Reasons Your Bankruptcy Could be Denied
Many people who file bankruptcy are unaware of the fact that their case could be denied. Most debtors just assume that the court will grant them the bankruptcy they desire as long as they meet all of the eligibility requirements. This, however, is not the case. There are several reasons that your bankruptcy could be denied, and if you or someone you know is considering bankruptcy then these are reasons that you will want to know. Here are just three of the main reasons why people’s bankruptcies get denied.
- Documents – Bankruptcy revolves around the debtors financial situation, and because of this the debtor will be required to present certain documentation to their attorney’s and ultimately to the bankruptcy court. Some of the most commonly requested documents are: paycheck stubs, bank statements, mortgage info, vehicle leases, and prior year’s tax returns. The majority of the paperwork will be requested by your attorney in order to create your bankruptcy petition, but in some cases the bankruptcy court will request documents form you directly. If, for some reason, you provide incorrect or insufficient documents to the bankruptcy court they have the right to deny your case.
- Timing – One thing is for sure if you do decide to file Chapter 7 or Chapter 13 bankruptcy; you will not be the only one filing. The courts are jammed full of petitions to consider, and allowing every debtor the ability to extend deadlines would push decisions back months, if not years. In multiple instances, federal and local courts have ruled that they do not possess the authority to cure an untimely bankruptcy filing. If you fail to meet a deadline that the bankruptcy court has set for your case, then that is grounds for dismissal.
- Fraud – When you stand before the bankruptcy trustee at your required bankruptcy court appearance they will ask you simple questions regarding your case and financial situation. These questions are to ensure that no fraud has taken place. Fraud in a bankruptcy could mean neglecting to list a creditor or debt, not telling your attorney about money you have in other accounts, or not admitting to being eligible for money like an inheritance once your bankruptcy is complete. Bankruptcy fraud is taken seriously and most bankruptcy judges have no problem denying the case on those grounds. In some severe cases where fraud is proven the bankruptcy trustee has the right to make sure the debtor can never file bankruptcy on those certain debts again.
Bankruptcy dismissals and denials are not an hourly occurrence, but they are something to be mindful of nonetheless. If you are serious about using bankruptcy to become debt free then you should do everything you can to make sure it does not get denied. Stay organized, aware, and in contact with your attorney every step of the way to make sure that your bankruptcy is completed smoothly so you can finally be on your way to financial freedom.