Opinion
ORDER ON MOTION TO RECONSIDER WAIVER OF CHAPTER 7 FILING FEE
PETER W. BOWIE, Chief Judge
The Congress of the United States has provided an in forma pauperis procedure for waiving filing fees in Chapter 7 cases by enactment of 28 U.S.C. § 1930(f)(1). It provides:
Under the procedures prescribed by the Judicial Conference of the United States, the district court or the bankruptcy court may waive the filing fee in a case under chapter 7 of title 11 for an individual if the court determines that such individual has income less than 150 percent of the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with section 673 (2) of the Omnibus Budget Reconciliation Act of 1981) applicable to a family of the size involved and is unable to pay that fee in installments....
Courts are in agreement that the statute calls for a two prong test. See, e.g., In re Nuttall , 334 B.R. 921, 923 (Bankr. W.D. Mo. 2005); In re Stickney , 370 B.R. 31, 36 (Bankr. D.N.H. 2007).
Debtor filed his Chapter 7 petition on June 17, 2010, and simultaneously applied for a waiver of the filing fee. The application was prepared by his attorney, claims a family size of 2, a combined monthly income of $1,302.50 and expenses of $1,848.48. Both income and expense figures were supported by Schedules I and J, respectively. The applicable poverty guideline for a family of 2 in California, multiplied by 150%, exceeds $1,800. So Mr. Orozco has met the first prong of the test.
Reading the cases on the issue of the second prong-whether under the totality of the circumstances debtor is able to pay the filing fee in installments-yields views that cover the spectrum. In the present case, the trustee's concerns center on 1) the debtor's failure to list any cash on hand or money in an account, as called for in items 8 and 9 of the application; 2) failure to list the debtor's vehicle as a personal property asset in item 10; and 3) the amount debtor paid his attorney.
The vehicle is the easiest to address because, as noted, debtor filed his Schedules with his petition and contemporaneously with submitting the application for waiver. In his motion for reconsideration, the trustee appears to believe the debtor "owns a motor vehicle free and clear valued at $9,865.00". Schedule B does list such a vehicle and "without Deducting any Secured Claim or Exemption". Schedule C reflects the debtor's value of an exemption at $0, and Schedule D reflects a credit union creditor with a claim for $15,028 for the vehicle the debtor values at $9,965. Because the vehicle is significantly overencumbered, there is no occasion to discuss whether a debtor with equity in an illiquid asset is obliged to sell or borrow against that asset to pay the filing fee.
The trustee is correct that in the initial application for waiver debtor did not list the amounts of cash on hand or on deposit in items 8 and 9. As the trustee also notes, debtor did disclose amounts for both those items in Schedule B, items 1 and 2. There, debtor stated he had $100 in cash on hand, and $1,000 in his Chase Checking Account. He also had $5.27 in a savings account at the Credit Union that made his car loan. Schedule I makes clear that Mr. Orozco is retired and his sole income is Social Security. His spouse is listed as a homemaker with no income.
The trustee's continuing concerns about the accounts is that at the § 341a meeting the debtor provided the statement for his Chase account showing a balance on the petition date of $1,335.18, not $1,000. Depending on the quality of debtor's maintenance of his checking account, debtor may or may not have known the actual balance on June 17 because the statement ran beyond that date.
Where Schedules have been filed by the time the Court reviews an application for fee waiver, the Court generally looks at selected Schedules, including B, C, D, I and J. In this case, the Court would have noted the nominal account balances on Schedule B, and would have recognized debtor could have paid the fee. However, the Court remains persuaded that debtor's sole income of $1,302 from Social Security assessed against spartan monthly expenses of over $1,800 per month would deplete those tiny reserves in 2-2½ months, leaving nothing. The Court is persuaded it would have made no difference if it had known the balance on the Chase account was $1,335 instead of $1,000 in terms of granting the fee waiver.
The remaining mystery is the changing fees which were paid to debtor's attorney, Mr. Stacy. The initial fee waiver application stated $1,100 had been paid and, curiously, item 13 states there was also a promise to pay $1,100, which is either a redundancy or a promise to pay an additional $1,100, which the Court would not countenance. In his Statement of Financial Affairs, debtor states he paid "Atty Fee $1000 plus fee waiver application", whatever that latter phrase is intended to mean. Mr. Stacy's Rule 2016 form filed with the petition states that $1,100 was the agreement and had been received. Then, on August 9, 2010 Mr. Stacy filed a revised 2016, stating the amount was increased to $1,200. Then, on August 19, 2010 a revised Statement of Financial Affairs was filed, stating in item 9 that debtor had paid "Atty Fee $1200.00 plus fee waiver application", with no explanation for the change. Another waiver application was filed, this time disclosing the account balances stated in Schedule B, but not the cash on hand. Also, the vehicle and its secured debt was listed. The application stated $1,200 had been paid and had been promised.
Then, if the foregoing is not confusing enough, on August 23, 2010 a further amended Statement of Financial Affairs was filed, this time stating "Atty Fee $1250.00 plus fee waiver application", again without explanation. Also filed the same date was an amended 2016 stating $1,250 was the agreed upon and paid fee. Finally, also filed was yet another waiver application, identical to the August 19 version except that the promised and paid fee was now $1,250.
Conclusion
For the foregoing reasons, the Court finds and concludes that the trustee's Motion to Reconsider should be, and hereby is denied. With respect to the conflicting statements by debtor and debtor's counsel regarding what fees were agreed upon, what were paid, and when, the Court will issue a separate Order to Show Cause to endeavor to find out what actually occurred.
IT IS SO ORDERED.