The vast majority of bankruptcy petitions go through the court process quickly and easily – but a few do hit some snags. If your bankruptcy petition is denied, however, that can create financial chaos on top of an already difficult situation, so it’s important to understand what kinds of things can make that happen.
Here are three reasons why your bankruptcy claim can be denied.
1. Falsifying your assets
Any attempt to transfer, destroy or conceal property can get you in trouble with the bankruptcy court and result in your petition’s refusal.
The U.S. Code takes abuse of the bankruptcy system very seriously. It spells out that you cannot be absolved from debt liability if you are declaring bankruptcy to delay, hinder or defraud your creditors. Depending on the circumstances, this could amount to bankruptcy fraud.
2. Failing to provide the proper documentation
While filing for bankruptcy, you will be required to provide a set of financial documentation to prove that you are unable to pay your debts. One such document is your tax returns. You will also need to provide the following documentation:
- Your income sources
- Major financial transactions over the past 24 months
- Your monthly living expenses
- Your loan documents
- List assets in your possession
2. Failing to meet the eligibility criteria
To be eligible for bankruptcy, you must meet certain criteria. For instance, you must meet and pass the income and means test to qualify for Chapter 7 bankruptcy.
Find out how you can avoid pitfalls that can lead to the refusal of your bankruptcy claim so that you can get through this process as easily and quickly as possible.