When you make the decision to file for bankruptcy, you are doing so because you need relief from debt. The last thing you want during these financially-challenging times is the rejection of your claim.
Unfortunately, it is not unusual for the court to decline a bankruptcy plea. And if this happens, you definitely want to know what went wrong and your options going forwards.
Here are three key questions that can help you understand why the court might have declined to discharge your bankruptcy.
Did you fail the eligibility criteria?
To qualify for bankruptcy, you must meet certain requirements. For instance, if you are declaring Chapter 7 bankruptcy, you will be required to pass an income and means test. Your bankruptcy petition will be denied if your income is above the median income for a similar household. Besides the mean income, the court will also require you to meet additional requirements before approving your bankruptcy claim.
Did you provide misleading information?
The U.S. Code strongly abhors abuse of the bankruptcy system. Any attempt to lie or provide misleading information can result in your claim’s denial. These include hiding your assets or attempting to defraud your creditor. It is important that you are upfront about all your assets while declaring bankruptcy.
Did you refuse to comply with a court order?
This may seem straightforward, but disregarding a lawful order could land you in trouble when declaring bankruptcy. If the court directs you to take a financial management court, be sure to follow through with this order. The U.S. Bankruptcy Code requires that bankruptcy applicants take two instructional courses. You run the risk of having your bankruptcy declined if you do not follow through with these orders.
A bankruptcy refusal can be a huge setback when you are drowning in debt. Find out how you can avoid costly pitfalls while declaring bankruptcy.