10 Oct Five Stupid Reasons Your Bankruptcy Case Won’t Go Through
If you don’t know the rules, don’t pay attention, or don’t take the process seriously, your case can be dismissed.
Dismissed doesn’t mean discharged.
Discharged means you don’t owe your debts any longer; your unsecured creditors can’t sue you or harass you.
Dismissed means your case is closed without a discharge. The automatic stay goes away. You and your creditors are back where you were before you filed bankruptcy. Outside of bankruptcy, their weapons are larger caliber than yours.
I’ll walk you through the most common ways to come up short in your bankruptcy case.
- Skip pre bankruptcy credit counseling Every individual filing bankruptcy is required to take a credit counseling session before their case is filed. It’s useless and intended to discourage people from filing. But it’s the law.The counseling is available on the internet, takes about an hour, and costs very little. Some times, some courts will allow you to take it after filing, but it’s risky to count on being excused.
- File only a skeleton petition A couple of sheets of paper is enough to file a bankruptcy case and get the benefit of the automatic stay. But the full package is more than a couple of sheets of paper.You must file the petition, creditor list, schedules of assets, statement of monthly income and statement of financial affairs to have the entire package before the court. You get 14 days from filing the case to complete the balance of the papers. Without the balance on file, your case is toast.
- Don’t provide the trustee a tax return One week before the first meeting of creditors, you must provide the trustee a copy of your most recently filed tax return (in Chapter 7). Blow it off and the trustee files a motion to dismiss your case. If you don’t have a copy, a transcript from the IRS will do. But do it!
- Playhookyfor the first meeting of creditors Bankruptcy law requires that you appear in person, with proof of your identity, to answer questions under oath. It’s usually the only time you have to personally show up in the process. The court sends you a notice of the 341 meeting. Be there or be tossed out of court.
- Fail to take the debtor education class The ticket out of bankruptcy with a discharge is the certificate that you’ve completed the debtor education class. In contrast to the credit counseling class, this one is usually quite useful. You need to file the certificate with the court within the deadline. Miss the deadline and the court closes your case. You have to pay the filing fee again to reopen it and file the certificate. Pointless expenditure. Get it done and get a discharge.
Image courtesy of Keith Allison.
Cathy Moran, Esq.
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