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Debtor in Chapter 7 Bankruptcy Asks California Federal Court to Waive Filing Fees

By Frank T. Merrill (1848-1923), L.S. Ipsen, John Harley (Gutenberg.org) [Public domain], via Wikimedia CommonsContrary to many popular misconceptions about bankruptcy, declaring bankruptcy does not necessarily mean that a person is “broke.” It means that, even if the person has cash or other assets on hand, they cannot continue to make payments on their debts and other obligations with their available income and assets. Sometimes, though, a person is in such financial distress that they must ask the bankruptcy court to waive the filing fee and other court costs. This is known as a request to proceed in forma pauperis. A California district court recently considered such a request from a Chapter 7 debtor. Following the magistrate’s finding that the debtor did not make the request in good faith, the judge denied it. In re Gjerde, No. 2:15-mc-0013, findings and recommendations (E.D. Cal., Oct. 26, 2015), order (Nov. 13, 2015).

As with any legal proceeding, bankruptcy courts require a payment of fees for new cases. In the Central District of California, which includes Los Angeles, the filing fee for a Chapter 7 bankruptcy petition is $335, and $310 for a Chapter 13 petition. Most other new bankruptcy filings have a much higher fee of $1,717. Reopening a case also requires the payment of a fee—$260 for a Chapter 7 case and $235 for Chapter 13. The court charges fees to amend bankruptcy schedules, to file certain motions, and to issue certain documents like abstracts of judgment. Converting a Chapter 7 case to Chapter 13 is free of charge, but a conversion in the opposite direction costs $25.

Numerous federal statutes and rules address in forma pauperis requests for a wide range of fees, including the cost of obtaining a transcript, 28 U.S.C. § 753(f), and most or all fees associated with an appeal. Fed. R. App. P. 24. U.S. district courts have discretion to permit a waiver of fees if the requesting party submits an affidavit stating that they are unable to pay, or provide security for, the required fees. The court may not grant the request if it “certifies in writing that [the request] is not taken in good faith.” 28 U.S.C. § 1915(a)(3). While the same general standards as in other federal proceedings govern in forma pauperis requests in Chapter 13 cases, additional requirements apply to Chapter 7 cases. See Guide to Judiciary Policy, Vol. 4, § 820 et seq.

The debtor in Gjerde filed a Chapter 7 bankruptcy petition in April 2015 and requested a waiver of the filing fee. The court initially granted the request but vacated that order shortly afterwards when it discovered that the Chapter 7 trustee opposed the request. The debtor filed an appeal with the Bankruptcy Appellate Panel (BAP) for the Ninth Circuit, but federal law requires district courts, not BAPs, to hear appeals of in forma pauperis denials. 28 U.S.C. § 1915(a). The district court concluded that the in forma pauperis request was not made in good faith. It based this conclusion on the bankruptcy court’s findings that the debtor is a former attorney with extensive experience in bankruptcy law and is therefore “knowledgeable about law and bankruptcy procedure.” Gjerde, reco. at 2.

Since 1997, Los Angeles bankruptcy lawyer Devin Sawdayi has represented individuals and families in Chapter 7 and Chapter 13 bankruptcy cases. We are dedicated to helping our clients achieve a fresh start and repair their finances with dignity and respect. Contact us online, at (800) 474-6050, or at (310) 475-9399 today to schedule a free and confidential consultation with an experienced financial advocate.

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Photo credit: Frank T. Merrill (1848-1923), L.S. Ipsen, John Harley (Gutenberg.org) [Public domain], via Wikimedia Commons.