The Supreme Court to Decide Whether Chicago Can Keep Cars Locked Up When Debtors File for Bankruptcy

[ZiprHead]

As our country grapples with an economic recession that has plunged millions of people into financial crisis — with Black and Brown communities hardest hit — the Supreme Court’s ruling on the bankruptcy question raised in Chicago v. Fulton is of critical importance nationwide.

Sandra Botello, an unemployed mother living in Chicago, faced a difficult financial choice — pay $400 in school fees for her son or cover the cost of renewing Chicago’s mandatory vehicle sticker. She paid the school fees, keeping her son’s education moving forward — but within weeks received five $200 tickets for not having a vehicle sticker. Late fees and collection fees caused her debt to balloon to nearly $3000. Chicago impounded Botello’s car for unpaid tickets, charged additional fees for storing her car for 33 days, and ultimately sold the car for scrap, leaving her with thousands of dollars of debt.

Today, the U.S. Supreme Court hears argument in Chicago v. Fulton, a case with profound implications for Botello and millions of others across the country who are buried under mountains of debt from fines and fees they cannot afford to pay to state and local governments. As our country grapples with an economic recession that has plunged millions of people into financial crisis — with Black and Brown communities hardest hit — the Supreme Court’s ruling on the bankruptcy question raised in Fulton is of critical importance nationwide.

 

[Rhea]

I was wondering how this was not constitutional, they explain a little more...



From the article

We argue that Chicago’s practice of keeping cars violates both the plain text of the Bankruptcy Code and Congress’ intent in establishing bankruptcy to give people a fresh start.

Our brief explains that the Bankruptcy Code requires creditors to return estate property to debtors immediately after the filing of a bankruptcy petition because debtors often need that property — like their cars — to earn income and make the payments required for a Chapter 13 bankruptcy plan. Instead of playing by the rules, Chicago seeks to keep cars locked up to coerce debtors into paying Chicago first. This practice causes real harm.

 

[Loren Pechtel]

I was wondering how this was not constitutional, they explain a little more...



From the article

We argue that Chicago’s practice of keeping cars violates both the plain text of the Bankruptcy Code and Congress’ intent in establishing bankruptcy to give people a fresh start.

Our brief explains that the Bankruptcy Code requires creditors to return estate property to debtors immediately after the filing of a bankruptcy petition because debtors often need that property — like their cars — to earn income and make the payments required for a Chapter 13 bankruptcy plan. Instead of playing by the rules, Chicago seeks to keep cars locked up to coerce debtors into paying Chicago first. This practice causes real harm.

And it's illegal besides--creditors are supposed to be on an equal footing in bankruptcy other than in terms of the priority classes defined in law. For each priority class you add up all valid claims and you add up the assets that can be used to pay them. If the assets exceed the claims you pay the claims and go on to the next class. If they don't everyone gets a pro-rated share of the assets. That's it. Paying off one creditor more than another gets the payer in trouble, the state is basically trying to force an illegal action.

Personally, I think fines and the like (but not restitution) should go in the lowest priority class.

 

[RVonse]

I was wondering how this was not constitutional, they explain a little more...



From the article

We argue that Chicago’s practice of keeping cars violates both the plain text of the Bankruptcy Code and Congress’ intent in establishing bankruptcy to give people a fresh start.

Our brief explains that the Bankruptcy Code requires creditors to return estate property to debtors immediately after the filing of a bankruptcy petition because debtors often need that property — like their cars — to earn income and make the payments required for a Chapter 13 bankruptcy plan. Instead of playing by the rules, Chicago seeks to keep cars locked up to coerce debtors into paying Chicago first. This practice causes real harm.

And it's illegal besides--creditors are supposed to be on an equal footing in bankruptcy other than in terms of the priority classes defined in law. For each priority class you add up all valid claims and you add up the assets that can be used to pay them. If the assets exceed the claims you pay the claims and go on to the next class. If they don't everyone gets a pro-rated share of the assets. That's it. Paying off one creditor more than another gets the payer in trouble, the state is basically trying to force an illegal action.

Personally, I think fines and the like (but not restitution) should go in the lowest priority class.

Your argument does have merit but this will certainly be interesting. I will be very surprised if she wins, because like they say...no one can ever beat city hall. We do not follow our constitution and we do not really live in a free society either.

Just look at all the income tax everyone is paying to federal, state and local governments. Our founding documents were clearly against even that kind of tyranny too. Yet we have paid this for so long it feels normal now.

