Can My Chapter 7 and Chapter 13 be Denied by the Court?

Bankruptcy filings result in the discharge of debts in the majority of cases, butsometimes the application for the bankruptcy discharge is rejected. As a result, you won’t get any legal protection to prevent creditors from collecting their debts.

What you will read below are some of the situations when a bankruptcy court may decide to reject the application for a discharge from debt.

1. Not Declaring All the Assets

U.S. Code § 727 is strict about any abuse of the system. You need to be transparent and declare all your assets. Falsifying any assets may result in rejection of the application. If the court finds that the application does not declare all possessions and property, and intends to defraud, hinder, or delay payment to the creditor, the bankruptcy application will be rejected.

The court could also reject your application if it’s found that you have destroyed or transferred property to avoid payment to the creditors.

2. Not Complying with the Court Order

You need to comply with every court requirement after you have filed a bankruptcy application. If you don’t comply with the court orders, such as not filing required documents or paying prescribed fees, your application for Chapter 7 or Chapter 13 may be rejected by the court.

3. Failing the Eligibility Criteria

Certain requirements are present for a person to be eligible for bankruptcy protection. The requirements for Chapter 7 are stricter than that for Chapter 13 protection. In order to qualify for Chapter 7 bankruptcy, you need to meet the income test criteria.

The income test involves assessing your income, the median income, and the number of individuals in the household.

If your medium income is more than the median income for a similar number of household in the area, your application for bankruptcy will be denied. In this case, you can file for a Chapter 13 bankruptcy protection, instead.

However, only Individuals or sole proprietorships are allowed to file Chapter 13 bankruptcy. Partnerships and companies are not eligible for this protection. Moreover, the unsecured debts should be less than $394,725, and secured debts should be less than $1,184,200 to become eligible for Chapter 13 bankruptcy.

4. Not Showing Proof of Tax Filing

You need to show proof of your tax filings when you submit a bankruptcy petition. You should show that you have paid state and federal income taxes for the past four tax years before filing the bankruptcy petition. Your case for bankruptcy could be rejected if you don’t show copies of transcripts or returns for the previous four years.

5. Not Attending First Meeting of Creditors

Every bankruptcy applicant needs to attend First Meeting of Creditors. Not attending the meeting may result in rejection of your application. In case of filing a joint petition, both the partners must appear in the court.

6. Not Taking Required Instructional Courses

The US Bankruptcy Code also requires that applicants of Chapter 7 and 13 bankruptcy plan take two instructional courses. The first course is a credit counseling course that must be taken before filing an application. The second course is a financial management course that must be completed after the case is filed. Both the courses are the requirement for getting bankruptcy protection. The cost of the courses can vary from $10 to $100 depending on the location where you file.

Most of the applications for bankruptcy are accepted. However, lack of honesty or not fulfilling the court requirements can result in rejection of the application. You should consult with a professional bankruptcy lawyer to increase your chances of a successful bankruptcy application.

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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

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