Recently on our bankruptcy forum a user asked, “I filed bankruptcy several months ago. I have heard horror stories about how some filers have their Chapter 7 bankruptcy cases dismissed. I am desperate and cannot have that happen. Can you tell me what I need to do to ensure that I do not face a Chapter 7 bankruptcy dismissal?”
Chapter 7 bankruptcy dismissal
Although it does not happen too often, there are a variety of reasons that your Chapter 7 Bankruptcy can be dismissed. More importantly, if your case is dismissed, you will not receive a Chapter 7 bankruptcy dismissal and your creditors can continue their debt collection efforts. The most common reasons are listed below:
- Court determines that you attempted to commit fraud by transferring assets
One of the most serious offenses and a common reason that you could receive a Chapter 7 bankruptcy dismissal is if the court determines you attempted to commit fraud. Committing fraud can include intentional or unintentional actions by a debtor to “transfer, remove, destroy, mutilate, or conceal property within one year before the date of filing for bankruptcy or any time after filing Chapter 7 bankruptcy.”
How do you avoid committing fraud? The first step is to understand the bankruptcy laws. For example, debtors are not allowed to transfer the title of a car or other assets to a relative with the purpose of keeping the asset out their bankruptcy estate.
- Court determines you committed fraud by hiding or lying about your financial information
Debtors who attempt to keep information from the bankruptcy trustee about their true financial condition could face a Chapter 7 Bankruptcy dismissal. Common types of informational fraud include destroying financial documents, lying about assets, hiding property, failing to turn over tax information, and making false statements, orally or in writing, about your assets, earnings and debts.
- Not attending the required credit counseling and financial management courses
All debtors must attend a credit counseling course with an approved credit counseling agency within 180 days of filing bankruptcy. Debtors must also complete a debtor education course and file a certificate called the Debtor’s Certification of Completion of Instructional Course Concerning Financial Management prior to the bankruptcy discharge. Debtors who do not meet these requirements can face a Chapter 7 Bankruptcy dismissal.
4. Failing the Chapter 7 bankruptcy means test
Debtors must pass a Chapter 7 means test to qualify to file Chapter 7 bankruptcy. Debtors who do not pass the means test may have their Chapter 7 bankruptcy case dismissed or choose to convert to a Chapter 13 bankruptcy.
5. Not paying the court fees or submitting the proper information to the court
Bankruptcy laws specifically state the type of forms, petitions, and schedules which must be submitted to complete the bankruptcy process. Certain fees must also be paid. If you fail to file the proper forms or you do not pay all the required fees, your Chapter 7 bankruptcy case can be dismissed.
The majority of debtors who are honest, who understand bankruptcy laws, and who follow all the rules and requirements of the court will not have to worry about a Chapter 7 Bankruptcy dismissal. Talk to your bankruptcy lawyer if you have questions.