How Does Chicago Make $200 Million A Year On Parking Tickets? By Bankrupting Thousands of Drivers.

This article was published in partnership with ProPublica Illinois.

By last summer, Laqueanda
Reneau felt like she had finally gotten her life on track.

A single mother who had gotten pregnant in high school, she
supported her family with a series of jobs at coffee shops,
restaurants, and clothing stores until she landed a position she
loved as a community organizer on Chicago’s West Side. At the same
time, she was working her way toward a degree in public health at
DePaul University.

But one large barrier stood in her way: $6,700 in unpaid
tickets, late fines, and impound fees.

She had begun racking up the ticket debt five years earlier, in
2012, after a neighbor who saw her riding the bus late at night
with her infant son sold her her first car, a used Toyota Camry,
for a few hundred dollars. She was grateful for the shorter commute
to work but unprepared for the extra costs of owning a car in
Chicago.

That year alone, Reneau got 15 tickets, including seven $200
citations for not having a city sticker. Later, she received a
dozen tickets for license plate violations on another used car that
couldn’t pass emissions testing, a state requirement to renew her
plates.

“Those tickets have followed me until this freaking day,” said
Reneau, who is 25.

Because of the unpaid tickets, the city garnished her state tax
refunds. Her car was impounded and she couldn’t pay for its
release. Her driver’s license was suspended. Unable to come up with
$1,000 to enter a city payment plan, Reneau did what thousands of
Chicago drivers do each year: She turned to Chapter 13 bankruptcy
and its promise of debt forgiveness.

“I know I’m putting a Band-Aid on the problem,” she said. “But
right now, my immediate need is to get a car so I can get to work
and get my son to school.”

For Chicago’s working poor, and particularly for African
Americans, a single unpaid parking or automated traffic camera
ticket can quickly spiral out of control and threaten their
livelihoods. Bankruptcy offers a temporary reprieve, giving these
motorists the chance to resume driving without fear of getting
pulled over or losing their vehicles to the city pound.

The problem has gotten worse over the past decade, ProPublica
Illinois found in an analysis of bankruptcies filed in the Northern
District of Illinois, which includes Chicago and its suburbs.

In 2007, an estimated 1,000 Chapter 13 bankruptcies included
debts to the city, usually for unpaid tickets, with the median
amount claimed around $1,500 per case. By last year, the number of
cases surpassed 10,000, with the typical debt to the city around
$3,900. Though the numbers of tickets issued did not rise during
that time, the city increased the costs of fines, expanded its
traffic camera program, and sought more license suspensions.

Tickets brought in nearly $264 million in 2016, or about 7 percent
of Chicago’s $3.6 billion operating budget.

The result: more debt due to tickets.

Legal experts say what’s happening in Chicago’s bankruptcy
courts is unique. Parking, traffic, and vehicle compliance tickets
prompt so many bankruptcies the court here leads the nation in
Chapter 13 filings.

It’s a problem fueled both by the city’s increasingly aggressive
ticketing to boost revenue—tickets brought in nearly $264 million
in 2016, or about 7 percent of the city’s $3.6 billion operating
budget—and a handful of law firms that pitch bankruptcy protection
as a cheap solution to drivers’ woes.

Advocates for the poor say the bankruptcy statistics are
symptoms of a broken city system that unfairly burdens those least
able to afford tickets, much less late fees and other penalties.
Motorists with crushing ticket debt who want to get back behind the
wheel are stuck choosing between a city payment plan they often
can’t afford or a bankruptcy plan that’s cheaper to enter but
likely to fail.

When bankruptcy cases are dismissed, drivers risk losing their
cars and licenses again, setting up a cycle of more debt and
potentially more bankruptcies.

“If you’re a city government that has a policy of basically
balancing the budget by issuing huge numbers of traffic tickets,
you have to expect this response,” said John Rao, an attorney who
specializes in bankruptcy at the nonprofit National Consumer Law
Center. “There’s obviously a market for consumers who are in need
of relief, and while it’s not the perfect form of relief, the other
options aren’t that great either.”

Debt That Lasts Forever

Each year, the City of Chicago issues more than 3 million
tickets for a wide range of parking, vehicle compliance, and
automated traffic camera violations, from $25 citations for broken
headlights to $250 tickets for parking in a disabled zone.

The overall numbers of tickets had been on the decline until
2013, when the city’s first speed cameras came online. More
citations are issued here, per adult, than in Los Angeles or New
York City.

Ticket debt piles up disproportionately in the city’s
low-income, mostly black neighborhoods. Eight of the 10 ZIP codes
with the most accumulated ticket debt per adult are majority black,
according to a ProPublica Illinois analysis of ticket data since
2007 and figures from the US Census.

Those neighborhoods account for 40 percent of all debt, though
they account for only 22 percent of all the tickets issued in the
city over the past decade—suggesting how the debt burdens the
poor.

Edward Morrison, a law professor and economist at Columbia Law
School who has studied the ties between
ticket debt and bankruptcy in Chicago, said low-income, African
American households are more affected by ticket debt because they
have less money to pay tickets even before debt mounts.

Tickets for red-light camera violations—issued when drivers turn
illegally or run through a red light—make up the greatest number of
all citations.

But compliance tickets for lacking a city sticker or having
expired plates—the kinds of citations Reneau got repeatedly in her
first years of owning a car—are disproportionately involved in
bankruptcy cases.

