Is it possible to file bankruptcy for free?
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 for 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 required 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. Keep in mind that if an installment plan is approved, the payment schedule must be met or the bankruptcy case may be dismissed without the debtor obtaining a discharge of debts.
Chapter 13 Petition Packet – In Chapter 13 bankruptcy cases, waiver of the filing fee and installment payments 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. 99% in Chapter 13 without an attorney, due to the complexity of a payment plan case.
Chapter 11 Petition Packet – 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 Packet – 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. submission in full or approve installment payments. The debtor must make a written request to the court and file the request at the Clerk’s Office reception window at the time the bankruptcy petition is filed. The intake staff will contact the judge to whom the bankruptcy case was assigned, 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 as follows: You cannot get a fee waiver if you hire a professional to assist you in the preparation phase of the petition. I agree with our courts that if you can even hire a petition preparer at their maximum allowable fee of $200.00, then you can certainly afford the $335.00 filing fee.
In addition to the court filing fee, two credit counseling courses are required. You can usually get a fee waiver if you qualify as low-income. You will have to ask for it, 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 for 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 not familiar with how to properly protect them from confiscation by the trustee, it may be wise to retain 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, hoping to make it 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 in 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 work out better than finding the cheapest bankruptcy attorney, paying him, and screwing up your bankruptcy case. Fear not, if you get into trouble, or run into an unhappy trustee who asks you questions or recommends you see an attorney, we’re still here to help and fix the record; for a fee.