Can Tolls Be Included in Bankruptcies? (2026 Legal Guide for Drivers)

Quick Answer: Yes, toll debts can be included in bankruptcy. But whether they actually get wiped out depends on which chapter you file, how the debt is classified, and which state you live in.

Toll debt has become a serious financial problem for millions of American drivers in 2026. The rise of all-electronic tolling (AET) and congestion pricing means it has never been easier to unknowingly build up a large balance. In some states, fees and penalties now make up over 90% of the total amount owed, even though the original toll charge was just a few dollars.

The good news is that bankruptcy law gives you real tools to address this. The strategy you use matters enormously though. Read on to understand exactly how toll debt works inside a bankruptcy case, and what outcome you can realistically expect.

Understanding Toll Debt: What You Actually Owe

Not all toll debt is the same. Courts treat different parts of your total balance in completely different ways. Before you file anything, you need to know what your debt is actually made up of.

Toll debt typically falls into these categories:

• Base toll: The original fee for using the road, bridge, or tunnel.
• Administrative fees: Charges added when you miss a payment deadline.
• Civil penalties: Larger amounts added after extended non-payment.
• Court fines: Assessed if your state escalated the matter to a legal proceeding.
• Collection agency fees: Added when your account is referred to a third-party collector.

Why does this matter so much? Because base tolls are generally dischargeable in bankruptcy, while penalties and fines may not be. The law draws a firm line between money owed as compensation for using a road, and money owed as punishment for not paying.

The Law Behind Toll Debt Dischargeability

The key legal question in every toll bankruptcy case comes down to one section of the Bankruptcy Code. Understanding it will help you predict your outcome before you file.

What Does 11 U.S.C. Section 523(a)(7) Actually Say?

Under 11 U.S.C. Section 523(a)(7), a debt cannot be discharged if it is:

• A fine, penalty, or forfeiture
• Payable to and for the benefit of a governmental unit
• Not compensation for actual financial loss

This creates a split. The base toll represents real compensation for the government providing a road. Courts treat it as dischargeable unsecured debt. The penalty portion, designed to punish and deter non-payment, falls under this exception and often survives bankruptcy.

The Three-Year Exception Rule

There is an important but little-known provision inside Section 523(a)(7)(B). Penalties that are tax-related in nature may be dischargeable if the event giving rise to the penalty happened more than three years before you filed for bankruptcy.

If a skilled attorney can argue that a toll surcharge functions like a tax-related assessment, this three-year rule could open a path to discharging even some penalty amounts in Chapter 7. It requires strong legal reasoning, but it is a real strategy worth exploring.

Chapter 7 vs. Chapter 13: Which One Actually Helps You?

The bankruptcy chapter you choose has a massive impact on how much toll debt you can eliminate. These two options work in fundamentally different ways, and for toll debtors in 2026, Chapter 13 is often the stronger choice.

The Problem With Chapter 7 for Toll Debtors

Chapter 7 is the fast track. Most cases wrap up in under six months, and qualifying unsecured debts get wiped out entirely. The catch? Punitive penalties issued by a government tolling authority typically survive the Chapter 7 discharge.

For a driver where 90% of their toll balance is fees and penalties, Chapter 7 may only eliminate a small fraction of what they owe. Worse, the surviving penalties can still trigger license suspension or registration holds even after the bankruptcy closes.

Why Chapter 13 Is Often the Better Option

Chapter 13 offers something called the super discharge. Under Section 1328(a) of the Bankruptcy Code, certain debts that cannot be discharged in Chapter 7 become dischargeable after you successfully complete a Chapter 13 repayment plan.

This includes most governmental toll penalties that do not arise from fraud or criminal restitution. The tolling agency gets treated as an unsecured creditor. You pay what you can afford over three to five years. At the end of the plan, the remaining balance on those penalties is discharged.

