Can Bankruptcy Be Denied?
The goal of filing bankruptcy is to receive a discharge of debt, whereby you’ll receive protection under the automatic stay. However, while uncommon, it is possible to have your bankruptcy case dismissed and your discharge denied by the courts. So the answer to the question is, yes, bankruptcy can be denied.
Below, we’ll outline a few of the most common causes for having your bankruptcy denied.
1. Bankruptcy Fraud
Honesty is always the best policy. Failure to tell the complete truth to your attorney or your bankruptcy trustee is the easiest way to have your bankruptcy denied.
According to Cornell Law, bankruptcy fraud is a white-collar crime that commonly takes four general forms:
- A debtor conceals assets to avoid having to forfeit them.
- An individual intentionally files false or incomplete forms. Including false information on a bankruptcy form may also constitute perjury.
- An individual files multiple times using either false information or real information in several jurisdictions.
- An individual bribes a court-appointed trustee.
Commonly, the criminal commits one of these forms of fraud with another crime, such as identity theft, mortgage fraud, money laundering, and public corruption.
If you make false statements, lie by omission, or fail to accurately disclose all information related to your assets, income, or property, you are likely to have your debt discharge challenged. Not only could you jeopardize your bankruptcy case, but you also face fines and possibly incarceration on the grounds of bankruptcy fraud.
2. Failing the Bankruptcy Means Test
Another way to have your bankruptcy denied is failing the Bankruptcy Means Test.
The bankruptcy means test is used by courts to ensure that the burden of debt repayment is substantial when compared to your income concerning your monthly expenses. It works by deducting specific monthly payments from your current monthly income to determine your monthly disposable income. When your disposable income isn’t low enough for you to pass this test, your bankruptcy case can be denied.
If you fail the Means Test, you may need to seek a Chapter 13 bankruptcy.
If you are thinking about filing, and have questions about the Means Test or anything related to bankruptcy, contact us for a free consultation.
3. Failure to Complete Mandatory Education Courses
U.S. bankruptcy law requires the completion of two educational courses to receive debt discharge.
Firstly, you must complete a credit counseling course before beginning your bankruptcy case. The purpose of the course is to educate debtors on budgeting and repayment of debt. Then you must complete a debtor education course before receiving a discharge.
These classes cannot be completed at the same time, and you must make sure that your classes are approved by the U.S. Trustee Program to receive credit for them. The classes give certificates of completion. Failure to submit these certificates in a timely manner to the courts can result in your bankruptcy being denied.
Making Sure Your Bankruptcy is Not Denied
Facing the decision to file for Chapter 7 or Chapter 13 bankruptcy is already a difficult one—you don’t want to make it more difficult by having your bankruptcy denied by the courts.
The right counsel and representation will work with you to ensure it that doesn’t happen. At Parker & DuFresne, we represent clients in the Northeast Florida area, including Jacksonville, St. Augustine, Orange Park and the beaches, and we can help safely guide you through the bankruptcy process. Contact our offices for a free consultation today.