669 B.R. 202
Bankr. D. Minn.2025Background
- Walker & Walker law firm filed numerous Chapter 7 bankruptcy cases in Minnesota, with a significant proportion (31%) seeking to pay filing fees in installments, often involving a third-party guarantor for payments.
- The United States Bankruptcy Court for the District of Minnesota updated Local Rule 1006-1 in July 2023, aligning it with federal rules allowing installment payment of filing fees but requiring court approval.
- The court found that in many of Walker's cases, disclosures to the court indicated third-party payment of post-petition fees, but in practice, debtors often paid those fees themselves.
- The court noted that installment payment applications should be filed only when debtors are truly unable to pay the filing fee in full.
- Statistical analysis revealed Walker filed the overwhelming majority (99.41%) of all installment fee applications in the district, a rate far exceeding other attorneys.
- The court identified issues of insufficient disclosure about fee sources and questioned the propriety of installment applications with a third-party guarantor able to pay the fee in full.
Issues
| Issue | Walker's Argument | Court's Analysis | Held |
|---|---|---|---|
| Disclosure of fee payment source | Third-party guarantor responsible for filing and attorney fees; disclosure complies | In practice, debtors pay fees; this was not adequately disclosed to the court | Held insufficient; such arrangements require submission of the fee agreement for court review |
| Propriety of installment applications with third-party guarantor | Installments should be permitted even when guarantor available | Rules intend fee be paid in installments only if debtor cannot pay; third-party can pay in full | Installment motions denied if third-party can pay in full |
| Frequency and accuracy of installment applications | Volume of needy clients justifies high rate of installment motions | Statistical rate far higher than district average; not credible all clients meet standard | Court finds filings not justified by actual financial inability |
| Filing fee payment timing | Practice of advancing fees or using guarantor for customer service | Rules require transparency and upfront payment unless true financial inability | Filing fee must be paid in full at filing, not in installments if third-party involved |
Key Cases Cited
- In re Mudd, 633 B.R. 364 (Bankr. W.D. Okla. 2024) (installment applications valid only when debtor is otherwise unable to pay in full)