6 Reasons Bankruptcies Are Denied

Filing for bankruptcy is not an easy decision to make. When struggling financially, it may be the best option. But, the filing of a bankruptcy case does not always lead to approval. There are several factors that could put your petition at risk of a denial. In the event that a bankruptcy is denied, you then have to decide what to do.  Here are some of the most common reasons for bankruptcy denial. 

Fraud

Intentionally providing misleading information or hiding assets during bankruptcy filing can lead to a dismissal of the case or a denial of discharge. This includes lying about your income, hiding assets, or intentionally trying to deplete funds before filing. A court has the right to refuse to discharge debts if there is suspected fraud involved in the petition. In addition, the intent to commit fraud in your filing can lead to criminal charges. For this reason, it’s important to go over all information you provide on your petition several times and with the help of an experienced bankruptcy attorney before filing. You will want to ensure that all information is accurate and no necessary information is missing. 

Recently Filed for Bankruptcy

You are allowed to file for bankruptcy more than once in Pennsylvania. However, Pennsylvania requires waiting periods before you are allowed to file against.  If you recently filed for bankruptcy and you file again within the time periods set forth for each chapter in the bankruptcy code, you will be denied a discharge of debts. 

 The waiting period depends on the type of bankruptcy that you filed for originally. Chapter 7 bankruptcy filings require a waiting period of eight years before filing for Chapter 7 bankruptcy again. Chapter 13 bankruptcy requires a waiting period of four years after a Chapter 7 case. This period is determined based on the date in which you previously filed. However, if your previous bankruptcy filing was denied or dismissed, you do not have to wait the required waiting period to file again. 

Failure to Attend Credit Counseling

Both Chapter 7 and Chapter 13 bankruptcy require filers to complete credit counseling before the petition is filed. Credit counseling needs to be completed within 180 days before filing for bankruptcy. Failure to perform the required credit counseling puts your petition at risk for dismissal. A certificate at the end of the course provides that you completed the credit counseling certificate. You will need to show proof of this certificate when filing for bankruptcy. 

There are several credit counseling agencies across the state of Pennsylvania. You should always use an approved credit counseling course provider.  For a list of all approved credit counseling agencies, visit the U.S. Trustee Program website. 

Failure to Meet Eligibility Requirements

Filing for bankruptcy requires you to meet all the requirements before filing. Requirements depend on the type of bankruptcy that you are filing for in Pennsylvania. For example, Chapter 13 requires you to have an income source, debts below a certain level, and to create a financial plan to pay back certain debts within the time frame provided by the law. 

To be eligible to file for Chapter 7 bankruptcy in Pennsylvania, your income must be below certain limits or you must not have disposable income.  This is determined through a complicated means test requiring various inputs.  Your income is first compared to the state median.  If the income is above the state median, you may still be able to file a Chapter 7 case if the test shows no disposable income.  In addition, all filers in Pennsylvania must take a credit counseling course before filing. If you file for Chapter 7 bankruptcy and you are not eligible, the United States Trustee will file a motion to dismiss the case or convert the case to Chapter 13.  

Insufficient Information

Providing insufficient information puts your bankruptcy filing at risk of denial. When filing for bankruptcy, the court requires extensive information that discloses income, expenses, assets, and liabilities.  The information you provide is proof that the court should allow you to discharge your debts. Working with a bankruptcy attorney on your petition, schedules, and statements is the best assurance that you will not miss crucial information that could be the difference between approval and denial. Bankruptcy attorneys have years of experience filing petitions, so they can help you determine what information may be lacking in your petition before you file. 

Failure to Pay Filing Fees

Filing fees are required to be paid within twenty-four hours of the filing of a bankruptcy petition. The federal court website provides a list of required filing fees depending on the bankruptcy type. For example, according to the court fee schedule for the U.S. Bankruptcy Court in the Eastern District of Pennsylvania, petitions filed under Chapter 7 require a $338 filing fee. Petitions filed under Chapter 13 require a $313 filing fee.  Failure to pay the filing fee will result in case dismissal.  

How Often Are Bankruptcies Denied?

Bankruptcies are denied regularly for the reasons above and for other reasons.  Your risk of a case dismissal or denial of an order discharging debts is greatly reduced when you provide a thorough petition with proof to back up your claims. Hiring a bankruptcy attorney is a great start in eliminating these risks because they understand what the courts are looking for in order to approve a petition. 

Get the Best Chance at Approval with a Bankruptcy Attorney
If you are ready to file for bankruptcy, contact one of our experienced bankruptcy attorneys at 610-323-5300. Our attorneys at RQP Law will set up an initial consultation to discuss your financial situation. We will help you determine whether there are any alternative options to filing for bankruptcy before helping you file.