According to Upsolve.org, this makes Chapter 13 the most effective route for drivers facing large accumulated fines from agencies like the North Texas Tollway Authority or the Metropolitan Transportation Commission.

The Automatic Stay: Your Immediate Protection

The moment you file a bankruptcy petition, a powerful legal protection kicks in automatically. This protection, called the automatic stay, is often the most urgent reason drivers file in the first place.

Under 11 U.S.C. Section 362, the automatic stay immediately stops:

• All collection calls and letters
• Wage garnishments
• New civil enforcement actions
• License suspension enforcement by state agencies
• Registration holds placed by toll authorities

For drivers, this is life changing. If your license was suspended because of unpaid toll penalties, the automatic stay requires the agency to freeze that enforcement action.

License Reinstatement Under Chapter 13

In a Chapter 13 case specifically, most jurisdictions allow for the immediate reinstatement of your driving privileges once the court confirms your repayment plan. This is one of the biggest practical advantages of Chapter 13 over Chapter 7.

Getting your license back means you can keep working. Keeping your income means you can fund the bankruptcy plan. It creates a workable cycle that the 2026 legal system increasingly recognizes and supports.

Important 2025 Case Law: Fantasia v. Diodato

A 2025 Ninth Circuit ruling in Fantasia v. Diodato clarified that a court’s decision to reimpose a previously lifted automatic stay is immediately appealable. This puts tolling agencies under real-time pressure.

If an agency successfully lifts the stay to pursue a state court judgment, and the court later overturns that decision, the agency has only 14 days to appeal or they lose their window entirely. Having skilled legal representation monitoring this process is essential.

Private Toll Roads: A Major Advantage for Drivers

One of the most underused strategies in 2026 toll bankruptcy cases involves knowing who actually owns the road you drove on. This distinction can completely change your outcome in Chapter 7.

Section 523(a)(7) only protects debts owed to a governmental unit. Private companies do not get this protection. A growing number of toll roads in the United States are operated by private entities under long-term concession agreements.

If your toll debt was incurred on a privately operated road, your attorney may be able to argue that both the base tolls and the penalties are fully dischargeable in Chapter 7. This is a significant strategic opportunity that most drivers never think to raise.

State by State: How Your Location Shapes Your Outcome

Federal bankruptcy law sets the framework, but state rules have an enormous influence on what actually happens to your toll debt. Where you live may be the single most important factor in your case.

Northeast: New Jersey and Massachusetts

In New Jersey, the prevailing legal approach in bankruptcy courts is to treat E-ZPass debt as general unsecured debt. According to Manchel New Jersey Bankruptcy Law, this means Chapter 7 filers can eliminate the debt entirely as long as there is no evidence of fraud. If the state already obtained a judgment lien, a separate motion to avoid the lien may be needed to protect your home equity.

Massachusetts made a landmark change with the 2026 Road to Opportunity Act. The law ended the practice of suspending licenses for non-safety related debts including toll fees. As the ACLU of Massachusetts reports, this removes much of the desperation that used to push drivers into bankruptcy purely to keep their licenses.

West Coast: California

California’s FasTrak system is integrated with both the DMV and the Franchise Tax Board. The FTB can intercept tax refunds for unpaid tolls. However, AB 2746 has significantly limited the DMV’s power to suspend licenses for financial debts.

Bay Area practitioners report that FasTrak fees are routinely discharged in bankruptcy. Agencies often choose not to fight discharge challenges because the legal risk of setting a bad precedent outweighs the value of any individual case.

Sun Belt: Florida and Texas

Florida and Texas present the toughest environment for toll debtors. Florida’s SunPass Customer Agreement holds drivers strictly liable for insufficient balances, with no “lack of knowledge” defense available. Registration holds are lifted by the automatic stay but often require a full Chapter 13 plan to permanently resolve the penalties.

In Texas, the North Texas Tollway Authority treats its assessments as governmental penalties. The 2026 guidance is clear: only Chapter 13 provides a reliable path to discharging the large surcharges that NTTA and TxTag violations typically generate.

