Common Reasons Why a Bankruptcy Petition might be Dismissed
By William Winfield, Esq. 1. Bankruptcy Fraud: It cannot be overstated how important it is to tell the truth and accurately disclose all income assets, debts, and other required information when preparing a Bankruptcy Petition. If a Court finds that a Petitioner committed a willful fraud, the Petition will likely be dismissed. In California, the Court may also impose criminal penalties including fines and incarceration. 2. Failing the Means Test: In order to be granted a discharge under Chapter 7 Bankruptcy protection a Petitioner’s disposable income must be low enough to pass the means test. The Court compares the Petitioner’s average income for the six month period before filing and compares it to the state median for a similar household. If the Petitioner’s income is below the median, than he or she qualifies automatically. However, if the Petitioner makes more than half median income, the Court must examine the Petitioner’s expenses to determine whether he or she qualifies for a discharge. If the means test is failed, the Trustee will likely offer the Petitioner the opportunity to convert the Bankruptcy to a Chapter 13 reorganization instead of a discharge before dismissing the Petition altogether. 3. Failure to Complete Mandatory Credit Counseling Courses: Every Bankruptcy Petitioner is required to complete two credit counseling courses as a part of the Bankruptcy proceeding. The course can be completed online or over the phone. After the course is taken, a certificate proving it was completed must be filed with the Court. If a Petitioner is not in compliance with this procedure, the case will be dismissed by the Trustee. 4. Not Paying Filing Fees: If a Petitioner is indigent, he or she may apply for a waiver of Court fees, but unless a waiver is granted, a case will be dismissed for failure to pay filing fees. You may apply for a waiver of your court fees. The court will take into account your income and expenses when granting or denying your waiver. Unless you receive a waiver, the court will dismiss your case if you fail to pay the required filing fees. 5. Improperly Completing Forms or Failure to Submit all Required Documents: It is important to take time and ensure that all paperwork filed with the Court is completed properly. If any financial disclosures, forms, schedules, or other documents required by the court are improperly completed or omitted, or if any information is missing, a bankruptcy court might dismiss the Petition. If the trustee requests pay stubs, tax returns, or other documents to verify the information in the Petition, it would behoove the petitioner to get that documentation to the Trustee as quickly as possible. 6. Not Attending the Meeting of Creditors: Early on in the Bankruptcy process, the Trustee holds a meeting of creditors to allow a Petitioner’s creditors to appear and ask questions under oath about the papers submitted. This process usually lasts only a few minutes and creditors rarely appear, but if a Petitioner fails to appear, the Trustee will likely dismiss his or her claim. 7. Failing to Make Chapter 13 Plan Payments: Reorganization plans under Chapter 13 of the Bankruptcy code are designed to allow Petitioners some breathing room to pay off their debts with more reasonable monthly payments. However, the Petitioner must act in good faith when preparing a repayment plan and afterwards, by actually making the payments. If the payments are not made without a good reason, the Bankruptcy will be dismissed. If you find yourself burdened with debt that cannot be repaid, you should consult a bankruptcy attorney at Schneiders & Associates, LLP promptly to discuss your best options. The bankruptcy attorneys at Schneiders & Associates, LLP are experienced at guiding clients through the bankruptcy process to help avoid your petition being dismissed.