The short answer is “Yes,” it is possible to file for bankruptcy for free, which means, at no cost to the filer. First, the costs of filing for bankruptcy include the court’s filing fee, which currently is $335.00 for a Chapter 7 case, and $310.0 for a Chapter 13 case. These are the mandatory court filing fees, however, they can be waived.
In order to obtain a fee waiver of the bankruptcy court’s 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 completely. Note that if an installment payment plan is approved, the payment schedule must be complied with or the bankruptcy case may be dismissed without the debtor obtaining a discharge of debts.
Chapter 13 Petition Package – In chapter 13 bankruptcy cases, it is generally not allowed to have a filing fee waived or to pay in installments. The purpose of chapter 13 is to keep current with payments, and therefore if the filing fee is not affordable, the court will question a debtor’s ability to succeed in a chapter 13 case. There is a 99% fail 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 usually are not allowed. Here, as in Chapter 13, filing without a bankruptcy attorney will doom your case to failure, 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 federal H.H.S Poverty Guidelines (which varies depending on your family size), the court may waive the filing fee completely or approve payments in installments. The debtor must make a written request to the court and submit the request at the Clerk’s Office intake window at the time the bankruptcy petition is filed. The intake staff will contact the judge to whom the bankruptcy case is assigned, and the judge will make a decision as soon as is possible. This may require the debtor to wait at the courthouse for a few hours if the judge is not available right away, or the debtor may have to return on the next day that 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 the judge’s position in deciding whether to waive the fee is this: You cannot obtain a fee waiver if you hire a professional to assist you in the petition preparation phase. I would agree with our courts that if you can afford to hire even a petition preparer at their maximum allowed rate of $200.00, then you can certainly afford the $335.00 filing fee.
In addition to the court’s filing fee, there are two credit counseling courses that are required. You can usually obtain a fee waiver, if you are eligible as low-income. You’ll have to ask for it, but this too, is possible.
After that, the only additional costs are incurred, if you hire either a petition preparer that is not a lawyer, 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 run much smoother than a case prepared without one, but that doesn’t mean that it’s impossible.
Someone looking to save money when filing bankruptcy, needs to consider whether they have anything to lose by doing it this way. Simply put, in Chapter 7 bankruptcy, the trustee’s job is to look for assets to take, to pay your creditors. If you have assets to protect, and you’re not familiar with how to properly protect that from the trustee’s taking, then, it would be wise to hire an attorney.
However, if you’re truly low-income, and have no assets to protect, then, you are a prime candidate to file bankruptcy on your own and obtain waivers for the filing and counseling courses fees. In fact, here in the Central District of California, we just changed our forms, in the hopes to make it more simple to file. We also have electronic self-representation ( ESR ) too, so you can handle all of this from the comfort of your home and file bankruptcy from your computer. As if that weren’t enough, there are also self-help videos and a self-help desk in most of our courthouses.
So, if you’ve got nothing to lose but time, then preparing your own bankruptcy case can save you money. It may even turn out better than if you shopped for the cheapest bankruptcy lawyer, paid them, and they messed up your bankruptcy case. Never fear, if you get into trouble, or if you encounter a unhappy trustee that asks you questions, or recommends you consult with an attorney, we’re still here to assist and correct the record; for a fee.