Indeed, sticker violations were the largest source of ticket
debt in Chicago. They accounted for about 19 percent of citations
connected to bankruptcy cases but only 4 percent of those marked
paid. City stickers, which must be purchased annually, cost about
$87 for most passenger vehicles.

“So if you don’t have the money to pay the city sticker and you
get a ticket, what makes you think you’re going to have the money
to pay the ticket?” said Salvador J. Lopez, a bankruptcy attorney
with the consumer law firm Robson & Lopez LLC. “It’s very easy
for the average person to say [filing for bankruptcy over tickets]
is being irresponsible, but let’s take a look at what’s causing
people to rack up these tickets.”

The city mails vehicle owners multiple notices to give them time
to pay or contest tickets before fines double, get sent to
collections, or land a car on a list to be booted. Once debt
accumulates, it can last forever because there’s no statute of
limitations for unpaid tickets in Illinois. Chicago motorists owe
$1.45 billion in ticket debt dating to September 1990.

By comparison, ticket debt in Los Angeles, where the statute of
limitations is five years, is $21 million. In New York City, with a
statute of limitations of eight years, ticket debt totals $238
million, according to officials.

In addition to booting and impounding vehicles, the city has
another weapon at its disposal: It can move to suspend licenses
after drivers accumulate 10 unpaid parking tickets or five unpaid
traffic camera tickets.

In 2016, Chicago asked the state to suspend licenses of more
than 21,000 drivers, up threefold since 2010, according to the
city’s finance department. One reason for the increase: In 2013,
the city started counting such compliance violations as not having
a city sticker against drivers for license suspensions.

“It seems like the city is shooting itself in the foot. How can
people pay the city if they can’t get jobs?”

Meanwhile, “anti-scofflaw” rules prevent those with unpaid
tickets or other debts to the city from accessing contracts,
licenses, and even grants for low-income homeowners who want to
replace their home furnaces. Taxi and ride-share drivers can’t work
in the city if they have ticket debt.

Mayor Rahm Emanuel, who has faced one budget crisis after
another since coming into office in 2011, made cracking down on
“scofflaws” on the municipal payroll an early priority.

“If you owe a parking ticket, you owe a bill, you have to pay.
The free ride is over for everybody,” Emanuel said in 2011.
“I want people to know that the whole city’s watching.”

Municipal jobs—from driving a bus to teaching in a
classroom—have long been off-limits to drivers with ticket debt,
unless they’re on a city payment plan or in bankruptcy. Tracy
Occamy Crowder, an organizer with Community Organizing and Family
Issues, a nonprofit that works mostly with low-income women of
color, said her group became interested in the issue after learning
that a longtime parent leader said she couldn’t get a job as a
recess monitor at her son’s elementary school because of unpaid
tickets.

“It seems like the city is shooting itself in the foot,” Occamy
Crowder said. “How can people pay the city if they can’t get
jobs?”

In January, COFI issued a series of recommendations to the city
on how to make ticket debt less punishing for low-income families
as part of the release of a report called “Stopping the Debt
Spiral.” Among them: make it easier for people with ticket debt
to get municipal jobs and licenses; make payment plans more
accessible; and waive late penalties on ticket debt.

COFI is also asking the city to create a task force modeled
after one in San Francisco studying how municipal fines and fees
disparately impact low-income people of color. This issue has
gained national attention since the release of a 2015 US Department
of Justice report that highlighted, in part, how the criminal
justice and court systems in Ferguson, Missouri, relied on
excessive fines and fees to generate revenue.

Alex Kornya, an assistant litigation director of Iowa Legal Aid
who has studied the impact of court debt on the poor around the
country, said what’s happening in Chicago is part of a broader
trend of local governments using “systems that were made to ensure
the public safety as revenue generators.”

“You’ve introduced this perverse economic incentive which has
flipped the system upside down,” he said.

No Good Option

Laqueanda Reneau is a petite woman with a steady gaze. She
speaks guardedly, aware from experience that she may be judged by
her appearance and circumstances: a single, young black mother who
can barely make ends meet.

“I know what my stance is in this world,” she said.

She can relate to the residents she works with in her job as a
community organizer in the neighborhood where she grew up.

“I want to work on something that has to do with inequities,
making sure that communities that need resources are able to get to
those resources, whether it’s health or economic development,” she
said. “I just want to make sure people have the opportunities to
get—what do they say?—the American Dream.”

Her own dream—to join the Navy, go to college, and become a
nurse—got derailed as a high school senior, when she got pregnant.
Not long after she had her son, she left her parents’ home.

“You ever try to call the city and ask for an extension, like you
might do for a light bill? Other places, you can get an extension.
But not with the city.”

She acknowledges getting one ticket after another and not paying
them. She needed the money she earned, she said, to pay rent, buy
food, and put gas in her car. The tickets were not a priority for
her survival, and she said she wasn’t aware of the potential
consequences.

After surrendering her car to the city’s impound lot and losing
her license because of unpaid tickets, Reneau studied her options.
At the time, she and her then five-year-old son were living in a
room they rented in a house with another family in South Holland,
in the Far South suburbs. Their daily commute on public
transportation was draining—for both of them.

