Can The Court Waive the Federal Bankruptcy Filing Fee?

The short answer is yes, but as you probably know, you must qualify for such a waiver.  Here’s what you need to know about how to get such a waiver.

The Federal Bankruptcy filing fee was increased from $306 to $335 on June 1, 2014 for a Chapter 7 personal bankruptcy.  These fees must be paid to the Bankruptcy Court when the initial bankruptcy petition is filed.

Debtors can file a motion at the time they file their Bankruptcy Petition and Schedules, to waive the filing fee.  The Court will review the Motion to Waive Filing Fees and respond with their opinion in a timely basis.

In a recent case, Bankruptcy Court Judge Hoffman of the Central Division of Massachusetts rendered a decision that explains how he looks at the Motion to Waive fees.  There is a two-prong test.  First, is the debtor’s household income less than 150% of the official poverty level for a family of the same size?  Even if a married debtor is filing alone, their spouse’s income must also be taken into account when this test is performed. The Court will look at “household” income.  This quantitative test is easy as the income figures are simply applied to the poverty level at the time of filing.

The second prong of the test is “qualitative” according to the Court.  Judge Hoffman said that the Court must look at whether the debtor is able to pay the fee in installments.  For example, the law is clear that simply being able to pay an attorney does not mean the debtor will be able to pay the filing fee as well.

In the case recently reviewed by Judge Hoffman, the attorney reduced his fee, which was helpful to proving inability to pay over time.  However, in this case the debtor testified that she had paid her attorney the filing fee and, by agreement, he put the same in his escrow account.  Thus, the Court decided that the second prong of the test was not satisfied:  the debtor was able to pay the fee notwithstanding her minimal income.

If you are concerned you will not be able to pay the cost of the filing fee when declaring bankruptcy you should discuss that with an experienced bankruptcy attorney early in the process so that a Motion to Waive can be filed on your behalf and this second prong of the test can be addressed.

What Does the Court Require to Pass the Fee Waiver Test?

We have filed a Motion to Waive filing fee on numerous occasions.  The qualitative part of the test clearly is troublesome in some instances.  In the event a debtor can borrow the money for the attorney fee, but not for the filing fee, they may pass the second prong of the test.

Debtors filing without an attorney should review the law and file accordingly.

Hire an Experienced Bankruptcy Attorney

Notwithstanding your income or assets, we recommend all debtors get the experience of an attorney who has represented debtors before the Bankruptcy Court.

Burns & Jain have filed Bankruptcy Petitions for debtors since 1985.  Call 617-227-7423 for a free consultation.