While there are certain debts that cannot be discharged through bankruptcy proceedings, such as college loans or child support payments, for most people bankruptcy is available as a protection from overwhelming debt. Nonetheless, certain circumstances can result in your being denied the entire discharge, leaving you responsible for all outstanding debt. Alarming as this may sound, as long as you have been open and honest with your creditors, you should have nothing to worry about.
Reasons for Denial of Chapter 7 Bankruptcy Discharge
The primary reasons you may be denied Chapter 7 bankruptcy discharge are all based on dishonest and/or illegal behavior. These reasons include:
Attempt to Defraud
If you have transferred, destroyed or concealed property within a year before, or at any time after, filing for bankruptcy, you may be accused of attempt to defraud and lose your right to file for bankruptcy protection. For this reason, it is extremely important that you be completely honest with your attorney about any transactions involving property that may have occurred, even if such transactions took place without any intent to defraud.
Lack of Sufficient Information
Any failure to maintain sufficient records about your finances during the period in question may result in your being accused of destroying, mutilating, or falsifying pertinent data. You have to be able to back up your assertions with proper recorded information.
The point has already been made that honesty is not only the best, but the only policy that will help you file for bankruptcy. When you file for bankruptcy protection, you take an oath that everything in your statement is true and accurate. You are therefore open to perjury charges if you are not completely honest with your attorney and with the court.
Inexplicable Loss of Assets
You are responsible for your own financial record-keeping and will be held accountable if you cannot explain to the satisfaction of the court where certain assets have gone.
Refusal to Comply with a Court Order
If the debtor fails to obey a lawful court order during the proceedings, he or she has forfeited the right to bankruptcy protection.
Failure to Take an Instructional Course on Debt Management
Under the bankruptcy code, debtors must take two instructional courses, one in credit counseling before the proceedings can begin, and a second one in financial management that must be completed during the case. The second one must be completed as a prerequisite for getting debt discharged through the bankruptcy proceeding.
How to Avoid Being Denied Bankruptcy Protection
It is always best to work with a skilled and experienced attorney when you are preparing to file for bankruptcy. Having an attorney who specializes in bankruptcy proceedings is important because such a professional will not only help you to achieve the most effective resolution of your debt problem, but will guide you through the procedure with as little turmoil as possible. It is crucial that you choose an attorney with whom you have a personal rapport, one you can trust implicitly and with whom you can be completely honest.