Although the bankruptcy laws of the United States exist to offer you protection when you can no longer afford to repay your personal or business debt, this still doesn\’t mean that you\’re automatically entitled to this same protection regardless of the way you incurred those debts in the first place.
Why Are Bankruptcy Filings Dismissed?
Bankruptcy filings are routinely dismissed for a number of reasons and one of these is what is termed as abuse of the bankruptcy filing code. A bankruptcy petition can be dismissed without prejudice, which means you can try to file again straight away. However if your filing is dismissed with prejudice this can prevent you from filing again for set amount of time, or even worse from being able to discharge certain debts when you can or do file for bankruptcy again. If your petition is found to be abusive (you basically lied in your original petition) in nature you could find your filing is dismissed with prejudice, which is the last thing you want to have happen.
What Is Abuse?
If you\’re not sure exactly what bankruptcy \”abuse\” means please allow us to explain. If you are filing out of time or your petition was just dismissed and you decided to file again you might be viewed as a “serial filler” and your petition might be dismissed on the grounds that it is abusive.
Other, more mundane, examples of a bankruptcy filing being dismissed would be because documentation hasn\’t been completed properly, or on time, or you missed a deadline set by the court as part of your filing. In cases like this your filing would be dismissed without prejudice, but this is still at the discretion of the presiding judge.
Dismissal With Prejudice
In cases where you filing is dismissed for abuse of the bankruptcy code judges tend to be not quite so lenient. Some examples of abuse of the bankruptcy code would include hiding assets, lying on your petition, filing sequential bankruptcy filings to slow your creditors down from claiming against you, disobeying the court\’s orders, or doing anything else to circumvent the bankruptcy code and the laws it is built upon. If you bankruptcy petition is dismissed with prejudice you could find yourself barred from filing again for several months, or even several years depending on the final ruling of the judge.
You do have the option of claiming special circumstances when it comes to having a bankruptcy petition dismissed, but these exceptional circumstances would need to include a major life event such as the birth of a child for example.
If you\’re filing for chapter 7 and it\’s dismissed because it\’s obvious that you have more consumer debt than business debt you do always have the option of filing for Chapter 13 instead – this is something you’re legally entitled to. Just remember that any evidence of bad faith on your part will be enough for your Chapter 7 filing to be dismissed as abusive
Always make sure to get the advice of a bankruptcy lawyer if you\’re in any doubt as to which type of filing you should be making.
Remember having a bankruptcy filing dismissed as abusive with prejudice could prevent you from being able to file again for at least 180-days, so it’s best to avoid that happening.