Each morning, Reneau took a commuter train, then a bus to drop
off her son at school on Chicago’s South Side. Then she took two
subway trains to her job as an organizer for a community group with
offices on the city’s North and West sides. After work, she rode
another subway train or a bus to classes at DePaul. Then she headed
home.

“He’s not going to bed until 11 p.m., then we have to get up at
6 a.m., and he’s tired in the morning,” Reneau said. “He hasn’t got
his full rest. I realized how much of a chain reaction that
is.”

Laqueanda Reneau poses on the street
outside her home in Calumet Park, January 1, 2017.

Marc Monaghan for ProPublica
Illinois

Some days she would borrow a friend’s car and drive illegally to
cut down the travel time. But that made her anxious, especially
after she got pulled over one night. Luckily, she said, the officer
let her off with a warning after seeing her son in the back
seat.

She qualified for the city’s hardship plan, which requires a
down payment of $1,000 or 25 percent toward total ticket debt,
whichever is lower. But she didn’t have the money. Reneau
considered signing up for a city payment plan to recover her
driver’s license and get another car. Of the $6,700 she owed the
city—for a range of parking tickets, sticker violations, and camera
infractions—less than half was for the original tickets; the rest
was late penalties, 22 percent collection fees, impound fees, and
even a $20 fee for the cost of suspending her license.

And even if she could have afforded it, Reneau doubted a city
payment plan was best for her. She’d tried plans in the past but
was unable to keep up with the required monthly payments. Each time
she defaulted, she incurred a new $100 penalty.

“You ever try to call the city and ask for an extension, like
you might do for a light bill?” she asked. “Other places, you can
get an extension. But not with the city.”

Then one day she heard a catchy jingle on the radio for the
Semrad Law Firm, which also calls itself DebtStoppers. It handles
more ticket-related Chapter 13 cases than any other firm in the
Northern District of Illinois, according to a ProPublica Illinois
analysis of case data.

“I still remember the song. I find myself singing it,” Reneau
said. “One of the first things they say is about…how you can get
your license back. About the zero dollars down.”

Filing for Chapter 13 bankruptcy, she soon learned, was cheaper
than getting on a city payment plan.

‘Is That a Band-Aid?’

There are two main types of consumer
bankruptcy in the US Chapter 7. Filing under Chapter 7 can take
just a few months and requires the liquidation of assets, although
most filers do not have enough to clear a legal threshold that
requires them to give anything up. Almost every Chapter 7
bankruptcy results in debt forgiveness.

Under Chapter 13, debtors get to hold onto their assets, like a
home or car. But in Chapter 13, debtors have to apply their
disposable income each month toward payments to creditors for up to
five years. Only when a plan is completed will the rest of the debt
be discharged, which is often difficult for poor people to
manage.

Last fall, ProPublica
reported that black debtors across the country
disproportionately file under Chapter 13, when compared with
whites. It’s a trend that’s particularly evident in Southern cities
like Memphis because of the sheer volume of cases. There, debtors
choose Chapter 13 because it’s cheaper at the outset, but they wind
up paying thousands of dollars more in legal fees.

It’s a similar story in Chicago, where larger firms can offer to
file a Chapter 13 case for zero down and charge $4,000 in legal
fees as part of the required monthly payments. Chapter 7 cases,
meanwhile, typically cost about $1,000, often with the debtor
required to pay the money up front.

But there’s a more practical reason to file under Chapter 13: If
you have ticket debt, unpaid tickets can be discharged under
Chapter 13 but not under Chapter 7.

Reneau’s debt, for example, is almost entirely tickets. Her only
other debt, according to her bankruptcy filing, is a few hundred
dollars in credit cards, plus about $12,600 in student loans. Her
student loans are in deferment and, in general, cannot be forgiven
in bankruptcy.

FROM TICKETS TO THE TOW YARD

One reason so many Chicago drivers file for Chapter 13
bankruptcy over unpaid tickets is to protect their vehicles from
the city impound lot. The city sends drivers multiple notices
before fines double, go to collections, or land a car on the boot
list. (Photos by Marc Monaghan for ProPublica.)

The immediate benefit of bankruptcy is time, thanks to a legal
reprieve known as an “automatic stay.” This protection allows
drivers to lift license suspensions tied to some kinds of debt and
keep their vehicles off the boot list for as long as their
bankruptcy case is active.

But bankruptcy is not a long-term solution for these debtors,
who are poorer and disproportionately black and have fewer assets
when compared with other people who file for bankruptcy under
Chapter 13.

ProPublica Illinois analyzed the outcomes of a sample of almost
1,000 Chapter 13 cases filed in 2010, and found that fewer than a
quarter that included unpaid ticket debt ended successfully. By
contrast, cases without tickets were more likely to end
successfully; according to the analysis, about half ended with debt
relief.

Patrick Semrad, managing partner of DebtStoppers, acknowledged
most Chapter 13 bankruptcies involving ticket debt get dismissed
before drivers get a discharge. But he doesn’t think that
necessarily makes them failures.

“For people with Chapter 13s, it’s not as fast or as clean [as
Chapter 7 bankruptcy], but they’re able to get things like their
car right away, or stop a foreclosure, or get their license back,
or keep a job,” he said. “And so it’s not just about the debt. If
someone is able to keep a job for a year or two years, is that a
Band-Aid? I don’t think so.”

