Deciding to file for Chapter 7 bankruptcy may be an excellent opportunity for a fresh financial start. The best part is that it’s a relatively stress-free experience for most people. Within a few weeks, you might be on the road to financial freedom if you get the courage to file for bankruptcy. But before you rush to do this, it’s essential to familiarize yourself with the reasons for bankruptcy denial and know how to avoid them. That’s why we’ve consulted attornies specialized in finances and gathered the list of most common reasons why your bankruptcy may be denied.
The most common reasons for bankruptcy denial
Personal bankruptcy is not a one-size-fits-all solution. There are several scenarios where a court can deny you a complete discharge of your debts. As a result, you might be denied your bankruptcy. You can avoid the most prevalent reasons for bankruptcy rejection if you hire a financial specialist who knows the process and the court system. Having a professional on your side to help you navigate the process of filing for bankruptcy can save you time, money, and nerves.
However, don’t rush and hire the first specialist you come across online. Instead, do what the experienced team from Consumer Opinion advises and search on verified online bases dedicated to different services. But before you start researching, let’s find out the main reasons for bankruptcy denial.
Attempting to commit a fraud
If the debtor transfers, removes, destroys, mutilates, or conceals property within one year of filing for bankruptcy (or any time after that date), they may be denied a discharge. Essentially, this provision prevents a debtor from giving away assets in the days leading up to bankruptcy.
It is, however, highly fact-specific whether or not a court will establish particular fraudulent “intent” sufficient to deny discharge. That’s why comprehensive disclosure of all property transfers and changes prior to and following bankruptcy filing is critical. A court may deny your release if you aren’t totally truthful. That’s why one of the most crucial bankruptcy tips you will get is not to try to defraud the system. Everything you do needs to be transparent and legally traceable if you plan to file for bankruptcy.
Owning non-exempt assets
When filing for bankruptcy, you must list all your assets and liabilities. The bankruptcy trustee subtracts exempt assets to establish whether you have any items that can be used to satisfy your debts. For example, let’s say you have a vehicle worth $30k, and your loan total is $10k. In that case, a court trustee could order you to sell your car and utilize your equity of $20k to cover your debts.
Hiding or destroying information
If you file for Chapter 7 bankruptcy and conceal, destroy, misrepresent, mutilate, or otherwise mishandle facts concerning your financial situation, your request will certainly be denied. Therefore, destroying papers that could lead the trustee to property that’s not on your list is a bad idea. You need to make sure you can back up all allegations about your finances from your bankruptcy schedules. We suggest carefully combing through your finances and getting your papers in order.
Failing to meet your obligations regarding credit and financial counseling
After you file for bankruptcy, the law will require you to attend credit counseling sessions within a specified amount of time. Additionally, you’ll need to complete a debtor education and present the court with a certificate. Should you fail to fulfill either of these responsibilities, your application for bankruptcy will likely be turned down.
For debtor education, you’ll have to choose an agency that is approved by the Office of the U.S. Bankruptcy Trustee. But remember, it’s crucial you rely on help from reputable experts in the field. Whether choosing a tax relief company or looking for a trustworthy financial advisor, it’s essential to do thorough checks first.
Refusing to comply with a court order
A debtor who disobeys a judicial order issued by the court could face serious legal difficulties. In addition, if your bankruptcy petition is rejected for the reason that you did not follow a court order, the harassing phone calls from your creditors will continue. On the other hand, following a discharge, it is a violation of federal law for collectors to continue calling you.
Having debts that don’t qualify for a discharge
our bankruptcy petition will not be denied if you have non-dischargeable debts. However, filing for Chapter 7 bankruptcy will not be able to wipe out all of your debts. A discharge is not available for 19 types of debt. These include student loans and obligations arising from a previous marriage, such as alimony and child support.
You previously filed for bankruptcy
Keep in mind that, in case you previously filed for Chapter 7 bankruptcy, the law requires you to wait eight years before filing again. On the other hand, if you have previously filed for Chapter 13 bankruptcy, the law mandates that there must be a gap of six years between subsequent petitions.
A bankruptcy denial is almost certain if you make a false statement or tell a lie in connection with your case. When you submit a bankruptcy petition, you must affirm under penalty of perjury that all of the information included in the paperwork is truthful and accurate. Your discharge can be contested if it turns out that you left out important information from the paperwork. We can’t emphasize enough how important it is to tell your attorney only the truth at all times.
Final thoughts on reasons for bankruptcy denial
Generally, the bankruptcy court will not reject your case if you are truthful and transparent with them. However, even unintended mistakes can happen. Therefore, do your best to familiarize yourself with the reasons for bankruptcy denial, and you’ll avoid having your care dismissed because of an honest mistake. But the only way you’ll be sure to go through the bankruptcy process successfully is to reach out to bankruptcy specialists who will guide you through the process and ensure you can avoid having your claim denied.
Freire & Gonzalez is an attorney’s office where the attorneys are involved with their clients from beginning to end. You, as the client, will not be passed off to secretaries or paralegals like at other bankruptcy law firms. The attorneys will meet with you, will return your phone calls, and will answer your questions. We provide services in English and Spanish.
Our lawyers will answer any bankruptcy question you might have during the free consultation. To request a free consultation, please contact us at 305-826-1774. Please browse through our website, read our bankruptcy FAQ and see if our firm can help you resolve your financial issues. Contact Us at our locations: