Filing for bankruptcy can be a viable solution for individuals and businesses struggling with overwhelming debt. However, not all bankruptcy filings are automatically approved.
Many people wonder, can bankruptcy be denied? The answer is yes.
While bankruptcy offers financial relief, courts can reject filings under certain circumstances. Below, we explore common reasons for bankruptcy denial, what disqualifies you from filing bankruptcies, and how often bankruptcies are denied.
Key Takeaways
- Bankruptcy Can Be Denied – Filing for bankruptcy does not guarantee approval. Courts can reject cases due to ineligibility, missing documentation, or suspected fraud.
- Compliance is Essential – Failure to follow court procedures, complete required courses, or provide accurate financial disclosures can result in dismissal.
- Legal Guidance Helps – Consulting a bankruptcy attorney can improve your chances of a successful filing by ensuring you meet all requirements and avoid common mistakes.
Can Bankruptcies Be Denied? Common Reasons for Bankruptcy Denial
1. Failure to Meet Eligibility Requirements
Different types of bankruptcies, such as Chapter 7 and Chapter 13, have specific eligibility criteria. For Chapter 7 bankruptcy, the applicant must pass a means test, which evaluates their income, expenses, and debts.
If your income is too high, you may not qualify. Similarly, Chapter 13 requires a steady income to repay debts over time. If you lack sufficient income, your case may be dismissed.
2. Providing False or Incomplete Information
Bankruptcy requires full disclosure of assets, income, and debts. If you attempt to hide assets, underreport income, or provide misleading financial information, the court may dismiss your case for fraud. Transparency is key to a successful bankruptcy filing.
3. Failure to Complete Required Courses
Before filing for bankruptcy, individuals must complete a credit counseling course from an approved agency. Additionally, after filing, debtors are required to complete a debtor education course before receiving a discharge.
Failure to complete these courses can lead to dismissal.
4. Previous Bankruptcy Filings
If you have filed for bankruptcy in the past, there are time restrictions on when you can file again. For example, if you previously filed for Chapter 7, you must wait eight years before filing for another Chapter 7 bankruptcy.
Attempting to file too soon can result in automatic rejection.
5. Failure to Follow Court Orders
If a debtor fails to submit required documents, attend hearings, or comply with court orders, the judge may dismiss the case. Bankruptcy courts require strict adherence to deadlines and legal requirements.
6. Attempting to Defraud Creditors
If the court finds evidence of fraudulent behavior—such as transferring assets to friends or relatives before filing—your case may be dismissed. Courts take fraud allegations seriously and can even impose penalties.
How Often Are Bankruptcies Denied?
You may wonder, how often are bankruptcies denied? While most bankruptcy cases are approved, denial is not uncommon.
According to data from the US courts, a significant percentage of Chapter 13 cases are dismissed, often due to failure to meet payment obligations.
Chapter 7 denials are less frequent but can happen if the applicant fails the means test or engages in fraud.
Why Do Bankruptcies Get Dismissed?
If your bankruptcy case is dismissed, it typically means you did not meet legal or procedural requirements. Understanding why do bankruptcies get dismissed can help you avoid common pitfalls.
In many cases, dismissals occur due to:
- Incomplete or incorrect paperwork
- Failure to attend required hearings
- Non-compliance with payment plans (for Chapter 13 filers)
- Suspicions of fraudulent intent
How Can A Bankruptcy Lawyer Help?
A bankruptcy lawyer can assist you in several ways if your bankruptcy filing was dismissed:
- Identify the Cause of Dismissal – The lawyer will review your case to determine why the court dismissed your filing, whether due to incomplete paperwork, missed deadlines, or failure to meet eligibility requirements.
- Correct Filing Errors – If your case was dismissed due to technical issues or missing documents, your attorney can help you refile with the correct information to avoid further complications.
- Explore Alternative Legal Options – If re-filing is not an option, a lawyer can suggest other debt relief solutions such as negotiating with creditors, debt settlement, or filing under a different bankruptcy chapter that may better suit your financial situation.
- Advocate for You in Court – If your case was dismissed due to suspected fraud or procedural non-compliance, an attorney can present your case to the court, argue on your behalf, and potentially reinstate your filing.
- Ensure Future Compliance – A lawyer will guide you through mandatory requirements, such as credit counseling courses and court hearings, to improve the chances of a successful bankruptcy filing in the future.
Contact S&B Legal today for a free consultation if you are considering bankruptcy.
Final Thoughts
If you’re considering bankruptcy, it’s crucial to follow all legal requirements and disclose accurate financial information. Consulting a qualified bankruptcy attorney can help you navigate the process and reduce the risk of dismissal.
While bankruptcy offers a fresh start, failing to comply with legal standards can lead to rejection.
By understanding what disqualifies you from filing bankruptcies and ensuring that you meet all eligibility criteria, you can improve your chances of a successful filing and financial recovery.
Frequently Asked Questions
Can I reapply for bankruptcy if my case is denied?
Yes, but it depends on the reason for denial. If your case was dismissed due to procedural errors, you may be able to refile immediately. If the court found fraud or abuse, there may be restrictions on when or if you can file again.
Does bankruptcy affect my ability to get a loan in the future?
Yes, a bankruptcy filing remains on your credit report for up to 10 years. While it may initially lower your credit score, you can rebuild your credit over time by making timely payments and using credit responsibly.
What happens if my bankruptcy is denied, but I still can’t pay my debts?
If your bankruptcy is denied, you may need to explore other debt-relief options, such as debt consolidation, settlement negotiations with creditors, or alternative legal solutions like a hardship discharge. Consulting a financial or legal professional can help determine the best course of action.
