A Good Way Out of a Bad Situation

Filing for bankruptcy isn't a simple process. Consequently, a bankruptcy attorney will encourage you to take every possible step to avoid rejection. Keep an eye on these five possible sources of trouble.

Wrong Type

The simplest reason a court might reject a case is because the judge believes it's the wrong type of filing. An individual might pursue a Chapter 7 case, for example, but the judge could state that the filer can afford to handle a payment plan under Chapter 13. Before you choose a type of bankruptcy, you should discuss your situation in detail with an attorney.

Incomplete Filing

Bankruptcies tend to involve loads of paperwork. You will need to present evidence showing what your income is and how much debt you have. Also, you'll need to document your available assets. Failing to include a key piece of information may lead to rejection.

Bear in mind that bankruptcies move rapidly once you file. You may only have days to make updates to your petition if something is missing or inaccurate. A bankruptcy lawyer will tell you to hold off on filing the case until you're certain that you have everything nailed down.

Abuse of the System

America's bankruptcy system has saved millions of people from living with permanent financial catastrophes. However, some people abuse the system. You don't want a judge to even consider the possibility that a filing is abusive.

What makes a filing look abusive? Suppose someone takes on several loans six months before they file. A judge would suspect something's wrong because subsequently filing bankruptcy is a dramatic turn just after a person sought so much additional debt. Similarly, a judge may cast a wary eye if someone sells or transfers lots of assets right before filing. Whenever possible, try to avoid filing for bankruptcy around the same time that you make big financial moves.

Not Completing Credit Counseling

The system requires everyone to complete credit counseling before they file. Your counseling provider will provide signed documentation of completion. You can give copies of the documentation to your bankruptcy attorney, and they'll file it alongside the rest of your supporting materials. Verify with the court that you're dealing with an approved counseling provider before you start.

Missing Hearings or Meetings

Once the process starts, the court may order you to attend hearings or meetings. These sessions allow the judge to ask questions, and they also permit creditors to protect their rights. Failure to appear justifies a rejection.

For more information, contact a bankruptcy lawyer near you.