Bankruptcy Court Allows Prisoner to Discharge Incarceration Expenses

by San Antonio Attorney

A prisoner locked up in Minnesota because of several criminal convictions can discharge the expenses of his incarceration in a Chapter 7 bankruptcy case.

On Sept. 22, U.S. Bankruptcy Judge Anita Louise Shodeen ruled that incarceration expenses can be discharged through Section 523(a) (7) of the U.S. Bankruptcy Code.

The Bankruptcy Code prevents elimination of a debt for a forfeiture, penalty or fine payable to the government except if it is pecuniary in nature, according to Shodeen.  The costs of incarceration are not considered as a penalty or fine, were not court ordered, and were not part of the condition of Jacob Jerome Milan’s sentence, according to the court.

When Milan filed for bankruptcy, he listed his incarceration expenses as an unsecured debt.

The County of Dakota filed a separate lawsuit to prevent Milan from discharging the $3,500 debt.

But the bankruptcy court concluded that such expenses failed to satisfy the statutory requirements to be exempt from discharge.  The County of Dakota filed an appeal for the decision of the bankruptcy court.

The court said the debt was not a monetary penalty serving as a punishment to Milan that is why it cannot be exempted from discharge.

The court also said the objective of the incarceration billing is to let Dakota County recover some of the costs of accommodating prisoners.  The obvious intention for the incarceration expenses is inherently financial and not punishment, the court said. Consequently, they are dischargeable in bankruptcy, the court said.

In a recent case in California, a mother who filed for bankruptcy was able to eliminate a debt she incurred due to the juvenile detention of her son.

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