When bankruptcy is dismissed

Bankruptcy

When can a bankruptcy be dismissed?

There are a number of reasons why a bankruptcy case can be dismissed. Typically, the causes go from intentional misconduct (i.e., fraud and bad acts) to the failure to do something like to file the correct forms with the court or attend a required hearing. Here are some of the most common reasons when bankruptcy is dismissed.

Did Not Pay the Court Filing Fees:
When you file bankruptcy you must pay a filing fee to the court to administer your case.  The filing fees are currently $335 in a Chapter 7 case and $310 in a Chapter 13 case.  The court will dismiss your case if you fail to pay the required filing fees.

Did Not Attending the 341 Meeting of Creditors:
When you file for bankruptcy, you are required to attend a hearing called the 341 meeting of creditors this is not optional its mandatory.  At this hearing the court appointed trustee and your creditors are able to ask questions under oath about your financial affairs and the paperwork that was filed in the case. As a general rule the meetings of creditors last only a few minutes and not many of your creditors usually show up.  However if you fail to attend the hearing, the trustee will typically move to dismiss your bankruptcy case.

Did Not File All Required Forms or Submitting All Supporting Documents:
Filing for bankruptcy requires disclosing all of your financial information to the court. This is done by filing a large number of forms including a bankruptcy petition, schedules, means test and other documents. If you fail to file all required documents with the court, your case will typically be dismissed after a noticing process.

Commit Fraud:
When you complete your bankruptcy filings you sign a document that you are telling the truth and accurately disclosing all of your income, assets, liabilities, and other required financial information. Failure to tell the truth in your bankruptcy paperwork may be considered fraud. Bankruptcy fraud is serious.  Bankruptcy fraud can result in the loss of your discharge, criminal fines, and incarceration. If you lie on your bankruptcy papers or otherwise commit fraud, the court or trustee will typically bring an action to dismiss your case, deny your discharge, and report you to the FBI for further investigation.

Fail the Means Test:
To qualify for Chapter 7 bankruptcy, your disposable income must below a certain level that will allow you to pass the means test. The means test compares your average income for the six month period prior to filing your case against the median state income for a similar household. If your income is below the state median, you qualify automatically. However, if it is above median, the means test uses national and local living expense standards to determine whether you qualify. If you fail the means test, the court or trustee will either dismiss your Chapter 7 bankruptcy or have you convert your case to a case under Chapter 13.

Failure to Complete the Mandatory Credit Counseling Course Prior to Bankruptcy:
The bankruptcy code requires all consumer debtors to complete a credit counseling course prior to filing the case. Usually this is a course that you complete online or on the phone. After completion of the course, your attorney will receive a Certificate of Completion which needs be filed with the court when the case is filed. If you do not take the credit counseling course prior to the bankruptcy case then bankruptcy is dismissed.

Failing to Make the Chapter 13 Plan Payments:
In a Chapter 13 bankruptcy, you are allowed to keep your property but you must pay back some or all of your debts through a repayment plan.  Please visit Utah Chapter 13 for more information on the Chapter 13 requirements.  Basically a Chapter 13 plans typically last three to five years and your debts are discharged only entered upon successful completion of all required plan payments. If you stop making your Chapter 13 plan payments the Trustee will typically bring a motion to dismiss your bankruptcy from failure to make the required plan payments.

As you can see there are a number of pitfalls in a bankruptcy case when bankruptcy is dismissed.  As always it’s my recommendation that working with an experienced lawyer is in your best interest.

 

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