Five Things That Can Disqualify You from Filing for Bankruptcy
Bankruptcy can be a helpful tool for individuals who are struggling with overwhelming debt. However, not everyone is eligible to file for bankruptcy. There are certain requirements that must be met, and there are also certain actions or circumstances that can disqualify a person from filing. In this article, we’ll explore what can disqualify you from filing for bankruptcy.
1. Lack of Eligibility:
The first and most obvious reason someone may be disqualified from filing for bankruptcy is if they do not meet the eligibility requirements. To file for Chapter 7 bankruptcy, you must pass the means test, which is a calculation that determines whether your income is low enough to qualify. If your income is too high, you may be required to file for Chapter 13 bankruptcy instead.
In addition, to file for bankruptcy, you must have received credit counseling from an approved agency within the past 180 days. If you have not completed this requirement, you will not be eligible to file.
2. Previous Bankruptcy Filings:
If you have already filed for bankruptcy in the past and received a discharge, you may not be eligible to file again for a certain period of time. The length of time depends on the type of bankruptcy you filed previously and the type of bankruptcy you are attempting to file now.
If you previously filed for Chapter 7 bankruptcy and received a discharge, you must wait eight years before filing for Chapter 7 again. If you previously filed for Chapter 13 bankruptcy and received a discharge, you must wait six years before filing for Chapter 7, or two years before filing for Chapter 13 again.
3. Fraudulent Activity:
If you have engaged in fraudulent activity, such as hiding assets, lying on your bankruptcy petition, or falsifying loan applications you may be disqualified from filing for bankruptcy. Bankruptcy fraud is a serious offense and can result in fines, penalties, and even imprisonment.
It’s important to be honest and transparent when filing for bankruptcy. You must disclose all of your assets, debts, and financial transactions on your bankruptcy petition. Failing to do so can result in the dismissal of your case and potential legal consequences.
4. Recent Repayments to Friends or Family Members:
If you have recently repayments on loans to friends or family members then you may have a problem in a bankruptcy. These purchases are considered “preferential transfers” and may be clawed back by the bankruptcy trustee to pay your creditors.
To avoid this, it’s important to refrain from making any repayments to friends or family members in the years leading up to your bankruptcy filing. Focus on paying your essential bills and living expenses instead.
5. Income from Illegal Sources:
If you receive income from illegal sources, such as drug sales or gambling, you may be disqualified from filing for bankruptcy. This is because bankruptcy is intended to provide relief for honest debtors who are unable to pay their debts due to circumstances beyond their control. Engaging in illegal activities can disqualify you from this relief.
Bankruptcy can be a helpful tool for those struggling with overwhelming debt, but it’s not an option for everyone. If you are considering filing for bankruptcy, it’s important to consult with a bankruptcy attorney to determine whether you are eligible and to ensure that you are following all of the necessary steps and requirements. Avoid any actions that could disqualify you from filing, such as fraudulent activity or luxury purchases, and be honest and transparent throughout the process.
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