Court Fines: What You Need to Know
In this section, we will define the different types of court fines, the consequences of getting a court fine, and the consequences if one does not pay their court fine. All of which can eventually lead to that court fine going to collections.
We define court fines as a penalty assessed by the court. Court fines can fall into two categories: monetary penalties associated with a civil or criminal conviction, and, monetary penalties assessed against attorneys and/or their clients for violating court rules or procedures during a litigation in the court at issue (such as violating the rules of civil procedure in a civil court, or the rules of criminal procedure in a criminal court).
Moving violations or other types of tickets issued by police officers are often referred to as "court fines." These court fines are considered criminal court fines, and in some cases, "non-criminal" moving violations (such as a non-moving violation for parking or driving without a license) can also be considered a court fine. Depending on the nature of the ticket, the jurisdiction that issued the ticket, and whether the violation is a criminal or civil violation, tickets may include other kinds of fines and penalties. Such as, surcharges (i.e . , additional amounts paid by a defendant for violations of a statute or ordinance), costs (i.e., all expenses incurred by the court in the action and taxed as costs against the losing party as permitted by law), penalties (i.e., a sum of money paid for violating a statute or ordinance).
Civil – There are a myriad of court fines that apply to both parties in a civil case; fines can be assessed against plaintiffs for failure to comply with the rules of civil procedure, defendants for failure to comply with discovery, and even attorneys for failure to comply with rules regarding filing, or making frivolous filings with the court. These civil court fines are typically referred to as sanctions. Sanctions penalize a party or their attorney, and are included in the cost recoveries a party can recover from the other party to a civil action.
Criminal – If a criminal defendant fails to pay a court fine assessed against them, arrest warrants, bench warrants, or holds can be issued. Many jurisdictions have programs in which if a defendant serves time in jail, and pays the outstanding court fines owed, the defendant can earn time off of their jail sentence for each amount of money the defendant pays directly toward their court fine.
Court Fine Collections: How It Works
Once the fine is imposed, the court will notify the defendant of his or her obligation to pay. This is generally done via a form account statement, with the payment amount and date due listed. If the fine is not immediately paid, the defendant is generally given some time to comply, such as within 30 days. If this fails to happen an internal mechanism is triggered: an administrative collection process begins. The court typically adopts a policy that collections are pursued only where the amounts due exceed a certain threshold, such as $25. However, in the case of repeated repeat offenders, this is likely to still be in effect in most courts. At this stage, the collection process generally involves notices being sent to the defendant advising of the past due payment. In addition, the administrative court monetary sanction policy may explicitly advise that upon referral to the collections agency, collections will be sought in the full amount of the monetary sanctions plus additional fees to the extent they exist. Penalties, costs, and other fees usually become part of the monetary sanction. Only in some cases are they separate. After the notices go out, the court may assign the account to a third-party collections agency. This can be a private collection agency, the Attorney General’s Office, or the court’s own collection division. This is when the collection process shifts from the court to the pre-litigation collection agency. Notice of the transfer is usually made with letters sent to the defendant by the collection agency at the address on file with the court. The third-party collection agency usually contacts the defendant in order to arrange for payment and to assess the defendant’s ability to pay. The agency may contact the defendant several times before the account is marked as non-payable, or they may place another judgment in litigation. The agency may also refer the matter back to the court for direct handling. There is an important distinction between the private and public debt collection process. In the private scenario, the agency handles all of the usable information obtained from the court directly. In the public scenario, the agency handles all usable information obtained from the court indirectly. Many courts have internal divisions to handle these cases. As such, although there is more of a direct relationship with the collection agency, there is less of a direct relationship with the actual defendant. There is a difference depending on the court system on how the collection agency seeks to obtain compliance. Some agencies file suits on behalf of the court system, while others may engage in garnishment, levies, and even an execution order. In some cases, the collection agency is used strictly to seek payment, and are not utilized for litigated accounts. Most recovery efforts by most collection agencies do not end in litigation, and relatively few court collection accounts end up being put into active litigation. However, while filing lawsuits is largely rare, it does occur from time to time. Generally speaking, if a suit is filed on the account, it may be filed in either the circuit or district court having venue over the county where the collection agency is based. Although cases vary by the court system, typically, entry of judgment may include a negative flag against the debtor’s credit history. This is not the same as a negative mark against the defendant’s criminal record.
Collecting Court Fines: What It Means for You
Your credit score can be impacted negatively by having your court fines being sent to collections. The influence it can have on your credit report depends on the type of violation as well. If your fines are sent to state level collections, the risk of affecting your credit is minimal. The agency collecting the fines do not report to the three credit bureaus (TransUnion, Experian, and Equifax), due to state privacy rules and regulations. Oftentimes, the statutes of limitations will prevent the agency from pursuing you to collect on the amounts owed if several years go by (sometimes as short as just 1 year). When you pay the fines directly to the state, or enter a Payment Plan where your monthly payments are sent to the state, these accounts will not be noted as negative information on your credit report, so no harm will be done to your credit score.