A New Tactic

Over the years, city officials have looked for ways to stem the
flood of bankruptcies involving ticket debt. Because drivers in
bankruptcy pay creditors such as the city pennies on the dollar,
and because so many of their cases end in failure, the city
recovers little from them. Of course, when bankruptcies are
dismissed, the city and its debt collectors can go after drivers,
their licenses, and vehicles once again.

City officials were especially frustrated by what, by all
accounts, was an only-in-Chicago phenomenon: Motorists were filing
for bankruptcy in droves to get impounded cars released without
paying any impound fees or underlying ticket debt. To the city,
what’s happened in bankruptcy court has been an abuse of the
system: Drivers were ignoring tickets they lawfully deserved and
then filing for bankruptcy to avoid paying what they owed.
Meanwhile, attorneys were profiting off the cases even when the
drivers got no debt relief.

The impound-to-bankruptcy phenomenon started in 2009, when a
federal appellate court ruling extended the automatic stay to
repossessed vehicles. Attorneys at DebtStoppers—which had filed the
initial case—soon realized the ruling could also apply to cars and
trucks impounded by the city because of unpaid tickets.

Racheal White stands in the middle
of the 8100 block of South Shore Drive near her home.

Marc Monaghan for
ProPublica

“We didn’t know this means we’re going to get all these parking
ticket cases, but we knew anybody who was holding a car was now
going to return the car immediately,” Semrad said. “And we enforced
it vigorously.”

In 2016, an estimated 3,770 impounded vehicles were returned to
drivers in bankruptcy. That represented more than a third of all
Chapter 13 cases filed that year involving Chicago ticket debt.

“It was a pretty big nightmare for us,” said David Holtkamp, a
senior corporation counsel for the city who oversees bankruptcy
matters. “People were filing these cases they had no intention of
completing. They’d file it, get the car out, and then the case
would ultimately get dismissed…And then they would file again.”

Last year, the city unveiled a new legal strategy to deter these
kinds of bankruptcies. It now claims liens on impounded vehicles,
which allows the city to hold onto them until the underlying ticket
debt is recognized as a secured claim in bankruptcy court—meaning
it will get paid out in full during a bankruptcy payment plan.

“People were filing these cases they had no intention of
completing. They’d file it, get the car out, and then the case
would ultimately get dismissed…And then they would file again.”

The tactic, yet another move in what seems like a cat-and-mouse
game between the city and indebted drivers, has been upheld by some
bankruptcy judges but is being appealed by motorists and their
lawyers.

City officials say the liens aren’t just about the city’s bottom
line; they say it’s also a consumer protection issue, a way to save
drivers from bankruptcies that are likely to get dismissed without
debt relief. Instead of paying a bankruptcy lawyer, city officials
say, drivers should enter into payment plans with the city where
every dollar goes directly toward outstanding debt.

In a way, Racheal White’s experiences with bankruptcy help
illustrate this.

A single mother of two teenage boys, White moved reluctantly to
the South Shore neighborhood a few years ago when she could no
longer afford rent in the suburbs. Almost immediately, she started
accumulating tickets, many of them speed camera violations.

White depended on her car, which she lovingly calls “Rosie,” to
get to a range of contract work across the metro area, including
her main job as a dental assistant, a gig handing out product
samples at stores and events, and an acting job as a hospital
patient for medical students.

Watch ProPublica’s video on ticket debt in
Chicago:

White, 35, couldn’t afford to pay the tickets, and eventually
her car got on the city’s boot list. She filed for Chapter 13
bankruptcy in 2016 to get a grip on her finances, and also to
protect her car.

“Bankruptcy gives you a nest, like a covering,” she said. “It
allows you to breathe so you can find a way to get yourself out of
a hole, to not worry about having your license suspended or getting
your car repossessed or your car booted.”

But less than a year later, her bankruptcy case fell apart. The
dentist office where she worked cut back her hours, and she
couldn’t afford to keep up with her payments. Her case was
dismissed last fall.

She had made eight payments totaling $2,275, according to a
final report issued by the Chapter 13 trustee who administered the
case. More than $1,900 went to legal fees. Another $105 went to
cover the trustee’s expenses. And $243 went toward her car
loan—most of it for interest. Not a dime went to her unsecured
debts, including the unpaid Chicago tickets.

Within weeks of her case getting dismissed, White’s Nissan went
back on the city’s boot list and was impounded. White borrowed
money from her mother to get on a city payment plan and get her car
back.

Then she filed for bankruptcy again.

On Borrowed Time

In February, less than eight months after she filed for
bankruptcy, Laqueanda Reneau told her lawyer to file the documents
to dismiss her case. She had been making her bankruptcy payments on
time, with $175 garnished from her paychecks each month. But as tax
season approached, it dawned on her that she’d also have to hand
over most of the $5,000 to $6,000 she said she expects to receive
in her federal tax refund, which is considered income and must be
taken into account in bankruptcy payment plans.

Reneau wasn’t willing to do that. She typically saves her tax
refunds to deal with emergencies and “immediate needs that come
up…throughout the whole year.”

Last year, she used $2,300 from her refund to buy a 2003 Kia
Sorento. This year, Reneau wants to move into her own apartment in
the city with her son. She plans to set aside enough money for the
security deposit, rent, furnishings, and basic household items like
plates.

When her case is officially dismissed, she knows she’ll be on
borrowed time before the city moves to suspend her license and puts
her car on the boot list again. She hopes to get on a city payment
plan before that happens.

