Can My Chapter 7 Bankruptcy Be Denied by The Court?

Bankruptcy is a way for you to get a fresh financial start. If you have significant debt and very little income, you may be eligible to file Chapter 7 bankruptcy, which effectively eliminates all unsecured debts.

In some cases, you may be able to keep your home, vehicle and other property under Chapter 7 bankruptcy. However, because this form of bankruptcy basically denies your creditors from collecting on the debts you owe, the requirements can be strict.

If the court discovers that you violated any of the terms of your bankruptcy, they may deny your bankruptcy discharge.

Attempting to Defraud

One reason that could cause your Chapter 7 Bankruptcy be denied is if you hinder, delay or defraud a creditor. This may involve transferring, removing or destroying property within the year before you filed or at any time after filing.

This prevents you from giving away assets in an effort to protect them from bankruptcy. If you have given property away within the past year, disclose that information to your attorney immediately so that they can be prepared for any questions from the trustee.

You must be able to explain any loss of assets to the trustee. If you cannot, it is possible the trustee could deny your discharge.

False Statements

If you make false statements in connection with your bankruptcy or conceal information regarding your financial condition, your Chapter 7 bankruptcy could be denied.

When you file bankruptcy, you state under oath that everything in the filing is true. If it is later found that you left information out or lied, a creditor can challenge your discharge.

Failure to Take Financial Courses

Under all types of bankruptcy, you must complete a personal financial management course before your bankruptcy is filed and again during the case that must be completed before your bankruptcy is discharged. These are court-ordered courses and, like any court order, if you fail to comply, you can have your case dismissed.

Having your Chapter 7 bankruptcy denied can have serious consequences. You will become immediately liable for all your debts. In the case of fraud, the trustee may also be able to administer non-exempt assets, which means you could lose your property and still owe your debts.

It is critical that you are open and honest with your attorney throughout your bankruptcy process in order to avoid doing anything where your Chapter 7 bankruptcy could be denied.