If you fail to pay your fines and they are sent to the local collection agency (which is contracted with the municipality or county), those fines will show up as negative information on your credit report beginning in the next reporting cycle. Many of these smaller local agencies purchase these accounts at a discount from the municipality or county, then send a notice to the account owner demanding immediate payment. You may only get one of these notices before the account is reported as a bad debt. Even if you pay it promptly thereafter, it will still show up as having been delinquent. There will be no showing on your credit report that the account was paid as agreed.
These smaller collection agencies may or may not report to all three credit bureaus. Additionally, they sometimes share information between them with other collection agencies such as CAI, AFNI, Convergent and Palladian to name a few. Sometimes these agencies have the same address or phone number, or even the same person answering the phone at different companies, so you may not even know you are dealing with multiple collection agencies. It does not matter how many reports of a credit inquiry you may receive if those reports all show a negative account. Even more troubling is when these small collection agencies wait until after you have paid the account, or after you have entered into a Payment Plan to pay the account, and report the information to the credit bureaus. You will have only one negative account reported, but it will show a collection account with multiple collection agencies. This may be a source of confusion and frustration if you try to explain to a mortgage company or car dealer why you have multiple collection accounts on your credit report when you know only one account has been reported to the credit bureaus. They will likely not believe you and assume you just have not paid on other past due accounts as well.
You also need to know that many local collection agencies assess an additional fee of 10% of the balance owed to them, in addition to the amount owed to the original creditor. This means that you may owe a bigger sum to the collection agency than originally owed. When they send a demand letter for payment, they will add the "collection fee" to the total owed. This should be shown on the demand letter, but not always. Regardless, you are not obligated to pay this amount. Even though the municipality or county contracted with the local collection agency to collect the accounts, the collection agency will not sue you for the amount owed to them or attempt to garnish your salary for payment. Many times, even without the legal ability to tap wages, many of these smaller local collection agencies will threaten their clients with law suits, often hoping that telling one client will encourage other clients to pay in fear of a law suit. More often than not though, these small collection agencies will send these accounts back to the municipality or county for collections. Some municipalities and counties charge back the fees assessed by their collection agents, but the bulk of the money is kept by the collection agent.
Conversely, the larger collection agencies do report to the three major credit bureaus. Those reports will show up as negative information on the credit report, and remain there for 7 years plus 180 days after the latest activity on that account. You can recover from this negative information by paying it, but you will still have to wait for 7 years plus 180 days after the last payment to clean your credit report. These larger collection agencies also have the ability to sue you for payment and can garnish your wages for amounts owed. If the municipal court or division of motor vehicles sends your fines to one of these larger collection agencies, you can be assured that the fines will be included in your credit report. It is definitely better to deal with the fines right away upon receipt of the Notice so that you can pay directly to the state and avoid any negative outcome on your credit report. We achieve great results in the case of overages where the clients bring the case to us before they default on their license suspension. We often get the overage referred to the state before the suspension ever takes place. Unfortunately in some cases we cannot get the overage paid and permitted to go through because the State simply refuses to accept partial payments in certain situations.
Your Rights and Obligations
When a defendant’s court-ordered fines, restitution, or fees go to collection, even though the underlying case was civil in nature and the debt was not dischargeable in bankruptcy, the debt is now being taken as though it were criminal in nature, and thus dischargeable in bankruptcy. If a collection company comes knocking on your door with a judgment in hand for a court ordered fee or fine, they are coming in the wrong door. Court orders are not subject to judgments.
This action has an adverse effect on defendants where, in the civil context of a divorce, the collection of unpaid attorney fees is being treated as though it were criminal fines. There is supposed to be a firewall between criminal and civil actions, and a separation of power between the courts and administrative agencies that cannot be breached. Federal case law has found that agency debt is subject to judgments only if the debt is supported by a statutory basis. The mere enforcement by an agency does not make its fines or fees subject to a judgment.
Suffice it to say, it seems unfair that an agency can receive a court order for payment, and then assert a judgment for more than ordered by the court due to the addition of interest and/or penalties and fees, especially when an individual’s license is at risk of suspension. This raises the question whether the current method of relying upon a debt collector for enforcement of unpaid debts against individuals while subject to bankruptcy is enforceable.
For example, an individual was ordered to pay a domestic violence attorney fee as part of a divorce action in Family Court. The individual failed to pay the fee. Six months after entry of the fee award, the Human Services Department (HSD) came calling, asserting that the court order was now treated as a judgment and therefore subject to interest, penalties and fees. Not only that, but the HSD can now suspend the individual’s driver’s license, professional license and/or suspended for nonpayment of child support . The statutory basis for the agency’s power to do so lacks any reference to whether the amount owed was a fee, fine, or for some other purpose. In fact, in order to provide an effective incentive for an obligor to voluntarily comply with his/her obligations for support, and to protect the best interests of children, pursuant to statute, the Secretary of Human Services has the authority to implement the provisions set out in 6.10.113.11 NMAC and throughout the statutory authority. This statute does not mention how the agency can enforce a support order. There is no mention of an agency’s ability to use a judgment. There is no mention of what happens if the person is actually unable to pay.
The basic legal framework established by the Bankruptcy Code provides that, generally, any attempt to "collect" a debt from a debtor in or out of bankruptcy violates the automatic stay. See 11 U.S.C. § 362(a)(6). As such, and even outside the bankruptcy context, the defendant may have rights to do the following:
The question is: What are the rights of individuals whose court ordered fines, restitution, or fees went to collection? The law makes no distinction among the different sources of court-ordered unpaid financial liabilities, placing all categories of creditor debt under the same general collection rules. In fact, the agency practice finds precedent in cases involving the collection of parking tickets (Settenbrino v. Carlson, 293 So.2d 439). This appears to be unjust enrichment in the purest sense.
For an indigent defendant, the inability to pay must be established before the order can be enforced in any way by DMV, HSD, etc. Inquire whether the person’s treatment in the system takes into account the individual’s inability to pay and whether indigency exemptions are available. Is there a minimum amount owed before suspension of license can proceed? What are the minimum requirements for the imposition of interest, penalties, and fees?
How to Get Out of Court Fine Collections
In certain cases the best option is to attempt to negotiate a payment plan with the government. This is especially true for small amounts — where it might be possible for the individual to pay the entire amount over a short time period (through a monthly plan for instance). In other instances, where there are very large amounts due, the government will only agree to consider reducing the amount owed — or entering into a repayment plan — over much longer periods of time. Remember that, despite the collection agency’s confusion tactics, the government itself will not determine whether a wage garnishment is the best option. The best strategy typically is to work out a repayment plan that avoids the need to have past due amounts deducted from a paycheck.
Individuals should not presume that the government will not accept a reduced amount for a debt. There are clearly economic rationales for why a government may prefer to accept a $5,000 payment in one year rather than have a 10-year repayment plan to recover the full amount owed. The individual should ask the representative from the government for permission to make an offer to reduce the amount owed. This must be in writing.
Another way for individuals to resolve this issue is to hire a lawyer to help craft a plan that avoids the obligation to pay in full. This can impact both the federal and state governments, since both agencies have substantial powers of collection. An experienced tax attorney can, for example, prepare an offer in compromise with a sizable discount on the amount owed. A significant amount of debt can be eliminated even with the most conservative estimate of the individual assets and earnings potential.
Avoiding Court Fine Collections in the Future
The best way to ensure that the court fines you are struggling to pay from the past are not joining them in collections is to make sure you never miss a fine payment in the first place. Here are some tips for doing just that: Find out when and how much your payments are due. The best way to ensure you don’t commit the worst of all errors — missing a fine payment and sending it to collections — is to know when and how much is due. When you pay your court fine (or even before), ask court staff for information about how often fines are paid. Generally, criminal courts require monthly payments, unless you get an agreement like drug court treatment whereby you could be required to make fine payments weekly. But even if you were told monthly payments are due, double check. Most courts have an automated payment reminder system you can sign up for by phone or email. You must meet deadlines, be on time with payments and avoid missing payments.
Keep accurate financial records. If you have been reporting to a probation department, you are already used to giving your income information. But now is a good time to review that information and see how much you can afford to pay each month in criminal court fines and costs. But don’t get too carried away with how much you can pay. If you think you can make a $200 payment, double check that amount. Compare it against your bills and what you have left over after you make those payments. If you are short that amount, report that to the court or the collection department.
Be sure to get a receipt and keep it with your other financial records . If the court is not keeping your payment history, you should. Keep them in your bank account register, with your pay stubs.
Resist the urge to take on new debts. If you are behind on child support or mortgage payments, catching up on those bills should be your goal. The best way to avoid future problems with not paying your criminal court fines and costs is to get on top of those current bills. If you cannot make all your bill payments every month, consider approaching the creditors individually to resolve the re-payment issue.
Stay up to date on what to pay. Be sure to check your court paperwork and financial records before you leave the courthouse and compare those to the payment requirements. You may think you know what you owe, but a mistake by the court staff in the past has left some people in payment limbo, and others in collections.
Stay aware of the circumstances for any fines in drug court, for instance, where any missed payments will still trigger criminal court fines and costs. What happens to the money you owe to the various courts in your county? If you are in Centralized Court Payments, the answer could be a little complicated.
If you have jobs that require you to drive as part of your duties, be sure to reinstate your license if the court placed you under suspension after a failure to pay criminal court fines and costs. If you’re not sure if the suspension is over, check with your state Department of Licensing Representatives to let them help you find out. That way, you do not miss any payments if you cannot work due to not having a valid driver’s license.
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