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Procedures for In Forma Pauperis Filings in Bankruptcy Cases

nyuszika on stock.xchngA California federal district court ruled recently on a debtor couple’s application to proceed with an appeal in forma pauperis (IFP), meaning without payment of filing fees and other costs. This is available to people bringing a variety of claims in the federal court system, provided they meet requirements set by statute. In personal bankruptcy cases, courts have established different procedures for Chapter 7 than for Chapter 13 cases. In either type of bankruptcy case, a debtor must provide evidence to the court of inability to pay fees, based on either total assets or income below a certain level.

An order granting IFP waives most court costs for litigants and appellants, such as filing fees and costs of transcripts. The procedure for seeking IFP in a Chapter 13 case is the same procedure used in most federal proceedings, but Chapter 7 cases have different standards. In cases where an appellant wants to waive the fee for a trial transcript, the trial court must certify that the appeal is not frivolous and that the transcript is necessary to the appeal. 28 U.S.C. § 753(f). The federal government pays the cost of the transcript in that situation. A trial court can block an IFP appeal with a written certification that the appeal is not in good faith. 28 U.S.C. § 1915(a)(3).

A litigant or appellant applying for IFP in most federal matters, including Chapter 13 cases, must submit an affidavit stating the reasons IFP is justified. The statute requires that the affidavit state “that the person is unable to pay such fees or give security therefor.” 28 U.S.C. § 1915(a)(1). Additional requirements apply to prisoners in state or federal custody, but the statute itself does not identify a specific income level that qualifies an applicant for IFP. In Chapter 7 cases, federal courts have established specific requirements, including minimum income, to qualify for IFP. A debtor’s income must be less than 150% of the federal poverty guidelines, which is $1,436.25 per month or $17,235 per year for a single-person household in California in 2013. The courts have promulgated a form, known as Official Form 3B, for debtors seeking IFP in Chapter 7 cases.

Seeking IFP in a bankruptcy case can be complicated with regard to jurisdiction. A debtor couple in a Chapter 13 case recently obtained a district court’s approval to proceed with an appeal IFP. In re Tevis, No. 2:13-mc-0082, order (E.D. Cal., Aug. 7, 2013). The debtors wanted to appeal the bankruptcy court’s ruling to the Ninth Circuit’s Bankruptcy Appellate Panel (BAP), and they included an IFP application. Before the BAP could take up their appeal, the district court had to rule on the IFP issue. Jurisdictional statutes require that district courts, rather than bankruptcy courts or the BAP, rule on IFP applications. The district court found that the debtors had met all of the requirements of the IFP statute and granted their application.

The bankruptcy system can offer relief to people whose required debt payments are more than they can pay from their available income. A debtor may be able to pay down debts by liquidating assets, restructure bill payments into a more manageable schedule, and even possibly receive a complete discharge of some debts. Bankruptcy attorney Devin Sawdayi has helped clients in the Los Angeles area through the bankruptcy process for over sixteen years. To schedule a free and confidential consultation to discuss your case, contact us today online or at (310) 475-9399.

More Blog Posts:

Bankruptcy Court Denies Chapter 13 Debtor’s Request for Turnover of Garnished Wages, Los Angeles Bankruptcy Lawyer Blawg, October 15, 2013

Understanding the Chapter 7 “Means Test,” Los Angeles Bankruptcy Lawyer Blawg, October 4, 2013

With Interest Rates on Many Loans Set to Double Soon, The Dischargeability of Student Loans in Bankruptcy is a Crucial Issue for Future College Students, Los Angeles Bankruptcy Lawyer Blawg, September 23, 2013

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