When you are filing for Chapter 7 bankruptcy, certain mistakes and oversights can cause your petition to be denied. To help you avoid situations that can prevent you from getting the fresh start you need, five of the most common mistakes are outlined below.
- Filing at the wrong time.
If you have filed for bankruptcy in the past, the timing of your Chapter 7 filing is critical. If you received a Chapter 7 discharge, eight years must pass before you can file again. If you filed Chapter 13 and were discharged, you must wait six years.
- Mistakes in your bankruptcy petition.
When you prepare your New York bankruptcy petition, it is essential to include all of your debt, as only the debts listed will be discharged at the end of the bankruptcy. If you forget something, you can amend your paperwork, but only up to a particular point in the process.
However, if you omit important financial information on purpose, such as failing to report how much you make from a cash-only job, or attempt to hide nonexempt assets that you don’t want your trustee to seize, then you may be accused of bankruptcy fraud and denied a discharge.
- You don’t check to confirm you meet income requirements.
Anyone wanting to file for Chapter 7 bankruptcy in New York must meet the income eligibility requirements first. This means that your income must not exceed the state median for a household the same size as yours. If it is equal to or less than the published median income, you will be allowed to file.
If you make more money, the bankruptcy court will also consider how much disposable income you have after permitted deductions are made. If it is too much, you will be required to file Chapter 13 instead.
- You don’t confirm that all of your debts are dischargeable.
Not all debts can be discharged in a Chapter 7 bankruptcy. Student loans and tax debts are good examples. If the majority of your debt falls into one or both of these categories, a repayment plan under Chapter 13 might be more feasible for you.
- You use credit soon before filing.
When you make excessive and non-essential use of credit soon before filing, the bankruptcy court may conclude that you are trying to take advantage of the debt relief process and exempt those specific debts from discharge. For example, if you used your Visa to pay for food or prescription medication, the court may allow the debt to be discharged, but maxing out your credit line at a clothing or electronics store would be treated with suspicion.
When done correctly, a Chapter 7 filing can erase the credit card bills, medical debt, and other obligations that are keeping you awake at night. A New York bankruptcy attorney will help you review your debt situation and advise you on what steps to avoid when you plan to seek relief under Chapter 7. A Chapter 7 bankruptcy wipes out most debts. Set up a free in-person initial consultation with Jayson Lutzky. He is a Bronx bankruptcy attorney with 35+ years of legal experience and can be reached at 718-329-9500. Visit mynewyorkcitylawyer.com/bankruptcy to learn more.