The short answer is “Yes”, it is possible to file bankruptcy for free, which means, at no cost to the filer. First, the costs of filing bankruptcy include the court filing fee, which is currently $335.00 for a Chapter 7 case and $310.0 for a Chapter 13 case. These are the mandatory court filing fees, however they may be waived.
To get a waiver of bankruptcy court filing fees, at least here in the Central District of California, in some situations, the court may approve a filing fee to be paid in installments or waived entirely. Note that if an installment payment plan is approved, the payment schedule must be met or the bankruptcy case may be dismissed without the debtor obtaining a debt discharge.
Chapter 13 Petition Package – In Chapter 13 bankruptcy cases, waiver of filing fee and payment in installments are generally not allowed. The purpose of Chapter 13 is to keep up with payments, and therefore if the filing fee is not affordable, the court will question the debtor’s ability to succeed in a Chapter 13 case. There is a 99% failure rate in Chapter 13 without an attorney, due to the complexity of a repayment plan case.
Chapter 11 Petition Package – In Chapter 11 bankruptcy cases, fee waivers or installment payments are generally not allowed. Here, as in Chapter 13, filing without a bankruptcy attorney will doom your case, again, due to the complex nature of these cases.
Chapter 7 Petition Package – If a debtor files a Chapter 7 bankruptcy case and the debtor’s income is less than 150% above the HHS Federal Poverty Guidelines (which varies by family size), the court may waive the filing fee entirely or approve installment payments. The debtor must make a written request to the court and file the request at the receiving window of the Clerk’s Office at the time the bankruptcy petition is filed. The intake staff will contact the judge assigned the bankruptcy case, and the judge will make a decision as soon as possible. This may require the debtor to wait in court for a few hours if the judge is not immediately available, or the debtor may have to return the next day the court is open. Even if the court does not waive the filing fee, the court may allow a debtor to pay the filing fee in installments.
My understanding of the fee waiver program in our courts is that the judge’s position in deciding whether to waive the fee is this: you cannot get a fee waiver if you hire a professional to help you in the petition preparation phase. I agree with our courts that if you can hire even one petition preparer at your maximum allowable fee of $200.00, then you certainly can afford the filing fee of $335.00.
In addition to the court filing fee, two credit counseling courses are required. You can usually get a fee waiver if you are low-income eligible. You will have to ask, but this is also possible.
After that, the only additional costs are incurred if you hire a non-attorney petition preparer, or if you hire an attorney to represent you in your bankruptcy case. Now, don’t get me wrong, attorney-assisted bankruptcy filings tend to work much better than a case prepared without one, but that doesn’t mean it’s impossible.
Someone looking to save money by filing bankruptcy should consider whether they have anything to lose by doing so. Simply put, in Chapter 7 bankruptcy, the trustee’s job is to find assets to take, to pay off your creditors. If you have assets to protect and are unfamiliar with how to properly protect them from forfeiture by the trustee, it would be wise to hire an attorney.
However, if you are truly low-income and have no assets to protect, then you are an ideal candidate to file for bankruptcy on your own and get waivers for filing and counseling course fees. In fact, here in the Central District of California, we just changed our forms, in the hope that it will be easier to file. We also have Electronic Self-Representation (ESR), so you can handle all of this from the comfort of your home and file bankruptcy from your computer. As if that wasn’t enough, there are also self-help videos and a self-help desk at most of our courthouses.
So if you have nothing to lose but time, preparing your own bankruptcy case can save you money. It may even turn out better than finding the cheapest bankruptcy lawyer, paying him, and ruining your bankruptcy case. Fear not, if you get into trouble, or if you find yourself with a dissatisfied trustee asking you questions or recommending you consult with a lawyer, we are still here to help you and correct the record; for a fee.
