3 reasons your Chapter 7 bankruptcy may get denied

On Behalf of | May 6, 2024 | Bankruptcy |

Every day, thousands of Americans file for Chapter 7 bankruptcy as a means to alleviate overwhelming financial burdens and seek a fresh start. However, the process is not always straightforward, and there are instances where individuals may face denials.

Understanding the reasons behind these bankruptcy denials is crucial for anyone considering or currently undergoing the bankruptcy process. These reasons may include the following.

1. Suspected fraud

Bankruptcy fraud is considered a serious offense that can result in the denial of your bankruptcy petition and even criminal prosecution. If the court suspects that you’ve engaged in fraudulent activities such as concealing assets, providing false information on your bankruptcy forms or transferring property to defraud creditors, your Chapter 7 filing may be denied. Similarly, if you’ve engaged in misconduct during the bankruptcy process, such as failing to disclose assets or income, disobeying court orders or attempting to hinder the administration of your case, your petition may be rejected.

2. Failure to meet eligibility requirements

Chapter 7 bankruptcy is subject to strict eligibility criteria set forth by the Bankruptcy Code. One of the primary requirements is the means test, which assesses an individual’s income level to determine if they qualify for relief. If your income exceeds the state median or if you have the financial means to repay a portion of your debts through a repayment plan, you may be ineligible for Chapter 7 bankruptcy. 

3. Non-compliance with court requirements

Filing for Chapter 7 bankruptcy involves adhering to strict procedural and administrative requirements set forth by the court. Common reasons for noncompliance include missing deadlines, failing to attend mandatory credit counseling sessions, neglecting to submit required documentation or not appearing at court hearings. Any deviations from the prescribed procedures can jeopardize your case and may lead to denial or dismissal.

If you are considering seeking a Chapter 7 discharge, legal guidance can help ensure you effectively handle the complexities of the bankruptcy process.