Learning that a judge rejected your bankruptcy filing can be devastating. However, you need to figure out why it happened and if you might have additional options. Take these four steps before you decide what to do next.
Collect the Documents from the Ruling
Make sure you collect every document from the court that outlines what the judge's decision was. These will be invaluable in determining what the ruling means and if you may have any more bankruptcy options. Make copies of all of the documents from the court so you review them without ruining the originals.
Especially if you filed without the support of a bankruptcy lawyer, contact one now. Even seemingly simple filings are challenging because bankruptcy isn't a simple system. The proliferation of do-it-yourself legal services online has led many people down the wrong path. Someone who followed the counsel of a bankruptcy attorney will rarely see an unexpected ruling against them.
If you did file with the support of a lawyer, you may want to find a different one. Bear in mind that a second attorney might agree with the court. This isn't necessarily a bad thing since understanding the judge's perspective may help you refile the case.
Understand the Ruling
The judge will state the reasoning for the rejection. For example, the court may have rejected the petition because the filer was ineligible for the preferred form of bankruptcy. If you filed for Chapter 7 and the judge believes you can afford to make a payment plan under Chapter 13, then you might still have some room to refile. Filing again is potentially costly, but you need to take the court's reasoning for the rejection under advisement.
Consider Your Options
You also need to talk at length with a bankruptcy attorney about your refilling options. Some rejections are worse than others. If the court said the case was a bad-faith attempt to avoid paying creditors, that's worrisome. There's a good chance if the court took offense to the filing that you may want to avoid filing again soon.
On the other hand, the judge might have said that you couldn't afford to make payments under a Chapter 13 plan and that you should've filed Chapter 7. In that scenario, the simplest solution is to follow the judge's advice.
Similarly, a court might have determined that it hasn't been long enough since your last bankruptcy discharge. In that scenario, the smart move is to wait until the appropriate date and file again.
Reach out to a local bankruptcy lawyer to learn more.