For most people making the decision to file for Chapter 7 bankruptcy represents a big step. Right or wrong, a significant amount of social taboo has been attached to bankruptcy, and many people put it off as long as they can, trying to avoid admitting that they need help with their financial situation. With that being the case, it is hard to imagine the emotional impact of having a bankruptcy application denied. If you are considering a bankruptcy filing, you need to be aware that denials are rare, but a possibility.

The first thing you need to understand about filing for bankruptcy is that you will be required to pass a means test. This will calculate your eligibility based on your household income, expenses, and family size to determine whether you qualify for Chapter 7, which discharges most consumer debt. If you don’t qualify or what to hold on to assets rather than sell the off, you may be directed to a Chapter 13, which provides the ability to restructure your debt and pay it off over a longer period of time or with better terms.

Though your application can be rejected if it is revealed that your assets’ value is greater than the amount of your debt, most rejections of applications are a result of improper preparation of supporting documentation, with items missing or improperly filled out. Take a moment to familiarize yourself with the most common reasons for bankruptcy denial to help you guard against missteps.

• Failure to attend credit counseling. Everybody who files for bankruptcy is required to take two educational courses before their debt can be discharged. Additionally, consultation with a nonprofit credit-counseling agency is required before filing for either Chapter 7 or Chapter 13 to see whether they can pay off their debts without the bankruptcy process.
• Evidence that the applicant attempted to defraud creditors or the bankruptcy court. This would include concealing assets in order to avoid having to sell or forfeit them; filing false or incomplete forms; filing multiple times using false information or filing in multiple jurisdictions; and attempting to bribe a court-appointed trustee.
• Having previous debt discharged under Chapter 7 within the previous eight years or under Chapter 13 within the previous six years.

Using the services of an experienced bankruptcy attorney is your best protection against these types of mistakes.  For help, contact us today to set up a time to discuss your situation.