Common Reasons for Bankruptcy Case Dismissal
It's important for those seeking debt relief to avoid a bankruptcy case dismissal. When the court dismisses a bankruptcy case, it means that the court has declined to grant the debtor’s request for a discharge of their debts.
This can be extremely detrimental to someone who needs debt relief because they will still be obligated to pay off their creditors in full. The debtor may also be prohibited from filing for bankruptcy again in the near future, which will make it even more difficult to find relief from their financial struggles.
Five Things that Can Trigger a Bankruptcy Case Dismissal
There is a variety of reasons why a court might dismiss a bankruptcy case. These reasons can range from simple mistakes and errors to intentional wrongdoing, such as fraud. What follows are a few common triggers for a bankruptcy case dismissal and how they can be avoided.
1. Failing the Means Test
Bankruptcy isn’t an option for everyone, and the court uses a means test to determine eligibility. The mean test evaluates the bankruptcy filer’s finances to determine the filer’s average income during the six months prior to filing for bankruptcy. If this income is lower than the median state income for a similar household, the filer may proceed with their case.
If the filer’s income exceeds the state median income, however, there’s a strong possibility that the court will dismiss the case. This outcome isn’t inevitable, though, because someone with a higher income may be able to claim deductions that reduce what the court considers to be disposable income. If the deductions reduce the filer’s income level below the state median income, then the filer’s case can proceed.
How to avoid this outcome: You can avoid this outcome by consulting with a bankruptcy lawyer before filing your petition! An experienced legal professional can help you evaluate your finances and how you might qualify for bankruptcy or another form of debt relief.
2. Failing to File Required Forms & Documents
A bankruptcy case involves a lot of paperwork, and it’s essential that everything is properly filled out and filed on time. If the petition, schedules, or another required form doesn’t reach the court on time, the judge will likely dismiss the case.
It’s also essential to ensure you disclose all financial documents required by the court. Because the bankruptcy process lays your financial life out for the court to evaluate, failing to disclose any financial document may result in a case dismissal.
How to avoid this outcome: Hire a bankruptcy attorney to handle the paperwork! If this is your first time filing for bankruptcy, it can be overwhelming to figure out the forms you need to fill out, how to do it, and which financial documents are relevant to your case. Your attorney is experienced in this process, though, and can guide you through it.
3. Missing Your Meeting of Creditors
Much of the bankruptcy process may be handled without you ever going to court, but you must attend the 341 Meeting of Creditors hearing. This should be a short proceeding (typically only a few minutes), but its purpose is to prove your identity and place you under oath that your bankruptcy petition and all supporting documents are accurate.
Failing to attend this meeting, however, can upend your chances of receiving a debt discharge.
How to avoid this outcome: Communicate with your bankruptcy attorney to make sure you’re aware of your obligations to appear in court. Write the dates, times, and locations of important proceedings and arrive at least half an hour early to make sure you reach the courtroom on time.
4. Failing to Make a Chapter 13 Plan Payment
If you filed for Chapter 13 bankruptcy, you’re obligated to pay a certain sum of money on a regular basis. This payment plan can last three to five years, and there’s almost no room for error. Missing just one payment can result in the bankruptcy trustee filing a petition to dismiss your case.
How to avoid this outcome: Make sure you pay your Chapter 13 plan payments on time – go so far as to make it a priority in your life! If you simply don’t have the money to pay, however, communicate this as soon as possible with your bankruptcy attorney. There may be a way to avoid dismissing your Chapter 13 case by negotiating with the trustee, but you should never wait until the last minute to bring up this issue.
5. Committing Bankruptcy Fraud
Bankruptcy fraud will result in a case dismissal and can come with criminal charges. Bankruptcy fraud occurs when someone attempts to leverage the bankruptcy process inappropriately, often by providing false information or withholding information that the court requires. Lies like these can have serious consequences and should be avoided at all times.
How to avoid this outcome: Be as truthful and accurate as possible – don’t attempt to hide any assets or other liabilities from the bankruptcy process or your attorney. If you are concerned about potential allegations of fraud, be upfront and honest with your lawyer, who can provide important legal counsel.
Need Help with Bankruptcy?
At Buchalter & Pelphrey Attorneys At Law, we understand the complexities and legalities associated with filing for bankruptcy. We have extensive knowledge in dealing with creditors and navigating the courts so you don’t have to worry about the details. Our attorneys can evaluate your financial situation, advise you on the best course of action, and explain every step of the process so that you know what to expect.
For more information about how we can help, contact us online and request a consultation.