David Eads contributed to this report.

This article was published in partnership with ProPublica Illinois.

By last summer, Laqueanda
Reneau felt like she had finally gotten her life on track.

A single mother who had gotten pregnant in high school, she
supported her family with a series of jobs at coffee shops,
restaurants, and clothing stores until she landed a position she
loved as a community organizer on Chicago’s West Side. At the same
time, she was working her way toward a degree in public health at
DePaul University.

But one large barrier stood in her way: $6,700 in unpaid
tickets, late fines, and impound fees.

She had begun racking up the ticket debt five years earlier, in
2012, after a neighbor who saw her riding the bus late at night
with her infant son sold her her first car, a used Toyota Camry,
for a few hundred dollars. She was grateful for the shorter commute
to work but unprepared for the extra costs of owning a car in
Chicago.

That year alone, Reneau got 15 tickets, including seven $200
citations for not having a city sticker. Later, she received a
dozen tickets for license plate violations on another used car that
couldn’t pass emissions testing, a state requirement to renew her
plates.

“Those tickets have followed me until this freaking day,” said
Reneau, who is 25.

Because of the unpaid tickets, the city garnished her state tax
refunds. Her car was impounded and she couldn’t pay for its
release. Her driver’s license was suspended. Unable to come up with
$1,000 to enter a city payment plan, Reneau did what thousands of
Chicago drivers do each year: She turned to Chapter 13 bankruptcy
and its promise of debt forgiveness.

“I know I’m putting a Band-Aid on the problem,” she said. “But
right now, my immediate need is to get a car so I can get to work
and get my son to school.”

For Chicago’s working poor, and particularly for African
Americans, a single unpaid parking or automated traffic camera
ticket can quickly spiral out of control and threaten their
livelihoods. Bankruptcy offers a temporary reprieve, giving these
motorists the chance to resume driving without fear of getting
pulled over or losing their vehicles to the city pound.

The problem has gotten worse over the past decade, ProPublica
Illinois found in an analysis of bankruptcies filed in the Northern
District of Illinois, which includes Chicago and its suburbs.

In 2007, an estimated 1,000 Chapter 13 bankruptcies included
debts to the city, usually for unpaid tickets, with the median
amount claimed around $1,500 per case. By last year, the number of
cases surpassed 10,000, with the typical debt to the city around
$3,900. Though the numbers of tickets issued did not rise during
that time, the city increased the costs of fines, expanded its
traffic camera program, and sought more license suspensions.

Tickets brought in nearly $264 million in 2016, or about 7 percent
of Chicago’s $3.6 billion operating budget.

The result: more debt due to tickets.

Legal experts say what’s happening in Chicago’s bankruptcy
courts is unique. Parking, traffic, and vehicle compliance tickets
prompt so many bankruptcies the court here leads the nation in
Chapter 13 filings.

It’s a problem fueled both by the city’s increasingly aggressive
ticketing to boost revenue—tickets brought in nearly $264 million
in 2016, or about 7 percent of the city’s $3.6 billion operating
budget—and a handful of law firms that pitch bankruptcy protection
as a cheap solution to drivers’ woes.

Advocates for the poor say the bankruptcy statistics are
symptoms of a broken city system that unfairly burdens those least
able to afford tickets, much less late fees and other penalties.
Motorists with crushing ticket debt who want to get back behind the
wheel are stuck choosing between a city payment plan they often
can’t afford or a bankruptcy plan that’s cheaper to enter but
likely to fail.

When bankruptcy cases are dismissed, drivers risk losing their
cars and licenses again, setting up a cycle of more debt and
potentially more bankruptcies.

“If you’re a city government that has a policy of basically
balancing the budget by issuing huge numbers of traffic tickets,
you have to expect this response,” said John Rao, an attorney who
specializes in bankruptcy at the nonprofit National Consumer Law
Center. “There’s obviously a market for consumers who are in need
of relief, and while it’s not the perfect form of relief, the other
options aren’t that great either.”

Debt That Lasts Forever

Each year, the City of Chicago issues more than 3 million
tickets for a wide range of parking, vehicle compliance, and
automated traffic camera violations, from $25 citations for broken
headlights to $250 tickets for parking in a disabled zone.

The overall numbers of tickets had been on the decline until
2013, when the city’s first speed cameras came online. More
citations are issued here, per adult, than in Los Angeles or New
York City.

Ticket debt piles up disproportionately in the city’s
low-income, mostly black neighborhoods. Eight of the 10 ZIP codes
with the most accumulated ticket debt per adult are majority black,
according to a ProPublica Illinois analysis of ticket data since
2007 and figures from the US Census.

Those neighborhoods account for 40 percent of all debt, though
they account for only 22 percent of all the tickets issued in the
city over the past decade—suggesting how the debt burdens the
poor.

Edward Morrison, a law professor and economist at Columbia Law
School who has studied the ties between
ticket debt and bankruptcy in Chicago, said low-income, African
American households are more affected by ticket debt because they
have less money to pay tickets even before debt mounts.

Tickets for red-light camera violations—issued when drivers turn
illegally or run through a red light—make up the greatest number of
all citations.

But compliance tickets for lacking a city sticker or having
expired plates—the kinds of citations Reneau got repeatedly in her
first years of owning a car—are disproportionately involved in
bankruptcy cases.

