You cannot discharge court-ordered restitution by filing bankruptcy. Federal law blocks it in every chapter, and that has been the settled rule since the Supreme Court decided Kelly v. Robinson in 1986.1Justia US Supreme Court. Kelly v. Robinson, 479 U.S. 36 (1986) Bankruptcy can still be useful if you owe restitution, because wiping out credit cards, medical bills, and other consumer debts frees up income to put toward the restitution balance. The restitution itself, though, comes out of the case untouched.
Why Restitution Survives Bankruptcy
Two sections of the Bankruptcy Code do the work. Section 523(a)(7) bars discharge of any debt that is a fine, penalty, or forfeiture owed to a governmental unit and is not compensation for actual financial loss. In Kelly v. Robinson, the Supreme Court held that criminal restitution falls within this exception because it serves the state’s interest in punishment and rehabilitation, not just the victim’s interest in compensation. That reasoning applies even when the money is paid directly to the victim.2Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
Congress added Section 523(a)(13) in 2005, which explicitly blocks discharge of “any payment of an order of restitution issued under title 18.” That closes any argument about federal restitution orders. State restitution orders remain nondischargeable under the Kelly framework in Section 523(a)(7), and courts have consistently applied it that way.3National Consumer Bankruptcy Rights Center. Criminal Restitution Is Nondischargeable
What Chapter 7 Does and Doesn’t Do
Chapter 7 liquidates non-exempt property, pays creditors from the proceeds, and discharges most remaining unsecured debts, usually within four to six months.4United States Courts. Chapter 7 Bankruptcy Basics Restitution is not part of that discharge. You leave the case still owing the full balance.
The automatic stay that normally halts collection efforts also doesn’t shield you from restitution enforcement. The Bankruptcy Code carves criminal proceedings out of the stay, so the government or the victim can keep collecting on a restitution order even while your case is open.5Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay
The indirect benefit is real, though. If restitution has been competing with credit card balances and medical bills for whatever’s left of your paycheck, eliminating those consumer debts leaves more of your income available for restitution. The restitution amount doesn’t shrink. The competition for your dollars does.
What Chapter 13 Does and Doesn’t Do
Chapter 13 gives you a three- to five-year repayment plan, with monthly payments to a trustee who distributes the funds to creditors. Remaining balances on most unsecured debts get discharged at the end.6United States Courts. Chapter 13 – Bankruptcy Basics Restitution is not among them. Section 1328 states that the Chapter 13 discharge does not apply to any debt for “restitution, or a criminal fine, included in a sentence on the debtor’s conviction of a crime.”7Office of the Law Revision Counsel. 11 USC 1328 – Discharge
What Chapter 13 can do is restructure everything else around the restitution. Credit card debt and personal loans often get paid at a fraction of their face value through the plan, with the rest discharged when the plan ends. The plan itself can include your restitution payments, giving you a structured schedule instead of ad hoc collection. If you were barely keeping up with minimum payments across multiple accounts, that compression can make it possible to stay current on restitution for the first time.
What Keeps Growing While You Don’t Pay
Federal restitution over $2,500 accrues interest automatically unless paid within 15 days of judgment. The rate tracks the one-year Treasury yield for the week before the obligation begins.8Office of the Law Revision Counsel. 18 USC 3612 – Collection of Unpaid Fine or Restitution
Falling behind is expensive. A delinquent balance picks up a 10 percent penalty on the overdue amount. If it goes into default, another 15 percent penalty stacks on top. A $50,000 order in default can grow by $12,500 in penalties before interest is even added.
Federal restitution also operates as a lien against your property with the same force as a federal tax lien, attaching to all property and rights to property from the moment the judgment is entered. The government can garnish wages within the Consumer Credit Protection Act’s limits and seize non-exempt assets. Collection authority runs for 20 years from the judgment or 20 years after release from imprisonment, whichever is later, and if you die before paying, the balance becomes a claim against your estate.9Office of the Law Revision Counsel. 18 USC 3613 – Civil Remedies for Satisfaction of an Unpaid Fine
State restitution orders have their own rules on interest and collection fees, and those vary widely.
How Non-Payment Can Affect Probation or Parole
If restitution is a condition of your probation or supervised release, missing payments can trigger a revocation proceeding. The Supreme Court set a limit on that in Bearden v. Georgia: a court cannot revoke probation solely because you didn’t pay. It has to find that the failure was willful — that you had the resources and chose not to pay, or made no genuine effort to get them. If you truly can’t afford to pay, the court must consider alternatives to imprisonment.10Justia US Supreme Court. Bearden v. Georgia, 461 U.S. 660 (1983)
Filing bankruptcy is itself evidence of financial distress and can support an argument that non-payment isn’t willful. The protection has limits, though. If your income increases after other debts are discharged and you still don’t pay, the inability-to-pay argument gets much weaker. Clearing out competing debts also clears out the excuses.
Related Debts That Also Survive Bankruptcy
If your case involves a DUI or a violent offense, the restitution order is not the only debt that survives. Section 523(a)(9) bars discharge of any debt for death or personal injury caused by operating a vehicle, vessel, or aircraft while intoxicated, which means a separate civil judgment from a DUI crash is also nondischargeable.2Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge Section 523(a)(6) does the same for debts arising from willful and malicious injury to another person or their property, which reaches civil judgments from assault, arson, and similar intentional acts. Someone facing both a restitution order and a civil suit from the same conduct may find the total nondischargeable exposure is much larger than the restitution alone.
The Real Path to Relief: The Sentencing Court
Because bankruptcy cannot reduce restitution, the court that imposed the order is the only realistic place to seek relief. Sentencing courts can modify payment schedules when circumstances change: a job loss, a serious illness, or other genuine hardship can support reducing monthly payments or suspending them for a period.
Federal courts have explicit authority to waive or limit interest when a defendant cannot afford it. The court can eliminate the interest requirement, cap total interest at a fixed dollar amount, or limit how long interest accrues. You have to go back to the sentencing court and demonstrate the inability to pay.11United States Courts. 18 U.S.C.A. 3612, Post Judgment Interest Rates Many state courts have similar discretion over payment schedules.
Documentation carries these requests: bank statements, pay stubs, a list of monthly expenses, and evidence of the setback. Courts respond better to defendants with a payment history who hit a genuine change in circumstances than to defendants who never made an effort.
Bankruptcy filings can actually strengthen a modification request. The schedules give the criminal court a detailed picture of your income, assets, and obligations, and the filing itself shows the situation is serious enough for judicial intervention. Some defendants run both tracks in parallel — filing bankruptcy to eliminate consumer debts, then petitioning the sentencing court to adjust the restitution schedule to fit the post-bankruptcy budget.