How to List Toll Creditors Correctly

Getting the right outcome in bankruptcy requires proper paperwork. Missing a toll creditor from your filing can leave that debt unaffected by the case entirely. In 2026, with tolling administration spread across multiple agencies, this step takes real care.

For a full discharge, you must list every layer of the creditor chain:

1. The primary tolling authority (e.g., Bay Area Toll Authority or NTTA)
2. The overseeing government department (e.g., Caltrans or the NJ Department of Transportation)
3. Any third-party collection agencies currently holding the debt
4. The state’s central collection unit if the debt has been referred for tax intercept

Why does this level of detail matter? Because every listed creditor receives notice of the bankruptcy. That notice starts a 60-day clock. If the tolling authority does not file an adversary proceeding challenging the dischargeability of their debt within 60 days of the first Meeting of Creditors, the debt is typically discharged by default. Even debts that could have survived bankruptcy get wiped out if the agency misses that window.

Accurate mailing addresses on your schedules are critical. If the agency never receives notice, the 60-day clock never starts.

Tax Consequences When Toll Debt Is Discharged

One concern that stops many people from pursuing debt relief is the worry about tax bills. Here is the good news: bankruptcy discharge does not create a taxable income event for toll debt.

Under IRC Section 108, any debt discharged through a Title 11 bankruptcy case is excluded from your gross income. You will not receive a 1099-C form. You will not owe income taxes on the amount that was forgiven.

This protection is especially important in 2026 because other temporary debt forgiveness exclusions have expired. Drivers who settle toll debt outside of bankruptcy for a reduced amount may owe taxes on the forgiven portion. Inside bankruptcy, that tax exposure disappears entirely.

Fraud and Willful Evasion: When Discharge Can Be Challenged

Most toll debt results from financial hardship, not fraud. But tolling agencies do have the legal right to challenge a discharge if they believe you acted dishonestly. Understanding these exceptions helps you avoid surprises.

Fraud Under Section 523(a)(2)(A)

If you opened a toll account with no intention of paying, or used a stolen payment method to fund an E-ZPass account, that debt may be non-dischargeable. The 2023 Supreme Court ruling in Bartenwerfer v. Buckley confirmed that the fraud exception applies even to parties who benefited from fraud without directly committing it.

Willful and Malicious Injury Under Section 523(a)(6)

In 2026, new laws in several states specifically prohibit altering or obstructing license plates to avoid toll detection. If a tolling agency can show that you intentionally covered or modified your plates, they may argue that this constitutes willful and malicious injury to state property.

To prevail, the agency must prove you had a subjective intent to cause harm, not just that you made a mistake or misunderstood the rules. The Fourth Circuit’s 2025 ruling in Martin v. Parker sets a high bar for this standard, protecting drivers who acted in good faith.

Small Business and Fleet Owners: What Subchapter V Means for You

Toll debt is not just a personal finance problem. Small trucking companies and independent delivery contractors have seen a sharp rise in toll-related bankruptcy filings in 2026. If your business is dealing with accumulated toll violations, Subchapter V of Chapter 11 may be the right path.

The Current Subchapter V Debt Limit

The temporary increased debt limit of $7.5 million for Subchapter V expired on June 21, 2024. The current limit has returned to $3,024,725. This affects which businesses can qualify for this streamlined reorganization process.

The Eleventh Circuit’s 2025 Ruling: A Significant Setback

In 2025, the Eleventh Circuit joined the Fourth and Fifth Circuits in ruling that corporate debtors in Subchapter V cannot discharge debts of the kind described in Section 523(a). This means toll penalties owed to a governmental unit may remain non-dischargeable even for small businesses under a non-consensual plan.

For small fleet operators, this is a major challenge. Getting legal advice specific to your business structure is essential before filing any type of bankruptcy to address commercial toll debt.

Should You File Bankruptcy Just for Toll Debt?