Indeed, sticker violations were the largest source of ticket
debt in Chicago. They accounted for about 19 percent of citations
connected to bankruptcy cases but only 4 percent of those marked
paid. City stickers, which must be purchased annually, cost about
$87 for most passenger vehicles.

“So if you don’t have the money to pay the city sticker and you
get a ticket, what makes you think you’re going to have the money
to pay the ticket?” said Salvador J. Lopez, a bankruptcy attorney
with the consumer law firm Robson & Lopez LLC. “It’s very easy
for the average person to say [filing for bankruptcy over tickets]
is being irresponsible, but let’s take a look at what’s causing
people to rack up these tickets.”

The city mails vehicle owners multiple notices to give them time
to pay or contest tickets before fines double, get sent to
collections, or land a car on a list to be booted. Once debt
accumulates, it can last forever because there’s no statute of
limitations for unpaid tickets in Illinois. Chicago motorists owe
$1.45 billion in ticket debt dating to September 1990.

By comparison, ticket debt in Los Angeles, where the statute of
limitations is five years, is $21 million. In New York City, with a
statute of limitations of eight years, ticket debt totals $238
million, according to officials.

In addition to booting and impounding vehicles, the city has
another weapon at its disposal: It can move to suspend licenses
after drivers accumulate 10 unpaid parking tickets or five unpaid
traffic camera tickets.

In 2016, Chicago asked the state to suspend licenses of more
than 21,000 drivers, up threefold since 2010, according to the
city’s finance department. One reason for the increase: In 2013,
the city started counting such compliance violations as not having
a city sticker against drivers for license suspensions.

“It seems like the city is shooting itself in the foot. How can
people pay the city if they can’t get jobs?”

Meanwhile, “anti-scofflaw” rules prevent those with unpaid
tickets or other debts to the city from accessing contracts,
licenses, and even grants for low-income homeowners who want to
replace their home furnaces. Taxi and ride-share drivers can’t work
in the city if they have ticket debt.

Mayor Rahm Emanuel, who has faced one budget crisis after
another since coming into office in 2011, made cracking down on
“scofflaws” on the municipal payroll an early priority.

“If you owe a parking ticket, you owe a bill, you have to pay.
The free ride is over for everybody,” Emanuel said in 2011.
“I want people to know that the whole city’s watching.”

Municipal jobs—from driving a bus to teaching in a
classroom—have long been off-limits to drivers with ticket debt,
unless they’re on a city payment plan or in bankruptcy. Tracy
Occamy Crowder, an organizer with Community Organizing and Family
Issues, a nonprofit that works mostly with low-income women of
color, said her group became interested in the issue after learning
that a longtime parent leader said she couldn’t get a job as a
recess monitor at her son’s elementary school because of unpaid
tickets.

“It seems like the city is shooting itself in the foot,” Occamy
Crowder said. “How can people pay the city if they can’t get
jobs?”

In January, COFI issued a series of recommendations to the city
on how to make ticket debt less punishing for low-income families
as part of the release of a report called “Stopping the Debt
Spiral.” Among them: make it easier for people with ticket debt
to get municipal jobs and licenses; make payment plans more
accessible; and waive late penalties on ticket debt.

COFI is also asking the city to create a task force modeled
after one in San Francisco studying how municipal fines and fees
disparately impact low-income people of color. This issue has
gained national attention since the release of a 2015 US Department
of Justice report that highlighted, in part, how the criminal
justice and court systems in Ferguson, Missouri, relied on
excessive fines and fees to generate revenue.

Alex Kornya, an assistant litigation director of Iowa Legal Aid
who has studied the impact of court debt on the poor around the
country, said what’s happening in Chicago is part of a broader
trend of local governments using “systems that were made to ensure
the public safety as revenue generators.”

“You’ve introduced this perverse economic incentive which has
flipped the system upside down,” he said.

No Good Option

Laqueanda Reneau is a petite woman with a steady gaze. She
speaks guardedly, aware from experience that she may be judged by
her appearance and circumstances: a single, young black mother who
can barely make ends meet.

“I know what my stance is in this world,” she said.

She can relate to the residents she works with in her job as a
community organizer in the neighborhood where she grew up.

“I want to work on something that has to do with inequities,
making sure that communities that need resources are able to get to
those resources, whether it’s health or economic development,” she
said. “I just want to make sure people have the opportunities to
get—what do they say?—the American Dream.”

Her own dream—to join the Navy, go to college, and become a
nurse—got derailed as a high school senior, when she got pregnant.
Not long after she had her son, she left her parents’ home.

“You ever try to call the city and ask for an extension, like you
might do for a light bill? Other places, you can get an extension.
But not with the city.”

She acknowledges getting one ticket after another and not paying
them. She needed the money she earned, she said, to pay rent, buy
food, and put gas in her car. The tickets were not a priority for
her survival, and she said she wasn’t aware of the potential
consequences.

After surrendering her car to the city’s impound lot and losing
her license because of unpaid tickets, Reneau studied her options.
At the time, she and her then five-year-old son were living in a
room they rented in a house with another family in South Holland,
in the Far South suburbs. Their daily commute on public
transportation was draining—for both of them.

Each morning, Reneau took a commuter train, then a bus to drop
off her son at school on Chicago’s South Side. Then she took two
subway trains to her job as an organizer for a community group with
offices on the city’s North and West sides. After work, she rode
another subway train or a bus to classes at DePaul. Then she headed
home.

