Oh no, you’ve found a parking ticket on your car or a red-light camera took your selfie in an intersection and sent you some fan mail. What happens if you just don’t pay it? Apparently, a lot. I mean, New York City even has an Office of Parking Summons Advocate that assists unrepresented/underrepresented members of the community with parking and camera violation issues. Under COVID guidelines, the time limit for submitting hearing requests and appeals have been suspended; no additional penalties will be added to unpaid tickets on or after March 22, 2020 (though interest continues to accrue on tickets issued before this date).

So, what can actually happen? Late fees, interest on the ticket/fee, installation of a car boot, suspended license, suspended registration, court summons, bench warrant for failure to appear at court summons, and even impounded vehicles.

But what happens if you’ve filed for bankruptcy? Specifically, a Chapter 13 bankruptcy which allows you to retain your property while you pay off your debts over three to five years? Enter Chicago v. Fulton.

The City of Chicago was busy! Many, many vehicles had been seized by Chicago for unpaid parking and red-light tickets. Aside: this was a class-action case and Robbin Fulton, as the named party, served as the class representative (despite no promises for Taco Tuesdays or Pizza Fridays). Establishing and proving a class is a massive undertaking, so if nothing else, that’s a remarkable accomplishment here. Fulton filed for Chapter 13 bankruptcy and Chicago refused to return Fulton’s vehicle. Both the bankruptcy court and Seventh Circuit Court of Appeals found that Chicago was obligated to return the vehicles upon filing for bankruptcy.

The Supremes decide to go in a different direction, instead answering the eternal question that plagues us all and keeps us up at night: “whether an entity violates [the automatic stay] by retaining possession of a debtor’s property after a bankruptcy petition is filed.” Basically, did Chicago take any action to exercise control over the cars after the debtors filed for bankruptcy? The debtors argued yes, Chicago refused to return our vehicles. Chicago argued no, as they simply kept the property they already had. The Court held that “mere retention of property does not violate” the automatic stay. Great. Thanks for answering a question that doesn’t actually answer anything (très Suprême).

Sonia, in true Sonia fashion, points this out:

[T]he Court has not decided whether and when §362(a)’s other provisions may require a creditor to return a debtor’s property . . . Nor has the Court addressed how bankruptcy courts should go about enforcing creditors’ separate obligation to “deliver” estate property to the trustee or debtor under §542(a). The City’s conduct may very well violate one or both of these other provisions. The Court does not decide one way or the other.

We’re diving into the bankruptcy code! §362 is the automatic stay provision. This pauses individual creditor efforts to collect debts; instead, everyone uses the bankruptcy procedures. §542 is the turnover provision. This transfers property to the trustee, disgorging the debtor and any preferential transferees. Under a Chapter 7 bankruptcy, the idea is that the trustee will gather up what they can and then dole out what’s available. Under Chapter 13, the debtor keeps their property and makes payments toward a court-approved repayment plan. Chapter 13 is only available if the debtor has “regular income.” (11 USC § 109(e))

So, hypothetically, what happens if someone needs their car to commute to work in order to maintain their employment to meet the terms of their Chapter 13 repayment plan? Sonia highlights just this type of situation with respondent George Peake:

Before the City seized his car, Peake relied on his 200,000-mile 2007 Lincoln MKZ to travel 45 miles each day from his home on the South Side of Chicago to his job in Joliet, Illinois. In June 2018, when the City impounded Peake’s car for unpaid parking and red-light tickets, the vehicle was worth just around $4,300 (and was already serving as collateral for a roughly $7,300 debt). Without his car, Peake had to pay for rides to Joliet. He filed for bankruptcy, hoping to recover his vehicle and repay his $5,393.27 debt to the City through a Chapter 13 plan. The City, however, refused to return the car until either Peake paid $1,250 upfront or after the court confirmed Peake’s bankruptcy plan. As a result, Peake’s car remained in the City’s possession for months. By denying Peake access to the vehicle he needed to commute to work, the City jeopardized Peake’s ability to make payments to all his creditors, the City included. Surely, Peake’s vehicle would have been more valuable in the hands of its owner than parked in the City’s impound lot.

George drives an older, high mileage vehicle that has already been collateralized. Also, he owes Chicago over $5K… from parking tickets? How? Having bus commuted over 60 miles away, it can take forever and be cost prohibitive without employer/institutional supplementation (thanks, Metro). Hopefully, George was able ride share with a colleague. But what is Chicago even hoping for? George’s car was already collateral for a different debt!

Drivers in low-income communities across the country face similar vicious cycles: A driver is assessed a fine she cannot immediately pay; the balance balloons as late fees accrue; the local government seizes the driver’s vehicle, adding impounding and storage fees to the growing debt; and the driver, now without reliable transportation to and from work, finds it all but impossible to repay her debt and recover her vehicle. Such drivers may turn to Chapter 13 bankruptcy for a “fresh start.” But without their vehicles, many debtors quickly find themselves unable to make their Chapter 13 payments. The cycle thus continues, disproportionately burdening communities of color . . . and interfering not only with debtors’ ability to earn an income and pay their creditors but also with their access to childcare, groceries, medical appointments, and other necessities.

This is the part where we can all express our shock and horror that there is a disparate impact, that racism and white supremacy play a central role. Thankfully, people have already pointed this out in investigative reporting and there are tools available like Do Not Pay and Upsolve that may reduce the barriers to contesting tickets and tackling the administrative procedures. And in typical John Oliver fashion, he talked about this issue IN 2015!