§ 73.11 — Filing Fees after BAPCPA

Revised: September 24, 2010

[1]

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)1 changed the filing fee for a Chapter 13 case from $155 to $150.2 Effective April 9, 2006, the Deficit Reduction Act of 20053 increased the Chapter 13 filing fee to $235. At this writing, with the $39 administrative fee, the total fee required for filing a Chapter 13 case is $274.

[2]

Filing fees are now second priority under § 507(a)(2) and must be paid in full before confirmation or through the plan under § 1325(a)(2).4 BAPCPA made no changes to who must pay or how filing fees are paid in Chapter 13 cases. BAPCPA did authorize the waiver of fees in Chapter 7 cases for individual debtors with incomes less than 150 percent of the official poverty line.5 It has been held that a waiver of filing fees granted in a Chapter 7 case can be revisited at conversion from Chapter 7 to Chapter 13; conversion itself is evidence that the waiver was improvidently granted and that the debtor should be required to pay the Chapter 7 filing fee in the Chapter 13 case after conversion.6

[3]

Inability to pay the filing fee in installments is one of the requirements for a fee waiver under the BAPCPA amendments to 28 U.S.C. § 1930(f). The rules drafters perceived that the prepetition payment of attorney fees in Chapter 7 cases would render many Chapter 7 debtors ineligible for installment payments and thus enhance their eligibility for the fee waiver in new 28 U.S.C. § 1930(f). They deleted the provision in former Rule 1006(b)(1) that required an applicant for payment of a filing fee in installments to state that no money had been paid to an attorney for services in connection with the case.

[4]

The rules drafters then conformed Bankruptcy Rule 1006(b)(3) to clarify that a Chapter 13 debtor is eligible to pay a filing fee in installments, notwithstanding that some or all of an attorney’s fee has been paid before the petition. Bankruptcy Rule 1006(b)(3) now reads: “All installments of the filing fee must be paid in full before the debtor or chapter 13 trustee may make further payments to an attorney . . . who renders services to the debtor in connection with the case.”7

[5]

The net effect of these changes is that filing fees can be paid in installments through a Chapter 13 plan notwithstanding that a portion (all?) of an attorney’s fee was paid before the petition. If an application for installment payment of the filing fee is filed, neither the debtor nor the Chapter 13 trustee can make further payments to an attorney until the filing fee is paid in full.

[6]

Perhaps it would be silly to ask the rule drafters why it is okay for a Chapter 13 debtor to pay a prepetition car note8 when the filing fee has not yet been paid in full but it is not okay to pay debtor’s counsel. Nothing in the Bankruptcy Code restricts the payment of prepetition debt in the manner required by Bankruptcy Rule 1006(b). Filing fees are no more or less entitled to priority in a Chapter 13 case than compensation allowed to a Chapter 13 debtor’s attorney.

[7]

Under § 1307(c)(2), the failure to pay a fee or charge required by Chapter 123 of Title 28 is a ground for conversion or dismissal of a Chapter 13 case.9 Bankruptcy Rule 1017(b) provides that if any installment of a filing fee is not paid, “the court may, after a hearing on notice to the debtor and the trustee, dismiss the case.”10 There is evidence in reported decisions that the payment of filing fee installments is monitored by the clerk’s office in some districts and a missed payment quickly results in a notice of deficiency and order of dismissal if the missed installment is not cured.11 The phrase “any fees or charges required under chapter 123 of title 28” has been interpreted to include unpaid filing fees from a prior Chapter 13 case with the result that any subsequent Chapter 13 case will be dismissed unless the debtor pays the unpaid filing fees from a prior dismissed case.12


 

1  Pub. L. No. 109-8, 119 Stat. 23 (2005).

 

2  See Pub. L. No. 109-8, § 325(a), 119 Stat. 23 (2005).

 

3  Pub. L. No. 109-171, 120 Stat. 4 (2006).

 

4  See §§ 100.5 [ Filing Fees ] § 73.10  Filing Fees and 385.1 [ Filing Fees, Installments and Waiver ] § 37.6  Filing Fees, Installments and Waiver after BAPCPA.

 

5  See 28 U.S.C. § 1930(f).

 

6  See In re Kauffman, 354 B.R. 682, 684–85 (Bankr. D. Vt. Oct. 24, 2006) (Brown) (Waiver of filing fee under 28 U.S.C. § 1930(f)(1) can be revisited based on evidence it was improvidently granted; conversion from Chapter 7 to Chapter 13 supports finding that debtor can pay filing fee. “[A] bankruptcy court may revoke a fee waiver if: . . . facts or circumstances are discovered during the administration of the case which demonstrate the waiver was unwarranted . . . . [T]he Court weighs the import of the Debtor’s voluntary conversion of her case to chapter 13, where she is acknowledging the ability to make monthly payments to creditors and fund an individual reorganization plan. . . . Since the Court has concluded that the fee waiver was not warranted, principles of equity require the Debtor to pay the chapter 7 filing fee, rather than the chapter 13 filing fee, in order to return the Debtor and the case trustee to the financial positions they would have been in from the outset of the case if the IFP relief were not granted.”).

 

7  Fed. R. Bankr. P. 1006(b)(3), discussed further in § 385.1 [ Filing Fees, Installments and Waiver ] § 37.6  Filing Fees, Installments and Waiver after BAPCPA.

 

8  See 11 U.S.C. § 1326(a)(1)(C), discussed in § 404.1 [ Adequate Protection before Confirmation ] § 47.2  Preconfirmation Adequate Protection after BAPCPA.

 

9  11 U.S.C. § 1307(c), discussed in §§ 312.1 [ Cause for Conversion ] § 141.3  Cause for Conversion and 333.1 [ Cause for Dismissal—In General ] § 152.2  Cause for Dismissal—In General.

 

10  Fed. R. Bankr. P. 1017(b)(1).

 

11  See, e.g., In re Kelly, No. 06-71019-JB, 2006 WL 6591613, at *1 (Bankr. N.D. Ga. Nov. 28, 2006) (Bihary) (Citing Bankruptcy Rules 1006 and 1017(b), failure to timely pay filing fee installment results in clerk’s notice of deficiency and order of dismissal; motion to reopen is denied when debtor still has not paid entire filing fee. “Debtor failed to pay the installment due on October 5, 2006 and the Clerk’s office sent a deficiency notice on October 11, 2006 notifying debtor that the installment was not paid, instructing him to pay the installment within ten days, and notifying him that the case would be dismissed if the installment was not paid. . . . On October 27, 2006, the case was dismissed for failure to pay the filing fee. . . . Federal Rule of Bankruptcy Procedure 1006 requires a debtor to pay a filing fee and permits that fee to be paid in installments. If an installment of the filing fee is not paid, Rule 1017(b) allows the court to dismiss the debtor’s case. In the present case, debtor did not pay his filing fee, was notified of the deficiency and consequences of his failure to pay and still has not paid the remaining installments on his filing fee. If debtor’s failure to pay the filing fee were the only problem in this case, debtor might be permitted to re-open the case and pay the filing fee.”).

 

12  See In re Domenico, 364 B.R. 418 (Bankr. D.N.M. Mar. 2, 2007) (Starzynski) (Phrase “any fees or charges required under chapter 123 of title 28” in § 1307(c)(2) includes unpaid filing fees from a prior Chapter 13 case; on order to show cause, current Chapter 13 case will be dismissed unless debtor pays unpaid filing fees from prior dismissed Chapter 13 case. That Congress amended § 523(a)(17) in BAPCPA to address only prisoners does not compel conclusion that failure of a non-prisoner to pay filing fee is ambiguous.).