“He’s not going to bed until 11 p.m., then we have to get up at
6 a.m., and he’s tired in the morning,” Reneau said. “He hasn’t got
his full rest. I realized how much of a chain reaction that
is.”

Laqueanda Reneau poses on the street
outside her home in Calumet Park, January 1, 2017.

Marc Monaghan for ProPublica
Illinois

Some days she would borrow a friend’s car and drive illegally to
cut down the travel time. But that made her anxious, especially
after she got pulled over one night. Luckily, she said, the officer
let her off with a warning after seeing her son in the back
seat.

She qualified for the city’s hardship plan, which requires a
down payment of $1,000 or 25 percent toward total ticket debt,
whichever is lower. But she didn’t have the money. Reneau
considered signing up for a city payment plan to recover her
driver’s license and get another car. Of the $6,700 she owed the
city—for a range of parking tickets, sticker violations, and camera
infractions—less than half was for the original tickets; the rest
was late penalties, 22 percent collection fees, impound fees, and
even a $20 fee for the cost of suspending her license.

And even if she could have afforded it, Reneau doubted a city
payment plan was best for her. She’d tried plans in the past but
was unable to keep up with the required monthly payments. Each time
she defaulted, she incurred a new $100 penalty.

“You ever try to call the city and ask for an extension, like
you might do for a light bill?” she asked. “Other places, you can
get an extension. But not with the city.”

Then one day she heard a catchy jingle on the radio for the
Semrad Law Firm, which also calls itself DebtStoppers. It handles
more ticket-related Chapter 13 cases than any other firm in the
Northern District of Illinois, according to a ProPublica Illinois
analysis of case data.

“I still remember the song. I find myself singing it,” Reneau
said. “One of the first things they say is about…how you can get
your license back. About the zero dollars down.”

Filing for Chapter 13 bankruptcy, she soon learned, was cheaper
than getting on a city payment plan.

‘Is That a Band-Aid?’

There are two main types of consumer
bankruptcy in the US Chapter 7. Filing under Chapter 7 can take
just a few months and requires the liquidation of assets, although
most filers do not have enough to clear a legal threshold that
requires them to give anything up. Almost every Chapter 7
bankruptcy results in debt forgiveness.

Under Chapter 13, debtors get to hold onto their assets, like a
home or car. But in Chapter 13, debtors have to apply their
disposable income each month toward payments to creditors for up to
five years. Only when a plan is completed will the rest of the debt
be discharged, which is often difficult for poor people to
manage.

Last fall, ProPublica
reported that black debtors across the country
disproportionately file under Chapter 13, when compared with
whites. It’s a trend that’s particularly evident in Southern cities
like Memphis because of the sheer volume of cases. There, debtors
choose Chapter 13 because it’s cheaper at the outset, but they wind
up paying thousands of dollars more in legal fees.

It’s a similar story in Chicago, where larger firms can offer to
file a Chapter 13 case for zero down and charge $4,000 in legal
fees as part of the required monthly payments. Chapter 7 cases,
meanwhile, typically cost about $1,000, often with the debtor
required to pay the money up front.

But there’s a more practical reason to file under Chapter 13: If
you have ticket debt, unpaid tickets can be discharged under
Chapter 13 but not under Chapter 7.

Reneau’s debt, for example, is almost entirely tickets. Her only
other debt, according to her bankruptcy filing, is a few hundred
dollars in credit cards, plus about $12,600 in student loans. Her
student loans are in deferment and, in general, cannot be forgiven
in bankruptcy.

FROM TICKETS TO THE TOW YARD

One reason so many Chicago drivers file for Chapter 13
bankruptcy over unpaid tickets is to protect their vehicles from
the city impound lot. The city sends drivers multiple notices
before fines double, go to collections, or land a car on the boot
list. (Photos by Marc Monaghan for ProPublica.)

The immediate benefit of bankruptcy is time, thanks to a legal
reprieve known as an “automatic stay.” This protection allows
drivers to lift license suspensions tied to some kinds of debt and
keep their vehicles off the boot list for as long as their
bankruptcy case is active.

But bankruptcy is not a long-term solution for these debtors,
who are poorer and disproportionately black and have fewer assets
when compared with other people who file for bankruptcy under
Chapter 13.

ProPublica Illinois analyzed the outcomes of a sample of almost
1,000 Chapter 13 cases filed in 2010, and found that fewer than a
quarter that included unpaid ticket debt ended successfully. By
contrast, cases without tickets were more likely to end
successfully; according to the analysis, about half ended with debt
relief.

Patrick Semrad, managing partner of DebtStoppers, acknowledged
most Chapter 13 bankruptcies involving ticket debt get dismissed
before drivers get a discharge. But he doesn’t think that
necessarily makes them failures.

“For people with Chapter 13s, it’s not as fast or as clean [as
Chapter 7 bankruptcy], but they’re able to get things like their
car right away, or stop a foreclosure, or get their license back,
or keep a job,” he said. “And so it’s not just about the debt. If
someone is able to keep a job for a year or two years, is that a
Band-Aid? I don’t think so.”

