When a Bankruptcy Case is Dismissed it May Disqualify a Person From Filing Bankruptcy
When a bankruptcy case is dismissed, it means that the court has decided to terminate the bankruptcy proceedings before the debts are fully discharged. Regardless of the specific reason for the dismissal, having a recently dismissed bankruptcy case on your record can disqualify you from filing for bankruptcy again in the near future.
The disqualification period for filing a new bankruptcy case after a dismissal can vary depending on the type of bankruptcy that was dismissed. If a Chapter 7 bankruptcy case was dismissed, then the individual may have to wait at least 180 days before they can file for Chapter 7 bankruptcy again. If a Chapter 13 bankruptcy case was dismissed, the wait time may be even longer, up to 2 years before filing for Chapter 13 bankruptcy again.
Having a recently dismissed bankruptcy case on your record can also impact the automatic stay that is typically granted when a bankruptcy case is filed. The automatic stay provides protection from creditor actions such as lawsuits, foreclosure, and wage garnishment. If a bankruptcy case is dismissed, and a new case is filed shortly after, the automatic stay may be limited or even denied altogether.
Having a recently dismissed bankruptcy case on your record can also be a red flag to creditors and lenders. It may make it more difficult to obtain credit or loans and can negatively impact your financial standing.
Fraud
This can include lying about assets, income, or debts on their bankruptcy petition, transferring or hiding assets to avoid having them included in the bankruptcy estate, or providing false information to creditors or the court.
Bankruptcy laws are designed to provide relief to honest debtors who are unable to repay their debts. Individuals who engage in fraudulent conduct, abuse the system and undermine the purpose of bankruptcy. The bankruptcy court takes fraud very seriously and will not hesitate to deny a bankruptcy filing or even impose criminal penalties on those found guilty of fraud.
A bankruptcy filing may be dismissed or converted to a different chapter if the court finds evidence of fraud. This means that the debtor would lose the protections and benefits of bankruptcy and be subject to collection actions by creditors.
Individuals who have been found guilty of committing bankruptcy fraud may be disqualified from filing for bankruptcy in the future. This can have serious consequences for someone who may legitimately need the relief that bankruptcy provides.
Previous Discharge
A bankruptcy discharge is a court order that releases you from personal liability for certain types of debts. It essentially wipes the slate clean and allows you to start fresh financially. However, if you have already received a bankruptcy discharge, there are limitations on when you can file for bankruptcy again and receive another discharge.
If you have previously filed for Chapter 7 bankruptcy and received a discharge, you must wait at least 8 years from the date of the previous filing before you can file for Chapter 7 again and receive another discharge.
If you want to file for Chapter 13 bankruptcy after receiving a Chapter 7 discharge, you must wait at least 4 years before you can receive a Chapter 13 discharge.
If you have previously filed for Chapter 13 bankruptcy and received a discharge, you must wait at least 2 years from the date of the previous filing before you can file for Chapter 13 again and receive another discharge.
These waiting periods are put in place to prevent individuals from abusing the bankruptcy system and filing for bankruptcy repeatedly in an attempt to discharge their debts.
Your Debts Don’t Qualify for a Discharge
One common reason that your debts may not qualify for a discharge is if they are not eligible according to bankruptcy laws.
Some types of debts cannot be discharged in bankruptcy, including certain tax debts, student loan debt, alimony and child support payments, and debts incurred through fraud.
You Fail to Complete all Actions Required
A common reason for disqualification is the failure to complete mandatory credit counseling. Before filing for bankruptcy, individuals are required to undergo credit counseling from an approved agency within 180 days of filing. [1]
This counseling is designed to help debtors understand their financial options and explore alternatives to bankruptcy. If you fail to complete this requirement, you may not be eligible to file for bankruptcy.
Individuals who fail to complete the necessary paperwork or meet the deadlines set by the bankruptcy court may also be disqualified from filing.
Bankruptcy involves a significant amount of paperwork, including financial disclosures, asset and liability schedules, and a repayment plan for Chapter 13 bankruptcy. Failure to provide accurate and timely information can result in your case being dismissed.
You Don't Complete the Court Ordered Financial Education Requirement
One of the requirements is the completion of a court-ordered financial education course.
If you fail to complete this course, it could disqualify you from filing for bankruptcy. The purpose of this requirement is to ensure that individuals seeking bankruptcy protection understand the financial responsibilities and consequences of their actions. It is meant to provide them with the necessary knowledge and skills to make informed financial decisions in the future.
Failure to complete the financial education course may be viewed as a lack of commitment to improving one’s financial literacy and taking steps to avoid future financial struggles.
Not completing the financial education requirement could indicate to the court that you are not taking your financial situation seriously, which could impact their decision on whether to grant you bankruptcy protection.
Concealing or Destroying Information
Concealing or destroying information can be seen as a fraudulent act and can have serious consequences. If the court discovers that an individual has not been truthful or has attempted to hide or destroy financial information, they can be disqualified from filing for bankruptcy.
They may face legal consequences, such as fines or even criminal charges.
It is always best to be honest and transparent when filing for bankruptcy, as attempting to deceive the court can lead to serious repercussions.
Contact Frego Law today for a free consultation with a bankruptcy lawyer and take the first step towards a fresh financial start.
Source:
[1] Chapter 13 – Bankruptcy Basics. (n.d.). United States Courts. https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics
