It is necessary to learn the rules governing the type of bankruptcy you intend to file in order to avoid wasting your time. There are several frequent reasons why bankruptcy petitions are denied.
The ""means"" test is failed. The majority of individuals declare Chapter 7 bankruptcy. In order to have your unsecured debts discharged in this type of bankruptcy, you must satisfy a ""means test"" imposed by the court. This is how the court determines the amount of your current disposable income. If the court finds that you have too much money, you cannot file for Chapter 7 bankruptcy.
Before appearing in court, it is recommended to have an experienced bankruptcy attorney review your case. A lawyer can typically inform you during a free initial consultation if your application will be denied based on the means test. You may still be able to petition for Chapter 13 bankruptcy in these situations.
2. You don't provide your tax documents. Before a court can grant you bankruptcy protection, it must have access to your tax information. You must demonstrate that you lack the means to repay your debts. If you misrepresent your tax documents or fail to produce them, the court will likely dismiss your case.
This is a new bankruptcy regulation resulting from the 2005 bankruptcy reform. Chapter 7 filings require you to provide the court with all requested tax documents. Tax preparation can be prohibitively difficult, and if you're in financial difficulty, paying someone to do your taxes may be out of reach.
3. Somebody challenges your proposition. The purpose of pursuing Chapter 7 bankruptcy is debt discharge. This is a court order releasing you from all of your debts, including medical and credit card expenses, permanently. If a bankruptcy trustee or creditor contests your discharge, your bankruptcy petition may be denied.
Typically, a challenge arises when someone suspects that you committed bankruptcy fraud. If you made false statements about your financial situation, hid assets, or did anything else dishonest with your finances in order to receive a Chapter 7 discharge, you could face a challenge that could result in the loss of your discharge. The best policy is to always provide the court with truthful information. Follow all instructions given by the court.""
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