How Does Filing for Bankruptcy Affect New Jersey E-ZPass Debt?

In New Jersey, unpaid E-ZPass tolls are subject to a $5 late fee on its second bill. If the second E-ZPass bill still remains unpaid, drivers are billed a $50 violation fee. These fees are not uncommon to New Jersey drivers. A recently proposed bill in New Jersey (S646) would require the New Jersey Turnpike Authority and South Jersey Transportation Authority to check the E-ZPass database before issuing violations. This bill, sponsored by Senator Declan O’Scanlon, was inspired by his 30 E-ZPass violation notices in the past couple years. Needless to say, many individuals in New Jersey, not just the state senator, have been hit with toll violation fees.

If left unpaid, NJ E-ZPass can result in quite a bit of debt. In some cases, what starts as an unpaid toll cost and late fee – when combined with administrative fees and costs – can compound into thousands of dollars of debt. The consequences of E-ZPass debt are not limited to a financial burden. An E-ZPass debt may also lead to registration suspension or vehicle impoundment. Bankruptcy greatly affects the way E-ZPass fines are resolved and, oftentimes, could result in the elimination of debt.

Bankruptcy greatly affects the way E-ZPass fines are resolved and, oftentimes, could result in the elimination of debt.

Our highly skilled attorneys at Rosenblum Law have helped clients navigate the bankruptcy filing and E-ZPass debt discharge process. This article will provide an overview of how filing for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy affects NJ E-ZPass debt.

What Is Bankruptcy and How Does It Affect NJ E-ZPass Debt?

Bankruptcy is a legal process initiated by individuals or businesses who need assistance managing their debts. For debtors, bankruptcy presents an opportunity to gain a fresh start that is free of burdensome debt. Bankruptcy also provides creditors with the opportunity to be partially or fully paid the total amount due. The U.S. Bankruptcy Code is organized into six chapters which differ based on who (i.e. an individual) or what (i.e. a business) is declaring bankruptcy and whether the entity is completely or partially capable of paying off their debts.

People file for bankruptcy for many different reasons. Oftentimes, people file due to a loss of income, overwhelming medical expenses, foreclosure and/or harassment by debt collectors. Congress created this process with the intention of offering a clean slate and fresh start to individuals who had been carrying burdensome debt. In 2021 alone, 399,269 non-businesses filed for bankruptcy. Needless to say, bankruptcy is a widely used tool to help individuals who have fallen into tough situations.

Bankruptcy greatly affects how E-ZPass debt is managed and can be used as a tool to eliminate E-ZPass debt. In NJ, EZ Pass debt is generally treated as unsecured debt. Unsecured debt refers to a type of debt that does not have a lien attached to property. This means that the debt is not backed by a form of collateral that creditors could seize to pay off the debt. Since E-ZPass debt is classified as unsecured in bankruptcy, there are opportunities available to eliminate this debt when filing for Chapter 7 or Chapter 13 Bankruptcy.

What Does Chapter 7 and 13 Mean for NJ E-ZPass Debt?

Chapter 7 Bankruptcy is referred to as “liquidation” bankruptcy. Many individuals and businesses that are not able to pay existing debts are eligible for this type of bankruptcy filing. A Chapter 7 bankruptcy filing requires debtors to give up assets such as property, which are sold by a trustee. The money produced from these sales is then used to pay certain creditors, subject to the Bankruptcy Code’s rules. Most people filing for Chapter 7 bankruptcy do not have many assets that could be sold to pay their creditors, making it an attractive option for reducing or eliminating their debt.

However, there are specific types of debts, referred to as unsecured debts, that do not require any assets to be sold off in order for them to be eliminated under Chapter 7 Bankruptcy. As noted earlier, NJ E-ZPass debt is regarded as unsecured debt. Therefore, an individual who is entitled to Chapter 7 is also eligible to have their E-ZPass debt eliminated.

Chapter 13 Bankruptcy allows individuals to create a payment plan to repay their debts over the course of 3-5 years without selling off their assets. Under Chapter 13 debt repayment plans, the debtor makes payments to a Chapter 13 trustee who then pays creditors. A Chapter 13 Bankruptcy filing is beneficial because it allows individuals to avoid foreclosure or repossession of property so long as payments are made according to the devised plan.

Similar to Chapter 7, a Chapter 13 Bankruptcy filing also treats E-ZPass debt as unsecured debt. However, whether or not the E-ZPass debt will be eliminated under a Chapter 13 Bankruptcy filing will depend on the full financial picture of the debtor. Factors such as the total debts owed (including E-ZPass debt), income and timeline of the repayment could affect whether E-ZPass debts are included in the repayment plan or if they could be discharged.

What Does Bankruptcy Mean for Suspension or Impoundment?

After an individual with E-ZPass debt files a Chapter 7 or Chapter 13 Bankruptcy, there is an automatic stay (stop) that prevents the New Jersey Turnpike Authority from suspending registration or impounding the vehicle.

If an individual’s registration has already been suspended, the Turnpike Authority must reinstate registration after filing for bankruptcy. However, the Turnpike Authority may lawfully charge the individual with reasonable fees or costs related to the reinstatement of registration.

Why Hire an Attorney?

If you are facing a steep EZPass debt, it’s best not to go it alone. An experienced bankruptcy attorney can help you successfully navigate a bankruptcy filing and E-ZPass debt discharge process. At Rosenblum Law, our attorneys are ready to help with all matters associated with bankruptcy. Contact us today for a no-obligation consultation today.

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