In Illinois, when you file for bankruptcy, the tollway authority is usually listed in Schedule E as a priority debt. The reason behind this is that in a Chapter 7 Bankruptcy fines and penalties are generally not discharged. However, with Tollway Authority, the policy of the tollway is that all of the late charges, penalties and other non-toll charges are removed. However, you still owe the tolls. Bottom line - your IPASS will not be re-enabled for regular use until the tolls are paid.
Debtor files a Chapter 7 Bankruptcy in Illinois. Debtor lists a $930 debt to the Illinois Tollway Authority. Most of the debt is late payments, fines and penalties. About one month after filing, Illinois Tollway Authority sends bill to debtor asking him to pay $110.00 for unpaid tolls. Upon payment of the tolls, the remainder of the debt which is fines and penalties is wiped off of the account and the IPASS is reset for regular use.
So why does this happen - even though the bankruptcy act no longer discharges fines and penalties, the tollway has its own internal procedure whereby they have elected to write off these debts upon a debtor's filing of Chapter 7. So why does the debtor have to pay the toll? Because it is a debt to a government entity that is in the nature of tax. This obligation is generally not discharged unless it is over 3 years old. Usually most tollway tolls are less than 3 years old. In practically, your IPASS will not be reset until you pay the tolls.
This is one of those areas where bankruptcy law and internal procedures mesh to form an odd result that in general is good for debtors. Social Security, Unemployment and other types of benefit overpayments have a similar treatment and are often treated in a similar fashion. I will take up these issues in another blog.
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