A Look At Things That Can Prevent Filing Chapter 7 Bankruptcy
In a lot of aspects, chapter 7 is the preferred way for common consumers to file bankruptcy. You pretty much get a fresh start because your debts are discharged, which means you get the opportunity to get out of the debt you are in and move on with the rest of your life. Even though chapter 7 bankruptcy may be one of the more common types of bankruptcy filed in the United States, it is also not fitting for every situation. When you initially decide to file bankruptcy, a bankruptcy law firm will help you determine which option is best for you. Take a look at some of the reasons why you may be prevented from filing chapter 7 bankruptcy.
You have too much disposable income.
People who have a high disposable income will not qualify for chapter 7 bankruptcy because they could essentially afford to pay for their debts if they were broken down through a chapter 13 repayment plan. When you go to file bankruptcy, your attorney will take a close look at your income, your debts, and what kind of living expenses you currently have. If you have a lot of extra money left after paying bills and paying for everyday life, this is considered disposable income and can be put toward the debt you owe.
You have filed chapter 7 bankruptcy in the past.
It is only legally allowed to file bankruptcy every so often. For example, you cannot file chapter 7 bankruptcy again if it has been less than eight years since you filed chapter 7 last or six years since you filed for chapter 13. There may be other options available for debt relief, but the bankruptcy court will not approve of your application if it is too soon since your last filing.
You have somehow tried to make your financial status lower.
There are certain things that you can do before filing bankruptcy that will prevent you from filing for chapter 7 because these actions look like red flags to the court. For example, if you sold your owned property to a family member for a price lower than market value right before trying to file, it can look like you were trying to liquidate your assets to prevent having to claim these assets as your own before filing for bankruptcy. Your assets count as tangible property in the eyes of the bankruptcy court, so this could be deemed as a form of trying to cheat the system.