§ 37.5 — Filing Fee and Option to Pay in Installments
Revised: August 17, 2009
The filing fee for a Chapter 13 case, currently $235,1 should be tendered to the clerk with the petition,2 or, in accordance with Bankruptcy Rule 1006, an application should be filed for permission to pay the filing fee in installments.3 While such applications are routinely granted, often by the clerk, there may be an exception when the debtor is a serial filer with a history of not paying filing fees.4 The number of installments may not exceed four, and the final installment must be paid within 120 days of the date of filing the petition. If the debtor is unable to complete payment of the filing fee within 120 days of the filing of the petition, for cause shown and upon application, the court can extend the time for making any installment provided that the fee is ultimately paid in full within 180 days of the petition.5 It has been held that the failure to pay a filing fee in installments is a ground for denial of confirmation.6 Failure to pay the final installment within the time prescribed may be cause for dismissal of the case.7
If the filing fee is to be paid through the Chapter 13 plan, then in lieu of specifying the frequency of installments, counsel should state in the application that “payment through the plan” is proposed. In jurisdictions that delay confirmation until expiration of the bar date for filing proofs of claim,8 installment payment of the filing fee through the plan may be impossible to accomplish within the time periods fixed by Bankruptcy Rule 1006.
Until the filing fee is paid in full, debtor’s counsel is prohibited to be paid “further” attorneys’ fees.9 Similarly, a bankruptcy petition preparer10 must certify on any application to pay the filing fee in installments that the preparer “will not accept any additional money or any other property from the debtor before the filing fee is paid in full.”11 The current version of Rule 1006(b)(3) permits payment of attorney fees or petition preparer fees before the petition but no additional fees until the filing fee has been fully paid.
There is nothing in the Bankruptcy Code that explicitly conditions the “filing” of a Chapter 13 petition that the debtor tender payment or a promise to pay the filing fee. Bankruptcy Rule 1006(a) states that every petition “shall be accompanied by the filing fee” except that “a voluntary petition . . . shall be accepted for filing if accompanied by the debtor’s signed application, prepared as prescribed by the appropriate Official Form, stating that the debtor is unable to pay the filing fee except in installments.”12 The omission of a general statement that a voluntary petition “shall be accepted” even when it is not accompanied by the filing fee or an application to pay in installments suggests conflicting interpretations: Did the rule makers intend to prohibit a “filing” that is not accompanied by payment or an installment application? Or did they intentionally avoid the question of consequences to attach to the “filing” of a petition without paying fees?
Under the former Bankruptcy Act, in United States v. Kras,13 the Supreme Court held that Congress could constitutionally condition the granting of a discharge in bankruptcy that the filing fee be paid. Kras did not directly address the question whether a petition is “filed” when not accompanied by payment or an installment application.
It has been said that the requirement in Bankruptcy Rule 1006(a) that every petition be accompanied by a filing fee “does not determine when a petition is filed. . . . It does not mandate that a petition should not be considered filed until the fee is paid.”14 When a Chapter 13 petition was tendered with an unacceptable personal check, another bankruptcy court stated that the petition should not have been returned by the clerk’s office but instead should have been marked filed subject to dismissal if the payment problem was not remedied.15
These cases demonstrate that it is risky to file a Chapter 13 petition without payment of the filing fee or an application to pay the fee in installments. Technically, the petition may be “filed,” but counsel cannot depend on the clerk’s office to properly manage a fee-less petition. Litigating whether the petition was properly filed will definitely be more expensive than tendering the fee with the petition in the first instance. Counsel should never allow the case to be dismissed for failure to pay the filing fee when the fee was collected by the attorney.16
Note also that the form of payment can be critical. In both cases discussed above, the filing fee was tendered with the petition—just not in a form that was acceptable to the bankruptcy clerk’s office. Ironically, most bankruptcy clerks will not accept filing fees in legal tender (cash). Perhaps stranger still, most clerks will not accept checks except those drawn on an attorney’s business account and then only in the exact amount required. Some bankruptcy courts accept credit cards, others don’t. As Electronic Case Filing (ECF) has spread among the bankruptcy courts, acceptance of credit card payments from the debtor’s attorney as part of an electronic filing has become routine, if not mandatory.
While BAPCPA included a provision for possible waiver of filing fees in Chapter 7 cases, no waiver of the filing fee is authorized for Chapter 13 debtors.17
1 In addition to this $235 filing fee, the Judicial Conference has approved the collection of a $39 “miscellaneous administrative fee” in every Chapter 13 case, for a total of $274. See 28 U.S.C. § 1930 and app.
2 Local rules or local practice may require a particular form of payment of filing fees. Cash is not widely accepted by clerks’ offices—for security and accounting reasons. Not all checks are acceptable—some districts will not accept checks from a debtor; most districts will accept an attorney’s check. With Electronic Case Filing, many districts now accept, and some require, payment of filing fees by credit card.
