When a citizen declares personal bankruptcy, federal law shields him or her with an “automatic stay” — a mechanism that blocks creditors from trying to collect debts that arose before the bankruptcy filing.
But does an automatic stay mean that a city must rescind an arrest warrant issued against an insolvent person who has failed to pay a municipal fine?
No, according to a July 3 ruling by the 8th U.S. Circuit Bankruptcy Appellate Panel.
“There is a significant difference between staying enforcement of the warrant and recalling or rescinding it in its entirety,” wrote Judge Thomas L. Saladino in the opinion, with which Judges Charles L. Nail Jr. and Kathleen Hvass Sanberg concurred.
“Certainly, recalling the warrant would be the safest route for the City to ensure that it does not cause a violation of the automatic stay,” Saladino continued, “but Appellant has not shown us any compelling authority supporting the proposition that the City is required to do so. Enforcement of the warrant is simply stayed while the automatic stay is in effect.”
The city in this case is the City of Ferguson, which on April 16, 2010 cited Teresa Cedreca Edwards for driving 39 mph in a 25 mph school zone. She failed to appear for her court date, so the municipal judge issued a warrant for her arrest. In 2015, Edwards was finally arrested. She pleaded guilty to speeding in a school zone and agreed to pay a $149 fine.
But she never paid it. In response, a municipal judge reissued the warrant for her arrest and notified the Missouri Department of Revenue of her failure to pay — a communication that, she now argues, has impeded her ability to renew her license.
Edwards filed for bankruptcy in 2016. She listed Ferguson as a creditor and asked the city for a “compliance letter” that would help her to reinstate her driver’s license. A city prosecutor suggested that she direct her request to a municipal judge, who would have the authority to recall the warrant.
Instead, Edwards, who is represented by Michael J. Watton of Watton Law Group in Milwaukee, filed an adversary proceeding against Ferguson. According to the opinion, she alleged that the city violated the automatic stay by refusing to release the warrant. She also alleged that Ferguson was “discriminating against her unfairly due to her bankruptcy filing and is denying her a fresh start.”
Both sides motioned for summary judgment. The bankruptcy court found for the city and against Edwards — and the bankruptcy appellate panel has upheld the lower court’s decision.
“Appellant argues — without factual support — that the failure of the City to recall the warrant will eventually result in her arrest which is an attempt to coerce her to pay the fine,” Saladino wrote in the July 3 opinion. “We have not been presented with any evidence in the record to establish whether that is a true statement. In fact, all we know is that the City has not acted on it. Unlike a garnishment (which will result in wages being withheld unless withdrawn), nothing will happen as a result of an arrest warrant until it is actually enforced.”
Neither side disputes that the automatic stay prohibits the city from arresting Edwards to collect her debt, Saladino wrote. But the automatic stay will be lifted if her bankruptcy results in a dismissal before completion, as many such cases do. In that circumstance, she will not receive a discharge of her debt to Ferguson, and the city has the right to pursue it anew. If it rescinds the warrant now, it will “have to go through additional legal and procedural steps to be in the same position it was in prior to bankruptcy filing.”
As for the compliance letter that Edwards requested, Saldino wrote that “There is nothing in the Bankruptcy Code requiring a municipality to write a letter saying a debtor has paid a fine or otherwise complied with its municipal code when the debtor has not done so.”
Watton, Edwards’ attorney, did not respond to a request for comment. Ferguson’s attorney, Joel O. Christensen of Behr, McCarter & Potter in St. Louis, declined to comment.
The case is In re: Teresa Cedreca Edwards v. The City of Ferguson, 18-6032.