How court fines are treated for debt relief orders

A fine is a financial penalty imposed by the criminal courts for breaking criminal laws. Fines are commonly imposed by the magistrates' court for summary offences. Summary offences are less serious than indictable offences.

The Insolvency Rules 2016,[1], and the Insolvency Act 1986 both use the definition of a fine contained in the Magistrates' Courts Act 1980.[2]

A fine is defined in the Magistrates' Courts Act 1980 as any pecuniary penalty or pecuniary forfeiture or pecuniary compensation payable under a conviction.

The court must make a collection order when a fine is imposed by the magistrates’ court, unless it would be inappropriate to do so.[3]

The collection order provides a breakdown of the balances owed for the:

• fine

• compensation

• victim surcharge

• court costs

The collection order states the terms of payment if they have been set by the court.

The Insolvency Rules confirm that a fine for an offence is an excluded debt.[4]

Where the Magistrates’ court makes an order for the payment of costs, for the purpose of collection and enforcement, these are also payable under a conviction.[5] That means they are an excluded debt.

The magistrates’ court has the power to issue a warrant of control to take control of goods.[6]

The power to take control of goods is only exercisable using the taking control of goods procedure detailed in Schedule 12 Tribunals, Court and Enforcement Act 2007.[7]

Schedule 12 states that regulations may make the provision for the recovery of costs in relation to enforcement.[8]

The enforcement fees do not fall under definition of a fine and should be scheduled as a qualifying debt. This is because the fees are payable to the enforcement agents. They are not sums adjudged to be paid by the court under a conviction.

The enforcement agent to whom the fees are owed is the creditor.

Before the DRO

Any payment made towards a magistrate court fine before the client proceeds with a DRO is not viewed as a preference. This is because only payments to qualifying debts can be viewed as a preference, and the fine is an excluded debt.[9]

During the moratorium period

Monthly payments to pay court fines are an allowable expense. See the DRO A-Z for further details.

The court has the power to remit a fine where there has been a change in circumstances since the fine was imposed.[10] If the fine is remitted, it is written off in full or in part.

A debtor can ask for full remission of the fine if they are on benefit income or have substantial debts.

The decision to reduce or fully remit the fine is at the discretion of the court. There is no guarantee that the application will be successful.

The court can only remit the fine itself. It cannot remit the victim surcharge or any costs associated with the fine.

How to request remittance of the fine

The debtor must request a means hearing before the court can consider remitting the fine. There is no fee for requesting a means hearing or a remittance.

The debtor can request a hearing by writing to the Magistrates’ court clerk at the court that issued the fine. The debtor must prepare a full financial statement and explain their change in circumstance. They must demonstrate that they are not able to meet their essential expenditure and that the situation is unlikely to improve in the foreseeable future.