3 See §§ 36.6 [ Application to Pay Filing Fee in Installments ] § 36.29 Application to Pay Filing Fee in Installments and 385.1 [ Filing Fees, Installments and Waiver ] § 37.6 Filing Fees, Installments and Waiver after BAPCPA.
4 See, e.g., In re Baunchand, No. 07-38452-H3-13, 2008 WL 318654 (Bankr. S.D. Tex. Feb. 1, 2008) (unpublished) (Clark) (Applying totality-of-circumstances test, motion to pay filing fees in installments is denied when debtor in third case has no disposable income, has demonstrated lack of understanding of documents necessary to maintain case, has falsely certified that she made plan payments and filed an incorrect credit counseling certificate.).
5 Fed. R. Bankr. P. 1006(b)(2).
6 In re Ennis, 178 B.R. 189, 190 (Bankr. W.D. Mo. 1995) (“The plan cannot be confirmed because it violates 28 U.S.C. § 1930[,] which requires the fee, 11 U.S.C. § 1325(a)(2), which requires the filing fee to be paid before confirmation, and Bankruptcy Rule 1006, which requires the filing fee to accompany the petition at the commencement of the case unless payment in installments is permitted, in which case all installments must be paid within 120 days after filing of the petition. Debtors must pay the filing fee or the case must be dismissed. . . . Debtors have refused to pay the required fee. Thus, the plan also violates § 1325(a)(3) because the refusal to pay indicates the plan has not been proposed in good faith and not by any means forbidden by law.”).
7 See In re Skinner, No. 08-60574-aer13, 2008 WL 2339798 (Bankr. D. Or. June 6, 2008) (unpublished) (Radcliffe) (Failure to make final installment payment of filing fee by time set is cause for dismissal.).
8 See § 216.1 [ Timing of Hearing on Confirmation ] § 115.1 Timing of Hearing on Confirmation before BAPCPA. This practice is arguably prohibited after the 2005 amendments to 11 U.S.C. § 1324(b). See § 502.1 [ Timing of Hearing on Confirmation ] § 115.2 Timing of Hearing on Confirmation after BAPCPA.
9 Fed. R. Bankr. P. 1006(b)(3), discussed in § 385.1 [ Filing Fees, Installments and Waiver ] § 37.6 Filing Fees, Installments and Waiver after BAPCPA.
11 See Official Bankr. Form 3.
12 Fed. R. Bankr. P. 1006(b)(1).
13 409 U.S. 434, 93 S. Ct. 631, 34 L. Ed. 2d 626 (1973).
14 In re Schleier, 290 B.R. 45, 52 (Bankr. S.D.N.Y. 2003) (When debtor handed petition to deputy clerk and offered to pay the filing fee in cash, the petition was filed notwithstanding that form of payment was refused by the clerk.).
15 In re Snyder, 287 B.R. 228, 230–31 (Bankr. E.D. Mo. 2002) (“When he filed his petition on July 6, 1999, he tendered a check drawn from Eric J. Snyder, P.C., Snyder’s legal practice account. The Bankruptcy Clerk’s Office file stamped a case number on Snyder’s petition and took his check. Snyder left the Court with a copy of his filed petition which reflected the assigned case number. . . . After Snyder left the Court, the Clerk’s Office determined that Snyder’s check was drawn from a personal account and was not an acceptable form of payment. Snyder’s petition was not processed. The case number was reassigned to another case. Snyder’s petition and check were returned to him by mail and he was informed that his method of payment of the filing fees was not acceptable. The Clerk’s Office later concluded that instead of returning the petition to Snyder, a better procedure would have been to process the petition in the Court’s system and issue a deficiency notice to Snyder informing him that he needed to make a valid payment of his filing fees within five days or else his case would be dismissed. . . . After receiving the return of his petition and check, Snyder admits that he did not take any action until he filed a new and second petition on October 19, 1999. . . . Snyder, a bankruptcy petitioner, should have appreciated the obvious consequences of having his petition returned by the Court, that is, his petition was not effectively filed and he needed to act to correct the situation. . . . The Court concludes that when Jane Snyder attended the dissolution hearing on October 19, 1999, the automatic stay was not violated because there was no automatic stay was [sic] in place.”).
16 See, e.g., United States Trustee v. Jones (In re Alvarado), 363 B.R. 484, 492 (Bankr. E.D. Va. 2007) (Debtors’ attorney sanctioned for permitting dismissal for nonpayment of filing fee when attorney collected fee, did not advise client of dismissal and then filed second petition without debtor’s consent. Under Rule 9011 and § 105(a), sanction prohibits bankruptcy practice while attorney obtains “continuing legal education with regard to BAPCPA and his ethical obligations under the Virginia Rules of Professional Conduct.”).
17 See 28 U.S.C. § 1930(f) and Fed. R. Bankr. P. 1006(c).