What Are the Most Common Reasons A Bankruptcy Case is Dismissed?
There are numerous reasons a bankruptcy case may be dismissed. A dismissal of a bankruptcy case is when the federal judge issues an order terminating a case. Usually the debts are not eliminated if the case is dismissed. In contrast, a “discharge” means the debts have been eliminated. Listed below are the most common reasons a bankruptcy case could be dismissed:
1) The debtor gives a false oath or information on the bankruptcy petition with the intent to defraud creditors,
2) The debtor has filed a previous bankruptcy within a certain time period and is not eligible to file another bankruptcy and receive a discharge of the debts,
3) The debtor has not filed all the required documents with the bankruptcy court,
4) The debtor did not take and complete the required court approved credit counseling and/or financial management courses as required by federal law,
5) The debtor fails to provide certain documentation to the bankruptcy Trustee upon request of such documents by the Trustee,
6) The bankruptcy Trustee has objected to the discharge of the debtor’s debts based upon his investigation of the debtor,
7) In a Chapter 13 repayment plan, the debtor fails to make the required Chapter 13 plan payments to the Chapter 13 Trustee,
8) The debtor has non-exempt property and fails to turn such property over to the Trustee upon request,
9) The debtor fails to obey a lawful order of the court, and
10) The bankruptcy judge believes there is good cause to deny the debtor a discharge and dismisses the bankruptcy case.
In conclusion, the above list is not exhaustive, but does highlight some of the most common reasons a bankruptcy case could be dismissed.
Is Child Support or Alimony Included As Income in Bankruptcy?
Before you file bankruptcy your attorney will ask you for verification of your last six months of income as a factor to determine Means Test qualification. The Means Test is a household income limit you must fall below according to the number of household occupants in order to qualify for a Chapter 7 bankruptcy.
Child support and alimony are considered income and can greatly impact your ability to qualify for the Means Test. Income from child support or alimony may put you over the Means Test limit causing you to file a Chapter 13 bankruptcy instead of a Chapter 7 bankruptcy.
In addition to having an impact on your Means Test calculation child support and/or alimony will also be considered when determining your monthly budget moving forward. It’s important that you discuss any form of domestic support obligation (child support or alimony) you receive with your attorney before filing your bankruptcy.
Are Food Stamps Considered Income in Bankruptcy Filings?
When you go to file bankruptcy, the court considers your income to determine whether or not you qualify for a Chapter 7 bankruptcy, and in the case of filing a Chapter 13 bankruptcy, to determine the amount of your monthly payments. Obvious income would be wages earned from employment, self-employment income, social security and child support; but what about government assistance such as food stamps? In short, food stamps are considered as income for the purposes of a bankruptcy.
The Means Test in a bankruptcy considers most income that you receive: wages, self employment, child support, family support, retirement withdrawals. When you receive food stamps, the monies go straight to a debit card in which you can only use to purchase food in a store that accepts the card. You cannot get cash back from the card?. However, for the purposes of the Means Test, it is still considered income. Since you can use the governmental assistance to purchase necessities, such as groceries, it is considered to be a part of your monthly income that is calculated under the Means Test. Therefore, it needs to be accurately reflected in both the Means Test and in Schedule I, which is the section that discloses your income to the courts.
If I File Personal Bankruptcy, What Information is Needed for My Business?
If you file bankruptcy, either Chapter 7 bankruptcy or Chapter 13 bankruptcy, you must disclose information about any business interest you have now, or have had in the past six years, where your ownership in the business is 5% or more. This includes disclosing the following information for each business:
Name and address of the business
Federal tax identification number
Beginning date of the business and ending date of the business, if appropriate
Names and addresses of any accountants or bookkeepers
Inventory taken for the business, if appropriate,
Partners, officers, directors and other shareholders as appropriate
Number of shares owned if incorporated or percentage ownership
You must also disclose financial information for any business you have had an interest in over the past three calendar years. This is required for an active, inactive or business closed during that timeframe. Depending on your interest in the business will impact what information is required.
If you have 50% or more ownership interest in the business, the following information is required:
Tax returns for the business, either Form 1120 or Schedule C, for the first two years is sufficient.
An income statement (often known as a profit and loss) and the most recent month’s balance sheet are required for the most current calendar year.
An income statement for each of the six months prior to filing bankruptcy, along with the income statement for the current month, is required.
If you have less than 50% interest the business, the following information is required:
Personal tax returns, which are already required, that shows your profit or loss in the business for the first two years.
A statement indicating your portion of the income or loss from the business for the most recent calendar year. This can be either an income statement for the business or a written statement, on company letterhead, indicating your profit or loss in the business and the most recent month’s balance sheet.
A statement indicating your portion of the income or loss from the business for each of the six months prior to filing bankruptcy.
This may seem like a great deal of information, but it is necessary to understand how the business impacts your personal financial situation. The most recent six months of financial information is used for the means test, if required. The balance sheet provides the equity in the business. It is extremely important that the equity in the business can be protected before filing bankruptcy. Your attorney will use this financial information to ensure bankruptcy is the right approach for you.
