Driven into Debt: The Harms of License-for-Payment Programs

Jane Doe, a woman in her 30s with a minimum wage job, gets pulled over for having a busted taillight. The fine for the infraction is $100, and she is expected to pay it off in full within 60 days. The deadline comes but Jane can’t pay, so the state suspends her driver’s license, which means she is unable to get to work. Faced with the choice of driving under suspension and having no income, she continues to drive so she can get to work. She is eventually pulled over two additional times for relatively minor infractions. This results in a 10-day jail sentence and even more court costs, along with the threat of losing her job.

For many people, driving is a necessity, not a luxury. A significant number of people in this country live in a place where their car is the only truly viable way of getting around. According to the Department of Transportation, more than three-quarters of workers get to their job by car.

Given this, losing the right to drive for small offenses seems like an extremely heavy penalty. Keep in mind, we are not suggesting that someone with a serious offense like driving under the influence (DUI)—or any other violation that could seriously compromise public safety—should be let off the hook. But the situation is different with relatively common, garden variety traffic tickets.

This is particularly the case when the driver in question is low-income and much less able to pay off fines while also meeting basic living expenses. If a person loses their means to get to work, it makes it even harder to earn enough money to pay off those fines. Yet in most states, this is allowed. According to the Legal Aid Justice Center (LAJC), 43 states and the District of Columbia will suspend a person’s driver’s license for failure to pay court debt. Moreover, in several states, eligible debt is not limited to traffic violations. Fourteen states will suspend a license for unpaid traffic fines as well as other forms of criminal court debt.

This means a person could lose their license—not because they are a dangerous driver—but to induce payment for comparatively minor traffic violations or unrelated debt. The Department of Justice has expressed concerns over the impact of prioritizing revenue over public safety.

The LAJC also found that in virtually all the jurisdictions with these license-for-payment schemes, the suspensions are indefinite, meaning the person is not allowed to drive until the debt is paid off or the length of time given to collect the debt (the statute of limitations) passes, which often takes years.

Solutions to this problem include allowing low-income households who have difficulty paying to apply for a fee waiver, allowing fines and fees to be substituted with community service and ending the suspension of licenses in these situations. Several states have recently pursued a version of this last option, including Hawaii, Mississippi and Virginia, though the feasibility of passing such bills remains to be seen.

Another proposal is having the court determine a person’s ability to repay (ATR) during a type of “willfulness” hearing. Many lending industries already use this as part of their loan underwriting process, and Prosperity Now has discussed the importance of bringing ATR into the payday lending market many times. The basic idea behind ATR would apply to court debt. Essentially, the court would have to tailor the length of time it takes to pay off debt and amount of installment payments to a person’s financial circumstances (whether they can still pay for basic living expenses, etc).

Ideally, courts should be given multiple tools to determine what is an appropriate penalty without causing undue or irreversible hardship on a person. States can enact legislation that would combine many features like ATR, community service substitutions and putting restrictions on when a license could be suspended for a non-driving offense into law, giving some discretion to courts to avoid financial harm. A bill introduced in Florida (SB 734) provided the most recent example of what such legislation would look like, proposing several of these solutions as a means to reforming the state’s penalties and fees practices.

Punishing a person for unpaid debts by revoking their only means of getting to work and earning enough money to pay off those debts is simply illogical at best and a painful, self-reinforcing debt trap at worst. States must embrace alternative policy solutions that ensure an individual, especially a low-income individual, isn’t punished multiple times for the same infraction or used as a means for extracting revenues from the indigent.

Policymakers should support common-sense, fair legislation that allows drivers to pay what they owe for their infractions while not shackling them with a lifetime of debt. We will continue to monitor these license-for-payment programs—particularly at the state and local levels—and will reach out when the time comes with opportunities to advocate for policies that help support the financial security of working families. In the meantime, check out LAJC’s Drive Down the Debt initiative for more information, and keep an eye out for the latest state bills to reform these practices on our State Priorities Bill Tracker.  

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