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2 reasons why your Chapter 7 bankruptcy can be denied

On Behalf of | Apr 12, 2023 | Bankruptcy

Life is full of uncertainties. One moment everything is working perfectly fine, and the next you could be dealing with an injury a medical condition that is not only affecting your health but also your ability to work and provide for your loved ones. Or, maybe you took out credit to start a business and things aren’t going quite as planned and the business is failing. 

If you are heavily in debt with no relief in sight, whatever the cause, one of the options you can consider for debt relief is a Chapter 7 bankruptcy

Basically, Chapter 7 is designed to help people discharge unsecured debts such as medical bills, credit card debts and most personal loans. However, there are instances when your petition for Chapter 7 bankruptcy can be denied. Here are some of these instances:

When you try to hide money or assets

When you commit fraud against your creditors or the bankruptcy court, the court will decline your petition. Of course, the court has a broad definition of fraud as far as bankruptcy is concerned. These can include failing to list some assets on the bankruptcy schedules and falsifying or destroying documents. It can also include making suspicious asset transfers. 

When you don’t obtain credit counseling

There is an educational component to filing for bankruptcy. For your bankruptcy petition to go through, you must complete credit counseling from an approved institution. Failing to complete these programs course can lead to the refusal of your petition.

Chapter 7 bankruptcy can provide you with a fresh start if you are caught up in debt. Learning how Chapter 7 bankruptcy laws work can help you successfully discharge your debts and turn over a new financial page.