Failure to pay tolls, fines and penalties associated with an E-ZPass a/k/a/ EZPass account can quickly result in skyrocketing and compounding debts. The majority of EZPass debts are made up of fines and penalties associated with not paying the relatively small underlying toll. These EZPass debts may have resulted as a result of defective EZPass tags, issues with multiple tags charging to an individual's single account, or other reasons beyond an individual's control. Nonetheless, if not addressed in a timely manner, failure to pay or otherwise resolve these EZPass-related debts can result in skyrocketing debts, collection actions, suspended licenses and/or impounding of vehicles.
Bankruptcy may be an option for those unable to resolve their EZPass debt issues. Filing a bankruptcy immediately stays efforts to collect the underlying debt. However, are EZPass debts dischargeable in bankruptcy, or will these debts survive bankruptcy and/or need to be paid off through a Chapter 11 or Chapter 13 plan of reorganization?
Generally most debts are dischargeable in bankruptcy. However, there are exceptions to dischargeability in bankruptcy, and this includes fines and penalties owed to and for the benefit of governmental units, which are non-dischargeable under Section 523(a)(7) of the Bankruptcy Code ("(a) A discharge under section 727.... of this title does not discharge an individual debtor from any debt—(7) to the extent such a 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—"). This includes traffic tickets and other punitive fines owed to and for the benefit of governmental units.
In New Jersey, it is very difficult to argue that EZPass fines and penalties are dischargeable, as they are owed "to and for the benefit of" the New Jersey Turnpike Authority (NJTA), which is a is a state agency, i.e., "a governmental unit", responsible for maintaining the New Jersey Turnpike and the Garden State Parkway. This means that EZPass debts are generally not dischargeable. However, unpaid tolls may consist of partially dischargeable amounts and partially nondischargeable amounts. A portion of a toll that is for actual monetary loss, i.e., the toll itself, if unpaid, may be dischargeable, whereas the portion that is a fine for non-payment, may be non-dischargeable. Further, the dischargeability of a certain EZPass debt may change if you file for Chapter 11 or 13 rather than Chapter 7. Chapter 13 provides for what is sometimes referred to as a “super discharge,” which is more inclusive than the narrower discharge provisions governing Chapter 7 cases.
Overall, it’s worth remembering that filing bankruptcy generally imposes an automatic stay of EZPass collection actions. The protection of bankruptcy is one of the ways to resolve tolls and government fines, and also, allow you to renew your registration and tags. If you are one of the many people struggling with unpaid tolls, fines or penalties, and their consequences, consider scheduling a free consultation with an experienced bankruptcy attorney at Middlebrooks Shapiro, P.C. to explore if bankruptcy may be an option for you. Call (908) 403-9952 to schedule a free initial consultation.