Once you've made the difficult decision to file for bankruptcy, it should be helpful to understand that in certain circumstances, you may not be allowed to file at all. The following situations are unfortunately all too common, and knowing about these issues in advance could allow you time to plan ahead a little better. Read on to learn about the 3 main issues that could bar you from filing for debt relief through bankruptcy.
1. You make too much money.
Bankruptcy should be used as a last resort for those in dire financial straits, so bankruptcy laws prevent people who make over a certain income from filing. Keep in mind that even if your income is too high to file for chapter 7 bankruptcy, you may still be able to file under a chapter 13, which allows you to reorganize your debts and extend out the payment plan for several years.
The maximum income allowed is based on your particular state's median income. This calculation is referred to as the "means" test. You may still file if you can show that you have extraordinarily large expenses, such as health care expenses or a larger mortgage payment. There are several variables that should be considered when calculating the income, so be sure to discuss your "means" with a bankruptcy attorney.
You've already filed for bankruptcy.
2. Bankruptcy law allows you to file only so often, so if you have had a fully-discharged chapter 7 bankruptcy in the past 8 years, you must wait to file again. If you filed but your case was dismissed for various reasons, you can file again once 180 days pass from the initial filing. Commonly, bankruptcy cases can be dismissed for a variety of reasons, such as failing to take the required consumer financial education classes, not showing up to the creditor's meeting or not cooperating with the bankruptcy trustee.
3. You've committed bankruptcy fraud.
Unlike the circumstances above where you simply didn't follow the rules correctly, fraud is a more serious and far-reaching situation. You may be barred from filing bankruptcy for life if you commit these offenses:
- Transferring or hiding assets.
- Running up your credit card debt on luxury items just prior to filing, such as on vacations, jewelry, dining out in expensive restaurants, and more.
- Lying on your application for any reason, such as about your income. Bankruptcy courts do check with the IRS for income verification.
Contact a bankruptcy attorney for more information about bankruptcy and how you get the debt relief you need. You can also visit a website like http://www.morrisonmurfflaw.com to learn more.