United States v. Kras

PETITIONER: United States
RESPONDENT: Kras
LOCATION: Allegheny County District Court

DOCKET NO.: 71-749
DECIDED BY: Burger Court (1972-1975)
LOWER COURT:

CITATION: 409 US 434 (1973)
ARGUED: Oct 18, 1972
DECIDED: Jan 10, 1973

ADVOCATES:
Edward R. Korman - for appellant
Kalman Finkel - for appellee
Robert William Kras - for the Eastern District of New York on May 28, 1971

Facts of the case

Question

Media for United States v. Kras

Audio Transcription for Oral Argument - October 18, 1972 in United States v. Kras

Warren E. Burger:

We'll hear arguments next in Number 71-749, United States against Kras.

Mr. Korman you may precede whenever you are ready.

Edward R. Korman:

Mr. Chief Justice, may it please the Court.

The United States appeals from the judgment of the district court for the Eastern District of New York, striking down as unconstitutional, an act of Congress, which required the payment of a $50.00 filing fee as a condition to a grant of a discharge in bankruptcy.

The district court held that the statute and the orders in bankruptcy promulgated by this Court, which provide that the filing fee may be paid out over a period of nine months -- up to nine months in installments after the filing of the petition were unconstitutional as applied to an asset-less debtor who alleged that due to his poverty he was unable to promise to pay the filing fee, even in installments.

Although the district court ordered that the discharge be granted, he indicated that he -- that the obligation to pay the $50.00 filing fee should survive the discharge and be paid when and if the petitioner of bankruptcy was able to afford it.

The district court also held that the federal in forma pauperis statute, 28, United States Code 1915 (a) was inapplicable here since Congress plainly manifested its intent to abolish in forma pauperis proceedings of bankruptcy and substitute in its place a system of installment payments.

The United States intervened in the district court to defend the constitutionality of the statute and the district court granted a stay of the order of discharge pending the resolution of this appeal.

Briefs and the opinions below understandably dwell on what it is that this petitioner of bankruptcy has been deprived of as a result of his inability to pay the $50.00 filing fee.

But I think it is important that the issues, and I think that the issues raised here can be seen in their proper perspective only by first examining what it is that Congress has given, an indigent asset-less petitioner of bankruptcy despite his inability to pay this $50.00 filing fee.

Initially, it must be observed that it is no long as far as an indigent debtor is concerned, this is no longer a filing fee that we are talking about.

Under the statute the petitioner of bankruptcy may file his petition without paying any fee at all, provided that he indicates on how he proposes to pay that filing fee in installments for up to six months, and the period may be extended for yet an additional three months.

Now, that filing of the bankruptcy petition carries significant legal consequences.

He is automatically adjudged to be a bankrupt, and as a result all of his earnings following the filing of the petition are exempt from his creditors.

And so what Congress has in effect said to an asset-less debtor, said, if you feel that you have earnings that you want to immunize from the reach of your creditors, you can file your petition.

You will have up to nine months to pay and as those earnings which you expect and anticipate come in, you will pay us out this $50.00 filing fee over a period of up to nine months, and I should point out that in actuality the filing fee as far as asset-less debtors go is really $40.00, $10.00 goes to the trustee, and since it is an asset-less debtor, there is no need for a trustee.

On the other hand, if as this petitioner alleges, he does not anticipate any income, he does not anticipate sufficient income to pay off his $50.00 or $40.00 at a sum of about a dollar a week, then Congress may rightly inquire why it is that he needs this discharge to begin with.

That is, the discharge becomes meaningful only when the possibility of additional assets and income becomes a reality, and when those additional assets become a reality then the $50.00 filing fee does not present any impediment at all to such an asset-less debtor.

Thurgood Marshall:

This man was on welfare, right?

Edward R. Korman:

That's correct.

Thurgood Marshall:

And if I understand welfare correctly, you get enough money to live on, do you?

Edward R. Korman:

That is correct.

Thurgood Marshall:

But why does he not get the $60.00?

Edward R. Korman:

Well, if he doesn't -- what I am saying Justice Marshall, if he doesn't as he says, expect to get any income, his welfare benefits are exempt from his creditors, so that what he is saying is, I want the discharge, the reason a person wants a discharge is so that any future earnings, nonexempt earnings --

Thurgood Marshall:

Sometime after six months?

Edward R. Korman:

Well, what in effect Congress is saying is that when you need it, come and we will let you file your petition, and when those earnings that you expect and you want to immunize become a reality, as those earnings come in, you can pay us out this $40.00 over a period of six to nine months.

On the other hand, if he appears on January 1 and he says, I don't expect to have any income for the next six months, why is it that the Congress can may rightly ask, why it is that this gentleman needs a discharge to begin with?

Thurgood Marshall:

Well, why is -- why not look the other way, why is the reasoning can't get?

Edward R. Korman:

Well, because Congress has decided --

Thurgood Marshall:

Because he doesn't have $50.00?