The Bankruptcy Court’s filing fee for Chapter 7 cases, which is currently set at $306, can be waived by the court pursuant to 28 U.S.C. §1930(f). However, whether or not a debtor filing Chapter 7 bankruptcy in San Jose will be granted a fee waiver depends not only on the debtor’s ability to prove that he meets the criteria established in the Code; it also depends on the judge’s discretion. In order to obtain a waiver of Chapter 7 filing fees, the debtor must prove two things. First, the debtor must show that his income, together with the income of his spouse and any dependents, is less than 150% of the current official poverty line for the debtor’s family size. Second the Chapter 7 bankruptcy debtor must persuade the judge that she is unable to pay the Court’s filing fee in installments. The “official poverty line” for purposes of a Chapter 7 bankruptcy fee waiver is that published by annually by the U.S. Dept. of Health and Human Services (DHHS).
The Chapter 7 filer who seeks a fee waiver must file Official Form 3B together with his Chapter 7 bankruptcy petition and schedules. The bankruptcy judge will then rule on whether the Chapter 7 debtor may proceed “in forma pauperis” without paying the filing fee, or whether the Chapter 7 debtor must pay the fee in installments (usually four), or whether the debtor must pay the fee in its entirety promptly or have her case dismissed.
Just because a Chapter 7 debtor meets the criteria set out in 28 U.S.C. §1930(f), does not mean that the bankruptcy judge will grant the fee waiver. The Code states that the judge “may” grant the fee waiver if these criteria are met, not that the judge “must” grant it, so the determination is entirely up the discretion of the court. Some judges are more or less sympathetic when it comes to fee waiver applications, and in my experience, Chapter 7 debtors are far more often allowed to pay the fee in installments than not to pay it at all. Some Chapter 7 panel trustees are quite hostile to fee waiver applications, which is no wonder given that they receive a portion of the Chapter 7 filing fee and stand to earn nothing in a no asset Chapter 7 if a fee waiver is granted.
Note also that under the Judicial Conference of the United States Interim Procedures Regarding the Chapter 7 Fee Waiver Provisions a Chapter 7 debtor is not disqualified from obtaining a fee waiver solely because she has paid a bankruptcy attorney to represent her in her Chapter 7 case. In fact, Federal Rule of Bankruptcy Procedure 1006(b)(1) was amended to delete a sentence from the Fee Waiver Application that had previously required the debtor to state that he had not paid anything to a bankruptcy attorney or petition preparer.
It is important to remember that everyone who files Chapter 7 bankruptcy is suffering real financial hardship. To convince the court that a debtor should not have to pay the fee really requires a showing that the particular debtor is truly destitute. In my experience, fee waivers are rarely granted by the Bankruptcy Court in San Jose and throughout the Northern District of California, but if the client meets the guidelines, there is nothing wrong with trying, and I would argue, is entirely proper as zealous advocacy of a Chapter 7 debtor’s interests.