If you are choking in debt and are not sure of a way out, you strongly need to consider declaring bankruptcy. Done right, bankruptcy can bring immeasurable relief and help you reset your finances.
However, to realize the benefits of bankruptcy, it is important that you avoid pitfalls that might lead to your claim’s denial. Here are three common reasons why bankruptcy claims are denied.
When you provide misleading information
Filing bankruptcy involves submitting a considerable amount of paperwork to the bankruptcy court. These documents outline your current financial situation so the court can review and determine your suitability for bankruptcy. If it is established that you provided misleading or fraudulent information, your petition will be declined. The importance of being forthright while filing for bankruptcy can never be overstated.
When you fail to comply with the court’s directive
While claiming bankruptcy, the court will require you to comply with a specific set of rules. These may include signing up for a financial literacy course as well as credit counseling programs. In fact, the U.S bankruptcy code made these two instructional courses mandatory. Failure to honor these directives can result in your claim’s refusal.
When your repayment plan is unrealistic
When you opt for Chapter 13 bankruptcy, you acknowledge that you will be working with the court and a trustee to come up with a repayment plan for your debt. Depending on the debt in question, the payment plan may last anywhere from three to five years. However, if the court believes your plan is not feasible, then your claim could be denied.
The decision to declare bankruptcy is a huge one. Proper preparation while avoiding costly mistakes can help you go through the process with confidence so you can have a fresh start on your financial future.