Criminal Proceedings not subject to Bankruptcy Automatic Stay

Courts generally find that the automatic stay does not halt criminal contempt proceedings to punish the debtor for contumacious conduct; orders to pay criminal restitution to the victim of a crime; or issuance of summonses, determination of guilt and imposition of fines in connection with traffic citations.

If, however, they are merely disguised debt collection actions, a few courts find either that they are stayed by §362 and/or that they may be enjoined under §105. Most courts disagree, holding that, even if the effect of the prosecution is to collect the debt, the action is still criminal and not subject to the stay. Such courts generally conclude that the prosecutor’s independent judgment as to whether or not to pursue the matter precludes the action from being treated as that of the private creditor.

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