By Columbia – Lexington Bankruptcy Attorney Lex Rogerson
For Columbia area residents planning on filing bankruptcy, now is a good time to complete the filing process. The Administrative Office of the U.S. Courts will increase the fees for filing a chapter 7 or chapter 13 case effective June 1.
The new figures
What a bankruptcy attorney refers to as the filing fee in a bankruptcy case is actually a composite of separate fees. These include the basic filing fee, an administrative fee, and, in chapter 7 cases, a trustee surcharge. The June 1 increase will raise one of those components, the administrative fee, by $29, from $46 to $75. For chapter 7, this means the total filing fee will go up from $306 to $335. For chapter 13, the current $281 fee will become $310.
Compared with other fees changed at the same time, these increases are relatively modest. The filing fee for an adversary proceeding — a separate lawsuit related to a bankruptcy case, involving to issues like improper creditor behavior or the dischargeability of a particular debt — goes up from $293 to $350, a bump of $57. The fee for filing chapter 11, which is typically business reorganization, rises by more than $500 and will now total $1,717.
For chapter 12, which is family farmer reorganization and is relatively rare in South Carolina, the same $29 increase applies. The new fee is $275.
Although a large majority of those filing bankruptcy pay the filing fee, the bankruptcy court can grant a waiver for low-income filers. The court considers several factors, but in general, the debtor’s income must be less than 150% of the federal poverty guideline for his or her household size. In addition, by statute, debtors who do not qualify for a waiver can pay the filing fee in installments.
Why this happened
Court fees are set by the Judicial Conference of the United States, a committee composed of senior federal judges. The conference did not announce a reason for the increases, but funding cuts have taken their toll on bankruptcy courts across the country during the last few years as the number of bankruptcy filings has decreased. Estimates are that overall funding is down about 35%. In the District of South Carolina, the clerk of the bankruptcy court has been forced to lay off several staff members over the last year or so and has shifted responsibility for serving several kinds of notices to debtors’ attorneys.
In the past few decades, filing fees have tended to increase modestly every five years or so.
Filing fees represent only what the debtor must pay the court and its officers in connection with a bankruptcy case. They are typically a small part of the overall expense of filing bankruptcy, with most of the cost being attorneys’ fees. Different lawyers charge different amounts, and their fees can vary with the type of case and the special problems each case involves. However, the fee a debtor’s attorney charges is subject to review by the bankruptcy court and the US Trustee, a division of the US Department of Justice, so variations among different lawyers tend to be small.