5 Reasons Why A Court May Deny Your Chapter 7 Bankruptcy Discharge
When you file for a chapter 7 bankruptcy, any interested party can challenge the discharge, but only a judge can deny your application. While a court may sometimes deny a request to include certain debts (like student loans) in a discharge application, it's also possible for a judge to completely deny your request. While these denials are generally rare, it's important to understand why this situation occurs. Learn more about five specific scenarios here.
Serial bankruptcies
It isn't easy to file for a chapter 7 bankruptcy, and for most people, this course of action is very much the last resort. Of course, following a chapter 7 bankruptcy discharge, people face certain restrictions anyway. For example, the discharge will appear on your credit report for ten years, which means you won't find it easy to rack up future debts.
That aside, a few people get themselves into trouble again. As such, bankruptcy courts won't approve a chapter 7 discharge if you have applied within 8 years of the start of the last one. Similar restrictions apply to a chapter 13 or 12 bankruptcy. In all cases, the courts expect you to find another way to deal with your debt problems.
Inaccurate information
Any bankruptcy attorney will tell you that a satisfactory outcome depends on honesty. In all cases, when preparing information for your application, you must give complete, accurate information. If you are unsure about any of the facts, you should always check what to say with your attorney. A bankruptcy court does not accept any margin of error, and even an innocent oversight could become a problem, so don't take any chances.
Failure to take a personal financial management course
Before a judge will accept a chapter 7 bankruptcy discharge, you must prove to the court that you now know how to better manage your money. As such, all applicants must complete a financial management course or predischarge counseling. To prove that you have met this requirement, you must present an Official Form 23 and certificate to the court.
What's more, you must file these documents within 45 days of your first creditors' meeting. Failure to meet any of these requirements may result in a denial. Always make sure you confirm any legal timeframes and conditions like this with your lawyer.
Any attempt to defraud
It should go without saying that any attempt to commit fraud is illegal. A bankruptcy judge will not take kindly to any evidence that you have attempted to defraud the court, so you must make sure you present a sound case.
As you can probably imagine, many debtors want to find ways to 'give away' their assets, and some applicants go to extreme lengths to do this. Generally speaking, if you transfer, remove, destroy or conceal any assets within one year before you file for a chapter 7 bankruptcy, the judge can deny your discharge request.
What's more, a court will not necessarily look for intent to defraud before making a decision. Given the highly subjective nature of these situations, the court may simply deny your request as a result of your actions, even if you didn't intend to defraud. As such, extreme caution is vital.
Failure to meet terms of court order
While a court will normally allow you to keep certain assets, your chapter 7 discharge could become conditional on certain special requirements. For example, the court may not allow you to keep your car if the value of the vehicle is too high. As such, the judge will issue a court order to detail any of these conditions. If you refuse to comply with any restrictions in a court order, the judge may deny the entire discharge.
A chapter 7 bankruptcy discharge can help you get rid of personal debts, but a court can sometimes deny your request. For more information and advice, talk to a trained attorney. You can also visit sites like http://www.morrisonmurfflaw.com to learn more.