If relief from financial stress is what you need, you may be considering filing for bankruptcy. Chapter 7 bankruptcy is often sought after because it can discharge debts without a repayment plan. However, there is always the possibility of being denied for Chapter 7, but why is that?
To help you on your potential bankruptcy journey, let’s explore the common reasons for Chapter 7 denial and what other options you have.
Common Reasons for a Chapter 7 Bankruptcy Denial
There are several different factors that can cause someone to be denied for Chapter bankruptcy. Some of the most common reasons include:
1. Failing the Means Test
Chapter 7 bankruptcy requires filers to pass a means test, which assesses their income and expenses to determine eligibility. If your income is too high compared to your state’s median income and you have notable disposable income that could be used to repay debts (presumption of abuse), your case may be dismissed or converted to Chapter 13.
2. Fraud or Misrepresentation
Another way bankruptcy filers can face Chapter 7 denial is by providing false information, hiding assets, or failing to disclose all of their sources of income. Bankruptcy courts take fraud seriously, and any attempt to manipulate the system can lead to the dismissal of your case and even legal consequences.
3. Failure to Complete Credit Counseling
Filing for bankruptcy takes some prep work from the filer. Before officially filing for bankruptcy, you must complete an approved credit counseling course. Failing to do so can result in the automatic dismissal of your case.
4. Previous Bankruptcy Filing Restrictions
It is also critical to keep in mind that if you previously filed for bankruptcy, you may be subject to a waiting period before filing again. For example, if you have already received a debt discharge through Chapter 7 within the last eight years, you may not be able to file again right away.
5. Failure to Provide Required Documentation and Paperwork
Bankruptcy also requires extensive documentation, including income records, tax returns, and a list of assets and debts. If you fail to provide the necessary paperwork within the court’s allotted timeframe or submit inaccurate information, your case may be dismissed.
6. Attempting to Discharge Non-Dischargeable Debts
Although bankruptcy can bring a lot of financial relief, it’s not a solution for all debt and financial struggles. Certain debts, such as child support, alimony, and most student loans, are not dischargeable under Chapter 7. If your case revolves around eliminating these types of debts, your bankruptcy may not be approved.
Despite these common reasons for denial, there is no need to fear; there are still some options for bankruptcy debt relief moving forward.
What Are Your Options After a Chapter 7 Denial?
If your Chapter 7 bankruptcy is denied, you have several options to manage your debt. Consider these three alternatives moving forward:
1. Refiling for Bankruptcy
Depending on the reason for the denial, you may be able to refile for Chapter 7 after correcting the issues. For example, if your case was dismissed due to missing paperwork or failing to complete credit counseling, you can address these problems and submit a new petition.
2. Filing for Chapter 13 Bankruptcy
The great news is that Chapter 7 is not the only form of individual bankruptcy. If you don’t meet the qualifications for the Chapter 7 means test or your case is denied for another reason, Chapter 13 bankruptcy might be an option. Unlike Chapter 7, which eliminates debts, filing for Chapter 13 entails creating a structured repayment plan over three to five years. This allows you to keep assets while gradually repaying creditors under court supervision.
3. Seeking Legal Assistance
Filing for bankruptcy takes tremendous effort on behalf of the filer. If you face denial for Chapter 7, that can feel devastating, but your path forward does not have to be navigated alone. If your Chapter 7 bankruptcy is denied, consulting a trusted bankruptcy lawyer is a good idea. They can help you understand the reasons for the denial and outline your next steps. A lawyer can assess whether refiling, switching to Chapter 13, or exploring non-bankruptcy alternatives is the best option for you.
Adam M. Freiman -Your Trusted Bankruptcy Lawyer
A Chapter 7 bankruptcy denial can be frustrating, but it doesn’t mean you’re out of options. Whether you need to explore refiling or are considering Chapter 13, having the right legal guidance is crucial.
Adam M. Freiman has been helping individuals navigate bankruptcy for over 25 years. With his extensive experience in both Chapter 7 and Chapter 13 cases, he understands the complexities of bankruptcy law and works closely with clients to develop the best plan for their financial future. From filing paperwork correctly to representing you in court, Adam provides the knowledge and support needed to make the process as smooth as possible. If you’ve been denied Chapter 7 bankruptcy or are considering your debt relief options, don’t wait to get the legal advice you need. Contact the office of Adam M. Freiman today to schedule a consultation and take the first step toward financial stability.
