Can I Be Turned Down For Bankruptcy?
A client asked me recently, “Can I be turned down for a bankruptcy?” That’s a maybe.
How it works
First, you answer all the questions honestly and you provide all the documents to your lawyer. The lawyer prepares the petition, and you fill it out and sign it. If everything is done in an honest manner, and everything is fully disclosed, the petition goes to court.
Then you have to go to court for a hearing with a trustee who will ask you questions. You must present your copy of your Social Security card, plus a photo I.D. to prove where you live. You also have to take two classes online, one, a debtor consumer education class, before you file the bankruptcy, and a second class after the bankruptcy.
Once all that is done and the certificate has been sent to the court shortly thereafter, the judge should sign the discharge, wiping out the bills, giving you a fresh start.
If you make mistakes, or if you lie
However, if you don’t fill out the forms correctly, or if you lie on the petition, that’s a basis for the judge to deny your petition. If you’ve given large gifts, tried to hide assets or handed relatives or friends things to hold for you, that would be a basis to possibly deny the bankruptcy.
Instead, go through the statement of financial affairs carefully with your lawyer, answer the questions honestly, and have an experienced lawyer make sure that you qualify. Then, the bankruptcy should go through very simply and without a problem.
In 37 years, I could think of maybe one or two cases out of thousands that did not go through smoothly and were rejected because someone did not tell the truth and left information out of their bankruptcy.
A client story and an accident
In one case, we had a situation where a woman had an accident case, did not tell me about it, and did not put it on the petition. However, when she was questioned by the attorney for the court, the trustee, they found out that she had an accident case.
Her ex and the lawyer told her not to mention it in the bankruptcy. The accident lawyer knew she was filing a bankruptcy. Once that was disclosed, the court went after her accident lawyer to get the money back because it was not listed on the bankruptcy. It wasn’t disclosed properly.
And the irony was that if she had listed the accident case in the bankruptcy, we could have exempted it and allowed her to keep all of the money. There are rules and procedures that allow you to keep certain assets, certain things, even if you file a bankruptcy.
So if she had been honest and listed it and we had then exempted that asset, she would have been able to keep all of the money she got from the accident case. And everything would have been done without a problem. At the end, she did get the bankruptcy discharge. The bills were wiped out.
But the lawyer on the accident case was responsible for paying a good amount of money back to the court because he told the woman not to list the accident case and he got in trouble.
What you should do
So if you’re thinking about a bankruptcy, speak to an experienced lawyer to guide you through the many pitfalls and procedures in a bankruptcy to make sure it goes through smoothly.
And you’ll get what you’re looking for, a fresh start. You’ll get rid of your old bills and start over again. Give me a call if you have any questions. I’ll be glad to help you.