This article examines the provisions of the U.S. Bankruptcy Code that except fines and penalties from the broad discharge of debts that individuals receive upon completion of a bankruptcy case. In its 1986 decision in Kelly v. Robinson the Supreme Court overrode the plain statutory language of the Code and extended the discharge exception to a restitution debt. The Court justified its action as deference to the interest of states in formulating laws designed to punish, deter, and rehabilitate offenders. In the wake of Kelly v. Robinson, debts characterized as fines, penalties, and restitution are typically non-dischargeable in bankruptcy, regardless of their purpose, as long as they were contained in a sentencing order in a criminal case.

Over the past four decades, the need to fund cash-strapped state and local governments generally, and to pay for mass incarceration specifically, propelled a staggering increase in criminal justice debt. Unlike the state laws to which the Kelly v. Robinson court deferred, today’s revenue-generating fines and fees practices actually undermine public safety by distorting law enforcement priorities. They deter rehabilitation, foster a general distrust of the criminal justice system and disproportionately impact communities of color.

In view of these developments, this article proposals changes to the Bankruptcy Code. First, fines and fees that serve a revenue-generating purpose should be subject to discharge. Second, a time limit should apply to all forms of criminal justice debt. These changes would treat fines and fees more consistently with the standards that were in place for chapter 13 bankruptcy cases until the early 1990s and similar to debts for most federal and state taxes.

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