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4 common causes of bankruptcy case dismissal 

On Behalf of | Jun 6, 2024 | Consumer Bankruptcy

Filing for bankruptcy can offer a fresh start for those overwhelmed by debt. However, not all bankruptcy cases are successful. Various reasons can lead to the dismissal of a bankruptcy case, leaving the debtor without relief and possibly in a worse financial situation.

Here, you can learn more about the most common causes of bankruptcy case dismissal

1. Incomplete or inaccurate paperwork

One of the most common reasons for bankruptcy case dismissal is incomplete or inaccurate paperwork. The bankruptcy process requires detailed documentation of your financial situation, including income, expenses, assets and liabilities. Failing to provide all necessary documents or incorrect information can result in the court dismissing your case. It’s crucial to be thorough and honest in your filings.

2. Failure to meet eligibility requirements

Different types of bankruptcy have specific eligibility requirements. For instance, Chapter 7 bankruptcy requires passing the means test, which assesses your income level. If your income is too high, you may not qualify for Chapter 7 and need to consider Chapter 13 instead. Similarly, Chapter 13 requires a feasible repayment plan based on income and expenses. If you do not meet these requirements, your case may be dismissed. 

3. Non-compliance with court orders

During bankruptcy, the court may issue various orders you must comply with, such as attending creditor meetings or submitting additional documentation. Non-compliance with these orders can result in case dismissal. It’s important to follow all court instructions diligently.

4. Failure to complete credit counseling

A credit counseling course is required before you can file for bankruptcy. This step is mandatory, and failure to provide proof of completion can lead to dismissal. Similarly, after filing, you must complete a debtor education course before your debts can be discharged. Neglecting these educational requirements can jeopardize your case.

Understanding why your bankruptcy case may be dismissed can help you avoid common pitfalls and increase the chances of a successful outcome.