You can be denied a bankruptcy discharge. There are limits to bankruptcy, such as how frequently you can receive a discharge
However, most of the reasons for bankruptcy being denied or dismissed are completely avoidable. These mistakes are often made when an individual tries to handle the bankruptcy filing process without the assistance of a professional bankruptcy attorney.
David M. Offen, Esq. has spent over 20 years practicing bankruptcy law in Philadelphia and has helped more than 12,000 clients through the bankruptcy process. Call his offices today at (215) 625-9600 to schedule a free consultation.
What Gets Your Discharge Denied or Your Bankruptcy Dismissed
It might seem like a stretch to merely call fraud a mistake, but without access to legal counsel, it is all too easy to make choices that seem reasonable at the time, but are actually illegal–and could bar you from discharging your debt.
2. Credit Card Fraud
Credit cards are frequently wellsprings of debt leading into bankruptcy. Some people will abuse their credit by utilizing the entire credit line on multiple credit cards, knowing they could never possibly pay back what they charged. Worse still, some people may attempt to buy luxury goods on credit while already close to filing bankruptcy.
Luxury charges are generally assessed as any charges of greater than $725 that are not necessary for support or maintenance. While creditors can challenge any charges by asserting there was fraud, luxury purchases made within 90 days of filing are presumed to be non-dischargeable.
Credit card fraud is not limited to luxury goods. Running up unreasonable charges then suddenly filing bankruptcy to clear them could be considered fraudulent even if those purchases were not luxuries, and a court might dismiss your bankruptcy case if these behaviors are unearthed and challenged by your creditors. Charges made within 90 days of a bankruptcy filing are particularly suspect.
Cash advances within 70 days are likewise highly suspect. If you take more than $1,000 total in the 70 days before filing from one creditor, these advances will be presumed to be non-dischargeable.
3. Hiding or Selling Assets
Another major bankruptcy no-no is a fraudulent transfer. This means giving away things that should be included in your bankruptcy either as gifts or selling well below market value in an attempt to hide them from your creditors.
As a general rule, you shouldn’t sell or gift anything of value, especially jewelry or luxury goods, before filing bankruptcy.
You can learn much more about this kind of fraud and how to avoid it in our post on fraudulent conveyance.
Any kind of fraud can get your bankruptcy case dismissed altogether, and a creditor could argue to exclude what you fraudulently owe them from the bankruptcy discharge. While common sense can help you avoid most fraud, there are many technically fraudulent charges and transfers that a non-lawyer might not recognize as fraud.
Your best bet to avoid having your bankruptcy dismissed for fraud is to let a bankruptcy attorney handle your case. He or she can not only counsel you to avoid making fraudulent charges but can also try to defend your spending from claims of fraud if a creditor challenges your bankruptcy.
4. Not Completing Mandatory Education
With few exceptions, you will be required to attend credit counseling session via telephone or computer before filing for bankruptcy and a personal finance course known as Debtor Education before the court will grant a bankruptcy discharge. People filing Chapter 7 and Chapter 13 will both be required to take these courses through an approved agency.
For people filing Chapter 7, you will be required to present a debtor’s education certificate of completion within 60 days of your first meeting of creditors. For a Chapter 13 bankruptcy, the certificate must be presented before the final installment of your payment plan is due.
While there are ways to file for short extensions in incredible circumstances, you will need to complete these courses eventually. Failing to take credit counseling will have your case dismissed, and failing to take debtors education will cause your case to close without a discharge.
5. You Declared Bankruptcy Too Recently
There are set-in-stone limits on how frequently you can receive a bankruptcy discharge.
Minimum Waiting Period after Chapter 7:
- You must wait at least 8 years before you can file for Chapter 7 bankruptcy again.
- You must wait at least four years before filing a Chapter 13 bankruptcy. There are exceptions to this rule depending on what your goal is when you file Chapter 13.
Minimum Waiting Period after Chapter 13:
- You must wait two years before filing Chapter 13 again.
- You must wait 6 years to file a Chapter 7 bankruptcy if you failed to repay at least 70% of the Chapter 13 payment plan. If you paid more than 70%, you could file Chapter 7 bankruptcy at that point.
6. Paperwork and Procedural Issues
Bankruptcy is complicated. The person preparing a bankruptcy has to sort through hundreds, perhaps even thousands of pages of financial documents and prepare a filing that is complete and exact–not a single debt excluded, all income and expenses accounted for. When people try to prepare these forms on their own, they rarely do so properly.
Any paperwork or procedural mistakes could result in the court dismissing your bankruptcy, ending the protection of an automatic stay and leaving you once again at the mercy of creditors.
Choose An Experienced Bankruptcy Attorney in Philadelphia
Your bankruptcy case can be dismissed and your discharge denied for a variety of reasons, from simple mistakes or omissions to strict procedural rules and missed deadlines. The best way to avoid this is to choose an experienced and knowledgeable bankruptcy attorney to handle your case from start to finish.
With over 20 years of experience in bankruptcy law in Philadelphia, the Law Offices of David M. Offen can help you move forward towards a brighter financial future. Call (215) 625-9600 to schedule a free consultation and find out how you can quickly improve your financial life.