Is Your Bankruptcy Case at Risk of Dismissal?

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Bankruptcy can provide significant relief from burdensome debt, which makes it all the more important that you ensure you minimize the risk of a case dismissal. Under certain circumstances, a bankruptcy court may dismiss a case without discharge, leaving the bankruptcy filer on the hook for the debt they may have desperately needed to eject from their finances.

While a bankruptcy lawyer can protect your case from dismissal, it’s important to understand the risk factors that can contribute to this outcome. Knowing how your case could get thrown out without a discharge can help you better understand your responsibilities during bankruptcy proceedings.

Failure to File Required Documents

One of the primary reasons bankruptcy cases get dismissed is the failure to file required documents on time. The bankruptcy process involves extensive paperwork, including schedules of assets and liabilities, statements of financial affairs, and income information. If these documents are not submitted within the stipulated deadlines, the court may dismiss the case.

This requirement ensures transparency and enables the court to make informed decisions. Therefore, meticulous attention to detail and adherence to deadlines is essential for the success of a bankruptcy filing.

Incomplete or Inaccurate Information

Providing incomplete or inaccurate information can also lead to the dismissal of a bankruptcy case. Bankruptcy trustees and courts rely on the debtor's disclosures to evaluate the case. If the information provided is incomplete or misleading, it undermines the integrity of the process.

Common issues include underreporting income, failing to disclose assets, or not listing all creditors. These omissions or inaccuracies can be perceived as an attempt to deceive the court, resulting in the dismissal of the case. Honesty and thoroughness are critical when disclosing financial information during the bankruptcy process.

Failure to Attend Required Meetings

The bankruptcy process includes mandatory meetings, such as the 341 meeting of creditors, where the debtor must answer questions under oath. Failing to attend these meetings can result in the dismissal of the case.

These meetings are opportunities for creditors to inquire about the debtor's financial situation and for the trustee to verify the information provided in the bankruptcy petition. Missing these meetings without a valid reason can signal to the court that the debtor is not fully committed to the process, leading to a dismissal.

Non-Compliance with Court Orders

Bankruptcy courts issue various orders throughout the bankruptcy process, and compliance with these orders is mandatory. Non-compliance can include failing to submit additional requested documents, not attending court hearings, or disregarding directives related to asset turnover or payment plans. Ignoring court orders demonstrates a lack of cooperation and can result in the court dismissing the case. Staying engaged and responsive to the court’s requirements is essential to avoid dismissal.

Failure to Complete Credit Counseling and Debtor Education

Before filing for bankruptcy, individuals must complete a credit counseling course. After filing, they must also complete a debtor education course. These courses aim to educate debtors on managing finances and avoiding future financial pitfalls. Failure to complete these courses and provide the necessary certificates to the court can result in dismissal. These educational requirements are non-negotiable and must be fulfilled to proceed with the bankruptcy case.

Abuse of the Bankruptcy Process

Bankruptcy courts are vigilant in identifying and preventing abuse of the bankruptcy system. If the court determines that a debtor is abusing the process, it can dismiss the case. Abuse might include filing multiple bankruptcy cases in a short period, filing without a legitimate need for relief, or attempting to hide assets. The court evaluates the debtor's intent and the overall circumstances to ensure the process is not being manipulated. Honest and genuine use of bankruptcy relief is necessary to avoid accusations of abuse and subsequent dismissal.

Insufficient Income for Chapter 13 Plans

In Chapter 13 bankruptcy, the debtor proposes a repayment plan to pay off debts over three to five years. The success of this plan hinges on the debtor's ability to generate sufficient income to meet the payment requirements.

If the court determines that the debtor's income is insufficient to fund the repayment plan, it may dismiss the case. This dismissal occurs because the repayment plan is deemed unfeasible. Debtors considering Chapter 13 must carefully evaluate their income and expenses to ensure their proposed plan is realistic and sustainable.

Failure to Make Plan Payments

For those who file Chapter 13 bankruptcy, making timely payments according to the repayment plan is crucial. Failure to make these payments can lead to dismissal of the case. Consistent payments are a cornerstone of Chapter 13 bankruptcy, as they demonstrate the debtor’s commitment to repaying their debts.

Missing payments or making partial payments can cause the court to lose confidence in the debtor’s ability to fulfill the plan, resulting in a dismissal and leaving the debtor without the protections of bankruptcy.

Unauthorized Use of Credit

After filing for bankruptcy, debtors must refrain from accumulating new debt without court approval. Unauthorized use of credit can indicate that the debtor is not taking the bankruptcy process seriously and is continuing the financial behaviors that led to their initial insolvency.

Courts closely monitor debtors' financial activities post-filing, and accumulating new debt without proper authorization can result in the dismissal of the case. Debtors must exercise financial discipline and seek court approval for any new credit to avoid this pitfall.

Contact a Bankruptcy Lawyer for Help

Having a bankruptcy lawyer on your side can help you mitigate many of the common risks of a bankruptcy case dismissal. When you need a discharge of burdensome debt, having a legal professional on your side can help you ensure that you properly follow the process and avoid making decisions that could jeopardize your case.

Our bankruptcy lawyers at Buchalter & Pelphrey have many years of combined experience helping clients in situations similar to yours. When you need help with bankruptcy, don’t hesitate to reach out to us and request a consultation.

Get started now by contacting us online.

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