COMMON ERRORS IN A BANKRUPTCY FILING CAN RESULT IN DENIAL

If you have lost your job or have unmanageable debt, filing for bankruptcy may sound like an appealing option. But the bankruptcy court does not accept all bankruptcy petitions. Bankruptcy pleas can be rejected for many reasons. Typically, a denial occurs because of preventable mistakes the applicant has made on the petition. Avoid the following all-too common mistakes and work with an experienced bankruptcy lawyer to ensure proper filing and acceptance.

Common reasons a bankruptcy petition is dismissed include:

  • Failing the “Means” Test: This is the court’s preliminary test to determine your disposable income. Chapter 7 bankruptcy requires the filer to be below a certain level of income. However, those filers who do not qualify for Chapter 7 protection can still file for Chapter 13 bankruptcy.
  • Improper Documentation: When you file bankruptcy, you are required to file a number of financial documents, including previous tax returns. Without these, your request for bankruptcy will be denied.
  • Unrealistic Payment Plans: In a Chapter 13 bankruptcy, you must repay some of your debts according to a payment plan. If you submit a plan that does not seem feasible, the court will reject the proposal. Initially proposing a legitimate and practical payment plan can save time and hassle.
  • Fraud: Perhaps it goes without saying, but a court will reject a bankruptcy if the filer tries to hide income or assets from the court. Withholding information on assets and income can ultimately harm the filer much more than merely reporting actual income and assets.

A creditor can also object to the bankruptcy plan for any of the above reasons. If a creditor objects to the plan within 60 days of the initial filing, the court will stay (stop) the bankruptcy proceedings while it investigates the reason for the objection. The court will have the final say in the matter, not the creditor.

In addition, for Chapter 13 bankruptcy, the filer must follow the bankruptcy plan and make payments on time. If not, a court may end the bankruptcy plan and leave the debtor open to creditor action once again.

Filing bankruptcy can be a financial lifesaver in the proper situations. If you feel this is the right answer for you, contact an experienced bankruptcy lawyer to ensure you file properly.

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