Considering Chapter 7 Bankruptcy? Three Mistakes That Could Cost You An Approval
Bankruptcy can be a complex, involved process. If you want to be sure that your filing is successful, it's in your best interest to work with a bankruptcy attorney who can help you organize your information and make sure that you qualify. A successful bankruptcy filing will give you the opportunity to start fresh financially, but there are a few serious mistakes that can cost you the whole process. Here are three of the most common mistakes that bankruptcy filers make that can lead to rejection. Talk to your attorney, at a place like the Wagner Law Office PC, about the process and these mistakes before you file.
Someone Challenges Your Bankruptcy Filing
When you file for Chapter 7 bankruptcy, the ultimate goal is to have your debts discharged. This means you don't have to pay the remaining balances on those accounts. This bankruptcy filing ends in a court order that prohibits creditors from demanding those funds from you. If a creditor or a trustee believes that you should not be awarded a bankruptcy discharge, he or she can challenge the filing with the courts. In some cases, if the challenge is supported by reasonable evidence, you may have your bankruptcy rejected by the courts.
There are a few common reasons for a bankruptcy challenge by a creditor. In most cases, it's because the creditor believes that you may have done something fraudulent in the filing. For example, if a creditor has evidence that you've hidden assets, misrepresented your financial situation or secured a credit account just before filing so that you could max it out and then discharge it, any of these things can result in a successful challenge.
The best way to avoid this mistake is to ensure that you are completely honest when you file your bankruptcy request. As long as everything is within the legal boundaries and you are completely up front about everything along the way, there should be little concern about any challenge being accepted by the court.
You Fail the Means Test
When you file a Chapter 7 bankruptcy request with the courts, you'll have to show that you don't have the financial means to settle the accounts with a consolidated payment. To show this, the courts conduct a means test which evaluates your current monthly income and expenses. The difference between the two is considered to be your disposable income. If the courts decide that you have too much disposable income or you make too much money according to the evaluation, you won't be permitted to file for Chapter 7.
The best way to avoid this problem is to talk with a bankruptcy attorney before you file. The attorney will evaluate your current financial situation to determine whether there is any question about your qualification according to the means testing. If your attorney determines that you are likely to be rejected based on the means test, you may still be eligible for a Chapter 13 bankruptcy filing.
You Didn't Include Your Tax Records
Before you can get any bankruptcy protection from the courts, they need to assess your most recent tax filing and any current tax withholding information. These tax records are an important part of evaluating your ability to make payments on your debts. If you misrepresent your current tax information, the courts could consider that a disqualification and reject your bankruptcy request.
There are some strict regulations in place about how tax returns can be handled if you're filing bankruptcy. If you've recently received a refund, it may be considered as part of your means testing, which could disqualify you under the tax and means sections of the evaluation. Your bankruptcy attorney can help you to understand the tax implications and how to proceed with your next year's filing after your bankruptcy, too.
Understanding these mistakes may help you to ensure your success when you file for bankruptcy. The more prepared you are before you submit the paperwork, the less chance you have of rejection. Work with an attorney for legal support and to ensure that you have the latest information about the local bankruptcy laws.