Don't Get Barred From A Bankruptcy Filing: What To Know

Most people don't consider the bankruptcy option unless their financial situation has gotten so out of control that they are in danger of losing property and legal action is being taken against them. While bankruptcy is an option for many in dire straits, you should know that there are three issues that could prevent certain filers from having a successful discharge of debts. Read on for what you need to know about the three situations that could bar you from filing a chapter 7 bankruptcy.

1. Your Income is Too High

Since bankruptcy is aimed at people who cannot afford to pay their debts based on their income, it just makes good sense that people who have high incomes won't qualify for filing. The income of the filer is compared to the state's median income, and if your income exceeds that amount you may need to consider a chapter 13 bankruptcy filing. Chapter 13 bankruptcy is more of a debt repayment plan, which extends your debt obligation out to several years and there is no income limit requirement.

Your income can be evaluated using the "means test". This median income level calculation allows you to reduce your income by deducting certain expenses, like a high mortgage payment or high medical expenses. It's important to understand that this calculation will only provide you with a general idea of your ability to qualify under the means test, so be sure to speak to a bankruptcy attorney to get a more exact estimation.

2. Your Last Bankruptcy Filing Was Too Recent

You must wait at least 8 years to file for a chapter 7 bankruptcy again if you have a previous chapter 7. It's important to note that the date is calculated from the discharge date, not the filing date. In some instances, you may file for bankruptcy but your case gets dismissed before it becomes final. In that instance, you must wait 180 days from your bankruptcy dismissal to file again. Some common situations that could cause your bankruptcy to be dismissed is a failure to comply with the financial education classes or not showing up at your creditor's meeting.

3. You Have Committed Bankruptcy Fraud

For those who have not only had their cases dismissed, but have had their cases dismissed for committing a fraud, you may be out of luck when it comes to another chance. While the bankruptcy courts review situations that concern fraud on a case-by-case basis, there is the potential to be banned for life for having a case dismissed "with prejudice".

Speak to a bankruptcy attorney like Grater Mark O atty for more information about any of the above issues that could bar you from getting the debt relief you need.