In the State of California, if you are in an automobile accident and you were at fault and you did not have enough insurance to cover all damages you caused, you will likely lose your driver license. Why? Well, the State of California has what is called a Financial Responsibility Law. The law provides that if you were at fault in an automobile accident you are responsible for all damages. If you have insurance to cover the damages, then your license is safe. But if you either did not have insurance or your insurance coverage was not enough to cover all damages you caused, you will likely lose your license.
If you had insufficient insurance, the person you injured will get a lawyer and the lawyer will sue you. If you were at fault, that person will likely get a judgment against you (unless he or she had a really bad lawyer). If you don’t pay that judgment within 30 days, the person who got the judgment against you goes to the California Department of Motor Vehicles, also known as the DMV, and has the DMV issue you a DL 30 license suspension until such time as you pay the judgment in complete.
You don’t have to be drunk. You don’t have to be driving recklessly. If you were driving, sober and with utmost care, and you get into an accident that is your fault and you don’t have enough insurance to cover damages you cause to another person, you can get a DL30 license suspension. Not only your license, but also the license of the owner of the car can be suspended.
In effect, California’s Financial Responsibility Laws force you to pay a judgment caused from an at-fault accident or else you won’t be able to excursion. What about if you need to excursion and cannot provide to pay the judgment? Do you have to ride the bus?
Fortunately, the federal bankruptcy laws provide you with a cure of relief. Will bankruptcy reinstate a DL30 suspension? Yes it will. If you have received a DL 30 license suspension, you can file bankruptcy on the judgment and then there is no more basis for the DL 30 license suspension.
In the past, some state DMV’s have attempted to enforce DL-30 license suspensions already after a bankruptcy. You no longer have to worry about that. The United States Supreme Court has squarely laid that issue to rest, holding that a state may not enforce a DL30 license suspension based on an unsatisfied judgment after a bankruptcy. To do otherwise would frustrate the purpose and spirit of the bankruptcy laws, which is to eliminate debt (including judgment debts) so you can have a fresh financial start.