 

[Rhea]

Do that many people pay income tax to local governmnets? I thought it was mostly just state and federal?

 

[Derec]

Do that many people pay income tax to local governmnets? I thought it was mostly just state and federal?

I thought it was local fees like car registration that these people have been in arrears with, not income tax.

Chicago seized the cars of Timothy Shannon and George Peake for unpaid tickets and the car of Robbin Fulton for driving on a license suspended for unpaid tickets. It also charged them thousands of dollars in fees to get their cars back. Unable to pay, each debtor sought a fresh start by filing for Chapter 13 bankruptcy. [...]For example, Fulton needed her car to get to her job, take her preschool age daughter to day care, and care for her elderly parents.

Doesn't that make Fulton's whole argument moot? If if she got her car back, she would not be able to legally drive it.

 

[Arctish]

Chicago seized the cars of Timothy Shannon and George Peake for unpaid tickets and the car of Robbin Fulton for driving on a license suspended for unpaid tickets. It also charged them thousands of dollars in fees to get their cars back. Unable to pay, each debtor sought a fresh start by filing for Chapter 13 bankruptcy. [...]For example, Fulton needed her car to get to her job, take her preschool age daughter to day care, and care for her elderly parents.

Doesn't that make Fulton's whole argument moot? If if she got her car back, she would not be able to legally drive it.

No, it doesn't. The argument against the City holding onto the cars despite the bankruptcy filings is independent of anyone's ability to legally operate them.

And anyway, Fulton might know someone who can drive but doesn't have a car, and they can work out something mutually beneficial if she gets hers back.

 

[Rhea]

And wasn't the point of her bankruptcy filing to take care of, in part, the tickets?

 

[Worldtraveller]

And wasn't the point of her bankruptcy filing to take care of, in part, the tickets?

Technically, the fines, not the tickets directly.

It seems like nitpicking, but it's part and parcel of why the whole injustice system needs to be burned down and rebuilt from scratch with a more equitable system in mind. It's designed to keep poor people poor and to keep feeding the for profit prison system.

 

[Loren Pechtel]

And wasn't the point of her bankruptcy filing to take care of, in part, the tickets?

Technically, the fines, not the tickets directly.

It seems like nitpicking, but it's part and parcel of why the whole injustice system needs to be burned down and rebuilt from scratch with a more equitable system in mind. It's designed to keep poor people poor and to keep feeding the for profit prison system.

It's not designed to. Nobody's trying to throw her in prison, the state is just trying to make their bills high on the priority list of who gets paid when money is short. In this case I think they've gone too far, however.

 

[Rhea]

It seems like nitpicking, but it's part and parcel of why the whole injustice system needs to be burned down and rebuilt from scratch with a more equitable system in mind. It's designed to keep poor people poor and to keep feeding the for profit prison system.

It's not designed to. Nobody's trying to throw her in prison, the state is just trying to make their bills high on the priority list of who gets paid when money is short. In this case I think they've gone too far, however.

It is absolutely designed to. The odds of it being that skewed to harm the poor by accident defies reason.

 

[Trausti]

And wasn't the point of her bankruptcy filing to take care of, in part, the tickets?

Technically, the fines, not the tickets directly.

It seems like nitpicking, but it's part and parcel of why the whole injustice system needs to be burned down and rebuilt from scratch with a more equitable system in mind. It's designed to keep poor people poor and to keep feeding the for profit prison system.

It's not designed to. Nobody's trying to throw her in prison, the state is just trying to make their bills high on the priority list of who gets paid when money is short. In this case I think they've gone too far, however.

Not really. Fines and tickets are not dischargable; that’s why this lady filed for chap 13 (reorganization) and not chap 7 (liquidation). In chap 13 the court approves a repayment plan. The city of Chicago is just an ass.

 

[Loren Pechtel]

It seems like nitpicking, but it's part and parcel of why the whole injustice system needs to be burned down and rebuilt from scratch with a more equitable system in mind. It's designed to keep poor people poor and to keep feeding the for profit prison system.

It's not designed to. Nobody's trying to throw her in prison, the state is just trying to make their bills high on the priority list of who gets paid when money is short. In this case I think they've gone too far, however.

It is absolutely designed to. The odds of it being that skewed to harm the poor by accident defies reason.

Haven't you heard of unintended consequences?

The city isn't trying to hurt the poor, the city is trying to get money and doesn't care about whether they are behaving properly.