How to Avoid the Rejection of a Bankruptcy Petition

When people file bankruptcy petitions, they often focus on what it takes to achieve acceptance. However, there is an argument for assessing your case based on why a judge might reject it under bankruptcy law. While not bankruptcy attorney services provider can guarantee a petition won't be rejected, you should pay attention to these four common areas of concern.

1. Financial Ineligibility

When someone submits a bankruptcy filing, they have to include proof that their circumstances justify it. If you make less than 50% of your state's median income, it is likely presumed that you're eligible for bankruptcy. Other folks, however, will have to show that their debt loads are so large that they either need to restructure the debts to lower amounts or have them discharged.

Before going to a firm for bankruptcy law services, gather up at least the last two years of tax filings you've submitted. A few months of your most recent pay stubs are also helpful, especially if your income has changed significantly since your last tax filing. Similarly, try to track down all of the debts you owe and the names of the attached creditors. Collect the last couple of months of utility bills, rent or mortgage payments, and even receipts for living expenses. These can all serve to explain why your petition should proceed.

2. Recent Discharges

You are allowed to get discharged under Chapter 7 once every eight years and under Chapter 13 once every six years. The clock starts on the date that you last filed, not when the judge granted the discharge. Once the clock starts, you should start working with bankruptcy law services. 

3. Filed for the Wrong Type of Bankruptcy

Your petition has to be for what the court considers the right kind of bankruptcy given your circumstances. For example, you might make too much money and have too little debt to file for Chapter 7. Consequently, a judge may reject the petition. You'll then have to file anew for a Chapter 13 case.

There are also some scenarios that can get tricky with business finances. In particular, someone filing a Chapter 11 restructuring case as a sole proprietor of an unincorporated business may see a rejection. Unincorporated business debts are generally treated as personal debts, and they have to be handled through the personal bankruptcy law system.

4. Fraud

Willing transferring or hiding assets is grounds for rejection. In some cases, it may lead to criminal charges. Even if you moved assets around before you filed, the court may see this as an attempt to shelter them. Represent all your assets, and be very careful about transfers in the months before filing,


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