Variations of this questions get asked all the time. Can a Chapter 7 Bankruptcy be denied? Is there anything that can cause my Chapter 7 Bankruptcy to go away? The short answer is yes. However, the reasons for dismissal are limited.
Section 707 of the Bankruptcy Code lays the groundwork for a Chapter 7 Bankruptcy to be dismissed. Among some of the reasons are a debtor causing an unreasonable delay that is prejudicial to creditors or failing to file Chapter 7 Bankruptcy file fees etc. Another is failing to file the proper schedules with the bankruptcy court or failing to file pay advices with the bankruptcy court. For this kind of a dismissal, the motion must be brought by the US Trustee’s Office.
The above reasons for dismissal are found in Section 707(a) of the Bankruptcy Code. The reason set forth below is found in Section 707(b) of the Bankruptcy Code and is referred to as a means test. The details of the means test would make a lawyer’s eyes glaze over. Suffice it to say, the idea basically boils down to this: if you have primarily consumer debt and your income is above the median income for your family size in your state, it is presumed to be an abuse to file a Chapter 7 Bankruptcy if, after going through the means test, you have the ability to pay your creditors back something over a 3-5 year Chapter 13 plan.
Under Section 707(b), any party in interest may bring a motion to dismiss your case.
Again, whether you file a Chapter 7 or Chapter 13 Bankruptcy, it boils down to your ability to pay. If you have the ability to make a payment back to your creditors, you must do so in a Chapter 13 Bankruptcy.
When the time is right, or when you are ready, reach out to Minnesota’s oldest bankruptcy law firm at www.kainscott.com. You will be so happy you did.