A New Tactic

Over the years, city officials have looked for ways to stem the
flood of bankruptcies involving ticket debt. Because drivers in
bankruptcy pay creditors such as the city pennies on the dollar,
and because so many of their cases end in failure, the city
recovers little from them. Of course, when bankruptcies are
dismissed, the city and its debt collectors can go after drivers,
their licenses, and vehicles once again.

City officials were especially frustrated by what, by all
accounts, was an only-in-Chicago phenomenon: Motorists were filing
for bankruptcy in droves to get impounded cars released without
paying any impound fees or underlying ticket debt. To the city,
what’s happened in bankruptcy court has been an abuse of the
system: Drivers were ignoring tickets they lawfully deserved and
then filing for bankruptcy to avoid paying what they owed.
Meanwhile, attorneys were profiting off the cases even when the
drivers got no debt relief.

The impound-to-bankruptcy phenomenon started in 2009, when a
federal appellate court ruling extended the automatic stay to
repossessed vehicles. Attorneys at DebtStoppers—which had filed the
initial case—soon realized the ruling could also apply to cars and
trucks impounded by the city because of unpaid tickets.

Racheal White stands in the middle
of the 8100 block of South Shore Drive near her home.

Marc Monaghan for
ProPublica

“We didn’t know this means we’re going to get all these parking
ticket cases, but we knew anybody who was holding a car was now
going to return the car immediately,” Semrad said. “And we enforced
it vigorously.”

In 2016, an estimated 3,770 impounded vehicles were returned to
drivers in bankruptcy. That represented more than a third of all
Chapter 13 cases filed that year involving Chicago ticket debt.

“It was a pretty big nightmare for us,” said David Holtkamp, a
senior corporation counsel for the city who oversees bankruptcy
matters. “People were filing these cases they had no intention of
completing. They’d file it, get the car out, and then the case
would ultimately get dismissed…And then they would file again.”

Last year, the city unveiled a new legal strategy to deter these
kinds of bankruptcies. It now claims liens on impounded vehicles,
which allows the city to hold onto them until the underlying ticket
debt is recognized as a secured claim in bankruptcy court—meaning
it will get paid out in full during a bankruptcy payment plan.

“People were filing these cases they had no intention of
completing. They’d file it, get the car out, and then the case
would ultimately get dismissed…And then they would file again.”

The tactic, yet another move in what seems like a cat-and-mouse
game between the city and indebted drivers, has been upheld by some
bankruptcy judges but is being appealed by motorists and their
lawyers.

City officials say the liens aren’t just about the city’s bottom
line; they say it’s also a consumer protection issue, a way to save
drivers from bankruptcies that are likely to get dismissed without
debt relief. Instead of paying a bankruptcy lawyer, city officials
say, drivers should enter into payment plans with the city where
every dollar goes directly toward outstanding debt.

In a way, Racheal White’s experiences with bankruptcy help
illustrate this.

A single mother of two teenage boys, White moved reluctantly to
the South Shore neighborhood a few years ago when she could no
longer afford rent in the suburbs. Almost immediately, she started
accumulating tickets, many of them speed camera violations.

White depended on her car, which she lovingly calls “Rosie,” to
get to a range of contract work across the metro area, including
her main job as a dental assistant, a gig handing out product
samples at stores and events, and an acting job as a hospital
patient for medical students.

Watch ProPublica’s video on ticket debt in
Chicago:

White, 35, couldn’t afford to pay the tickets, and eventually
her car got on the city’s boot list. She filed for Chapter 13
bankruptcy in 2016 to get a grip on her finances, and also to
protect her car.

“Bankruptcy gives you a nest, like a covering,” she said. “It
allows you to breathe so you can find a way to get yourself out of
a hole, to not worry about having your license suspended or getting
your car repossessed or your car booted.”

But less than a year later, her bankruptcy case fell apart. The
dentist office where she worked cut back her hours, and she
couldn’t afford to keep up with her payments. Her case was
dismissed last fall.

She had made eight payments totaling $2,275, according to a
final report issued by the Chapter 13 trustee who administered the
case. More than $1,900 went to legal fees. Another $105 went to
cover the trustee’s expenses. And $243 went toward her car
loan—most of it for interest. Not a dime went to her unsecured
debts, including the unpaid Chicago tickets.

Within weeks of her case getting dismissed, White’s Nissan went
back on the city’s boot list and was impounded. White borrowed
money from her mother to get on a city payment plan and get her car
back.

Then she filed for bankruptcy again.

On Borrowed Time

In February, less than eight months after she filed for
bankruptcy, Laqueanda Reneau told her lawyer to file the documents
to dismiss her case. She had been making her bankruptcy payments on
time, with $175 garnished from her paychecks each month. But as tax
season approached, it dawned on her that she’d also have to hand
over most of the $5,000 to $6,000 she said she expects to receive
in her federal tax refund, which is considered income and must be
taken into account in bankruptcy payment plans.

Reneau wasn’t willing to do that. She typically saves her tax
refunds to deal with emergencies and “immediate needs that come
up…throughout the whole year.”

Last year, she used $2,300 from her refund to buy a 2003 Kia
Sorento. This year, Reneau wants to move into her own apartment in
the city with her son. She plans to set aside enough money for the
security deposit, rent, furnishings, and basic household items like
plates.

When her case is officially dismissed, she knows she’ll be on
borrowed time before the city moves to suspend her license and puts
her car on the boot list again. She hopes to get on a city payment
plan before that happens.

David Eads contributed to this report.