Practice Tip: Filing fee installment payments

A debtor filing bankruptcy can apply to the court to pay the filing fee in installments AFTER filing the petition. For example, the filing fee now for a Chapter 7 bankruptcy is $335.00. It can be really hard for a person to come up with that AND their attorney fees. Since their unpaid attorney fees would be discharged along with everything else in the bankruptcy, those nearly always have to be paid up front. But, the filing fees are a different matter since the court retains the power to dismiss the case if they go unpaid.

In the Eastern District of Kentucky, installment applications taking up to 120 days post-petition to pay the fees are routinely granted. However, there has been a shift in how the court handles those installments. Until recently, the clerks had a lot of latitude as to when those payments were made so long as they all were paid by the final deadline. NOW, though, if debtors run late on ANY of the installments, a Show Cause Order is being issued to make the debtor appear in court. If they cannot convince the judge that they have a good reason for running late, their bankruptcy may be dismissed.

So, if you are going the installment fee route and paying monthly payments of $83.75 for a Chapter 7, make sure you give yourself reminders. Also, you cannot pay by personal check. You either have to show up in person with exact change or you must mail in a money order for the exact amount. The courts system does not account for payments that are even a penny off. You can double or triple up (i.e. $167.5 or $251.25) or even pay it in full early. Just do not round up to $84.00.

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