Bankruptcy courts make decisions based on various factors, and cases can be denied for a range of reasons, from procedural errors to ineligibility. Here are some of the most common reasons why bankruptcy petitions may be denied.
Lying About Your Assets
Be truthful and transparent when filing for bankruptcy, particularly when it comes to disclosing your assets. Bankruptcy courts have the authority to discharge debts and remove liabilities, but they will not tolerate attempts to conceal or transfer property. Falsifying assets is a severe offense that can lead to the dismissal or rejection of your bankruptcy petition if there is evidence that you have not been truthful about your possessions or property.
Sometimes, individuals who apply for Chapter 7 bankruptcy may not intentionally lie about their assets, and their cases may be rejected because they are not aware of what they should include. Work with an experienced bankruptcy attorney who can guide you through the process and ensure that you disclose all your assets accurately. Failing to disclose an asset can result in your bankruptcy case being dismissed, and your creditors may still pursue collection actions against you.
Failing To Provide The Necessary Documents
Documents serve as evidence that you are unable to meet your debt obligations and help the court make an informed decision on whether to grant you bankruptcy relief. Failure to provide the required documents may lead to the rejection of your bankruptcy petition.
The documents required when filing for bankruptcy include financial records such as recent tax returns, real estate deeds, car titles, itemized monthly living expenses, all property and possessions, recent major financial transactions, and sources of income. Provide all the necessary documents and disclose all your assets and income sources to avoid complications in the bankruptcy process.
Failing To Meet The Eligibility Criteria
Not everyone with debt and financial difficulties will be able to file for bankruptcy, and the eligibility requirements can be strict.
One of the eligibility requirements is the means test, which is a complex evaluation of a person’s income sources. The test determines whether the individual’s income meets the average income in their state for the number of people in their household. If your income is above the median income in your state, your Chapter 7 bankruptcy petition may be rejected.
Failing To Go For Credit Counseling
Credit counseling is a mandatory requirement for individuals who file for bankruptcy. As part of the process, individuals must provide a certificate from an approved credit counseling agency, which must be obtained within six months of applying for bankruptcy. The counseling agency must offer repayment plans, and individuals can find approved agencies on the Department of Justice website.
Having Filed For Bankruptcy Previously
Individuals who have previously filed for bankruptcy may not be eligible to file again immediately. There are waiting periods for filing based on the type of bankruptcy previously filed. If you filed for Chapter 7 bankruptcy before, you must wait 8 years before being eligible to file again.
Making Disqualifying Asset Transfers
If an individual tries to transfer their assets to another person or entity before filing for Chapter 7 bankruptcy, it can be considered a disqualifying asset transfer. This is especially true if the transfer is done to make it appear that the individual does not have enough assets to pay off their debts.
Bankruptcy courts appoint trustees who are responsible for checking whether recent asset transfers invalidate the individual’s petition. For example, transferring a bank account to a child’s ownership can be seen as a cover-up and result in the rejection of the bankruptcy petition.
A Bankruptcy Lawyer From Lincoln-Goldfinch Law Can Help
The importance of hiring a bankruptcy attorney from Lincoln-Goldfinch Law can’t be overlooked. Bankruptcy lawyers have the knowledge and experience to provide legal advice on bankruptcy matters. Most importantly, you need to find one that understands bankruptcy laws unique to your state.
The article discusses the common reasons why bankruptcy petitions may be denied. It highlights the importance of being truthful and transparent when disclosing assets, as bankruptcy courts have strict laws that prohibit individuals from using bankruptcy to defraud or delay creditors. Failure to provide the required documents, meet the eligibility criteria, attend credit counseling, or comply with waiting periods for filing based on the type of bankruptcy previously filed can lead to the rejection of bankruptcy petitions.
Additionally, transferring assets before filing for bankruptcy can be considered a disqualifying asset transfer and result in the rejection of the bankruptcy petition. The article emphasizes the importance of working with an experienced bankruptcy attorney to navigate the bankruptcy process and avoid complications.