Debt obligations can pile up and tremendously affect an individual or business’s financial stability, often leading to the consideration of bankruptcy as a solution. However, there are instances where bankruptcy applications are denied.
If you are considering filing for bankruptcy, there are several reasons why your application may get denied. They include the following:
1. Failure to meet eligibility criteria
Bankruptcy eligibility criteria vary depending on the chosen chapter of bankruptcy, such as Chapter 7, Chapter 11 or Chapter 13. For example, Chapter 7 bankruptcy typically requires individuals to pass a means test to showcase their inability to repay debts. Chapter 13 bankruptcy, on the other hand, needs individuals to have a stable income to propose a repayment plan. If you fail to meet these specific eligibility requirements for the chapter of bankruptcy you’re applying for, your application may be denied.
2. Paperwork errors
If you filed incomplete or inaccurate paperwork, it could lead to your bankruptcy application being denied. The bankruptcy forms require detailed information about your financial situation, assets, debts, income and expenses. Any errors or missing information can raise concerns and cause delays or denials in the process. It’s crucial to carefully review and accurately fill out all required forms to help ensure your application is processed smoothly.
3. Evidence of bankruptcy fraud
When filing for bankruptcy, it’s essential to provide truthful and accurate information about your financial situation. Any evidence of bankruptcy fraud such as concealing assets, providing false information or transferring property to defraud creditors, can lead to the denial of your application. Bankruptcy fraud is taken seriously by the courts and can lead to legal penalties.
4. Recent bankruptcy discharge
If you’ve recently received a bankruptcy discharge, you may not be eligible to file for bankruptcy again within a certain period. The timing between bankruptcy filings varies depending on the type of bankruptcy previously filed and the type you’re seeking now. If you attempt to file for bankruptcy too soon after a previous discharge, your application may be denied.
It is important to get guidance from legal help to help increase the chances of a successful bankruptcy application and avoid potential pitfalls that could lead to denial.
