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Can a Bankruptcy be Denied?

Yes, the Court can deny your bankruptcy.  When a bankruptcy case is denied, the case generally remains on the debtor’s credit report and can have a negative impact for years regardless of whether the debts were discharged or not.  The most common reasons for denial are as follows:

Filing under the Wrong Chapter

Failure to file under correct “Chapter” may result in the denial of a bankruptcy.  For example, filing under a Chapter 7 when the debtor only qualifies for a Chapter 13.  However, in these situations the Court typically will simply allow the debtor to convert their bankruptcy under the correct Chapter without a denial.

Failure to take Instructional Course

Every debtor is required to take two instructional courses about personal financial management.  The first course is a credit counseling course that must be completed before the bankruptcy case begins.  The second is a financial management course that must be completed during the bankruptcy case.  Failure to take either course may result in the Court denying the bankruptcy.

Fraud

If you are not honest and transparent in your bankruptcy case, the Court can deny your discharge.  For example, hiding, destroying, or giving away assets can cause a denial by the Court.  In these situations, not only can the Court deny your bankruptcy, but it can also order that you sell certain assets to repay creditors without having your debts completely discharged.

While fraud typically caries malicious intent, there are debtors who make honest mistakes on their filings or do not follow proper procedure.  These honest mistakes can result in a denial of the bankruptcy.  Having an experienced attorney can greatly reduce your chance of making such mistakes.

Case Procedures

Bankruptcy cases have unique procedures and requirements.  Failing to comply with these procedures and rules can result in denial of the case.  These procedures can include: filing late documents, inaccurate documents, or missing a required hearing.  Hiring an experienced attorney will provide you with the confidence and assurance that you comply with the bankruptcy procedures and rules.

The best way to avoid a denial is to be open, honest, and transparent.  If the debtor follows this advice, the chances of dismissal are dramatically reduced.  At Burnham Law we can remove some of the stress of a bankruptcy.  We have experienced attorneys to give you confidence that your case is not denied and moves as seamless as possible.

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