This is a question worth asking honestly before you commit. Bankruptcy has real costs and long-term consequences. Sometimes, there is a better option available that does not carry those tradeoffs.

Consider bankruptcy if:

• Your toll debt is part of a larger financial crisis involving credit cards, medical bills, or other loans
• Your license has been suspended and you need immediate relief through the automatic stay
• Penalties make up most of what you owe and only Chapter 13 can discharge them
• You cannot qualify for or access state amnesty programs

Consider alternatives first if:

• Toll debt is your only financial problem
• The total balance is manageable with a payment plan
• Your state has an active amnesty program that waives penalties for drivers who pay the base tolls
• Some charges may be disputable, for example due to license plate misreads at toll cameras

Filing Chapter 7 over a few thousand dollars in toll fees when no other debt is involved is rarely the right move. The credit score impact lasts seven to ten years. The math rarely works in your favor for small balances.

Five Strategic Steps Before You File

Whether you are leaning toward bankruptcy or still exploring your options, there are five concrete steps every driver in toll debt should take first. These steps help you understand what you are dealing with and prepare the strongest possible case if you do decide to file.

• Get an itemized statement from your toll authority. Know exactly how much is base tolls versus fees versus penalties. This determines your strategy entirely.
• Find out if any of your debt has been classified as a criminal fine or referred to a court. This changes which exemptions may apply.
• Check your current license and registration status with your state DMV before filing anything.
• Contact a bankruptcy attorney who handles consumer cases. The National Association of Consumer Bankruptcy Attorneys has a free attorney locator tool. Many offer a free initial consultation.
• Check whether your state has an active toll amnesty program. Massachusetts, Illinois, and California have all offered these programs at various points. A quick call to the toll authority may resolve your situation without bankruptcy at all.

The Road Forward: What You Need to Remember

Toll debt can absolutely be included in bankruptcy. The level of relief you get depends on three things: which chapter you file, how your debt is classified, and what state you live in.

Here is the core takeaway to hold onto:

• Base tolls are generally dischargeable as unsecured debt in both Chapter 7 and Chapter 13.
• Punitive penalties owed to a governmental agency survive Chapter 7 but can be discharged in Chapter 13 through the super discharge.
• Private toll road debt may be fully dischargeable in Chapter 7, regardless of the penalty split.
• The automatic stay gives you immediate protection the moment you file.
• Where you live shapes your outcome as much as the law itself.

The 2026 tolling environment has made it easier than ever to accumulate serious debt without realizing it. At the same time, changes in state law across Massachusetts, California, and other states are starting to reduce the most punitive consequences for low-income drivers.

Get a clear picture of your specific debt. Talk to a bankruptcy attorney. Understand your state’s rules. With the right approach, you can protect your ability to drive, protect your income, and get the financial relief you need to move forward.

Legal Disclaimer

This article is intended for general informational purposes only and does not constitute legal advice. The information presented here reflects general principles of United States bankruptcy law as of 2026 and may not account for recent changes in legislation, case law, or state-specific regulations that could affect your individual situation.

Reading this article does not create an attorney-client relationship. Every financial and legal situation is unique. Before making any decisions about bankruptcy, toll debt, or related matters, you should consult a licensed bankruptcy attorney in your state who can evaluate your specific circumstances and provide advice tailored to your needs.

The laws and procedures governing bankruptcy and toll debt enforcement vary significantly by state and jurisdiction. References to specific statutes, court rulings, and agency policies are included for educational purposes only. Neither the author nor the publisher makes any warranty, express or implied, regarding the accuracy, completeness, or suitability of this information for any particular purpose. Reliance on this article without independent legal counsel is done at your own risk.

Pavithra Vinoth

Pavithra Vinoth is the founder of nytollsinfo.com, where she simplifies U.S. toll systems through expert insights and custom-built calculators. Her research-driven tools help drivers avoid costly mistakes and make smarter car decisions.