What Is Considered a Hardship for Filing Bankruptcy?
- The U.S. Bankruptcy Court charges a fee to file a bankruptcy petition to pay for the services that the court renders. When you file a bankruptcy petition, your fee helps pay for the salary of the various court clerks, the court's paperwork and computing expenses and the fee of the bankruptcy trustee. If you have a demonstrable hardship, the court may waive your filing fee. From the perspective of the court, you may qualify for the fee waiver if you can show that your income falls below 150 percent of the poverty line, as determined by the U.S. Department of Health and Human Services. You must complete Form 3B to qualify for the fee waiver.
- If you can't qualify for the full fee waiver, you may be able to pay your fee in installments. The court typically grants permission for debtors to pay the filing fee in up to four installments, with the first installment due at the time of application. You must submit Form 3A, Application to Pay Filing Fee in Installments, with your petition when you file, along with your first payment. If you fail to make any of your payments on time, the court may dismiss your case.
- It is not an inexpensive proposition to file bankruptcy. Chapter 7 bankruptcy costs $299 just in filing fees, while a Chapter 13 bankruptcy costs $274. The fee waiver process only applies to a Chapter 7 bankruptcy. Because you need a regular income to file Chapter 13 bankruptcy, the court expects that as a Chapter 13 debtor, you should be able to afford the filing fee.
- While you may be able to avoid the Chapter 7 filing fee due to your financial circumstances, you cannot usually apply for a hardship exemption for other typical bankruptcy fees. For example, although you can legally file a bankruptcy case by yourself, many debtors rely on professionals, such as attorneys or bankruptcy petition preparers, to help file a petition. While in rare cases an attorney may handle a case pro bono, Chapter 7 attorney fees can often exceed $1,000.