## Facts

- Carolyn Robinson pleaded guilty in Connecticut state court to larceny based on wrongfully receiving welfare benefits.
- The state court imposed a prison sentence, suspended execution, and placed Robinson on five years’ probation.
- As a condition of probation, the court ordered Robinson to pay restitution in monthly installments to the Connecticut Office of Adult Probation for the duration of probation.
- Under state law, restitution payments were made to the Probation Office and then forwarded to the victim.
- Robinson later filed a voluntary Chapter 7 bankruptcy petition and listed the restitution obligation as a debt.
- State agencies received notice of the bankruptcy but filed no proof of claim and no objection to discharge; Robinson received a discharge and stopped making restitution payments.
- After being told the restitution remained owed, Robinson filed an adversary proceeding seeking a declaration that the restitution obligation had been discharged.

## Issues

1. Whether a state criminal restitution obligation imposed as a condition of probation is dischargeable in Chapter 7.
2. Whether such restitution is excepted from discharge by 11 U.S.C. § 523(a)(7) as a “fine, penalty, or forfeiture” payable to and for the benefit of a governmental unit and not compensation for actual pecuniary loss.

## Decision

- The Supreme Court reversed the Second Circuit.
- The Court held that § 523(a)(7) preserves from Chapter 7 discharge conditions imposed as part of a state criminal sentence, including restitution ordered as a condition of probation.
- The Court treated criminal restitution as serving the State’s penal and rehabilitative interests, even when payments are ultimately forwarded to a victim.
- The Court emphasized federalism concerns and the long-standing practice of bankruptcy courts avoiding interference with state criminal judgments.

## Legal Principles

- 11 U.S.C. § 523(a)(7) excepts from Chapter 7 discharge debts that function as criminal sanctions, including restitution imposed as part of a criminal sentence.
- Criminal restitution is characterized primarily as penal and rehabilitative, not as private compensation, because it is imposed and controlled by the criminal court to serve public purposes.
- Bankruptcy discharge is not intended to operate as a means to undermine or alter state criminal sentencing choices; absent clear congressional direction, bankruptcy courts should not disturb criminal judgments.

## Conclusion

A state criminal restitution obligation imposed as a condition of probation is nondischargeable in Chapter 7 under 11 U.S.C. § 523(a)(7), even when the restitution amount reflects victim loss and payments are forwarded to the victim.


Kelly v. Robinson, 479 U.S. 36 (1986)