter 13 debtors whose cars were in an impound lot due to parking tickets were able to retrieve their vehicles with no money paid up front to the City of Chicago. However, as of this year, the City has filed numerous cases in the bankruptcy court challenging this common practice – and the City has been successful in convincing the court.

Before these challenges, a debtor could include all past due parking tickets, fines, and impound fees in their bankruptcy. Once the case was filed, the City was required to return the debtor’s vehicle with no money paid. If, for some reason, a debtor’s bankruptcy case was dismissed, and the car ended up in the impound lot again, the debtor need only file another bankruptcy. And the cycle continued in this manner until either the debtor’s Chapter 13 case was concluded and discharged or until the debtor finally gave up possession of the vehicle.

Due to recent successes in the bankruptcy court, the City can now keep a debtor’s vehicle, even if they have filed a bankruptcy and included all parking tickets and fines in the plan. The only way to retrieve the vehicle is usually to set up a payment plan with the City of fifty percent up front and monthly payments due thereafter.

For debtors who live paycheck to paycheck, this policy change could lead to some extremely harsh results. Some may lose jobs due to unreliable transportation. Others will see cars repossessed to keep them from being crushed by the impounders. Repossessions will negatively affect credit reports and drag down credit scores, preventing some people from attaining financing for a new car in the future. "The attorneys at Illinois Advocates can offer insight to whether bankruptcy is a good decision for you based on your circumstances," said Joseph Coli, Partner at Illinois Advocates.

None of these situations are positive for people in already difficult financial situations, who most likely would not have considered bankruptcy if they had been able to afford the debts to the City of Chicago in the first place. So, in order to avoid such dire results, get advice from a bankruptcy attorney well before your vehicle ends up on the City’s boot list.

If you are considering filing for bankruptcy, or would like some more information, call Illinois Advocates today.

Illinois Advocates
77 W. Washington St.
Suite 2120
Chicago, IL 60602

Phone: 312-818-6700
Fax: 312-492-4804