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What Do I Do if My Bankruptcy is Denied?

Bankruptcy Alternatives: A Possible Solution to Your Debt Problems

Filing for bankruptcy in Springfield, MA, can be a difficult decision. But, for many people struggling with overwhelming debt, it offers a financial fresh start. However, receiving a “bankruptcy denied” notice can be a frustrating experience. If you’re in this situation, it’s important to understand your options and what steps you can take next.

Quick Summary:

  • Bankruptcy denial can occur due to exceeding income limits, improper filing, credit counseling absence, fraudulent activity, or recent filings.
  • If your bankruptcy is denied, you can develop debt management strategies and explore alternative solutions to handle your debt.
  • If bankruptcy isn’t suitable, you can consider alternatives like debt negotiation, consolidation loans, or credit counseling. These options provide different strategies to effectively manage and reduce your debt.
  • Alternatives to bankruptcy have benefits, but drawbacks include time and commitment needed for negotiation and repayment plans, as well as potential fees and limited coverage for certain debts.

Are There Any Reasons for My Bankruptcy to be Denied?

There are several reasons why a bankruptcy court might deny your petition. Here are some of the most common:

Ineligibility Based on Income

Chapter 7 bankruptcy eligibility is subject to a means test. This test compares your income to the median income for your household size in Massachusetts. If your income exceeds the median, your case for Chapter 7 might be denied.

Improper Filing

Bankruptcy involves complex legal procedures and paperwork. Missing documents, inaccurate information, or failing to meet deadlines can lead to dismissal of your petition.

Failure to Attend Credit Counseling

Completing a credit counseling course approved by the U.S. Trustee Program is mandatory before filing for bankruptcy. Skipping this step can result in a case dismissal.

Fraudulent Activity

If the court finds evidence that you:

  • Intentionally concealed assets or income
  • Or engaged in fraudulent behavior,

Your petition will likely be denied.

Previous Bankruptcy Filings

There are waiting periods between filing for bankruptcy again.  For example, you typically need to wait eight years to file for Chapter 7 after a previous discharge.

What Are My Next Steps After a Bankruptcy Denial?

Receiving a bankruptcy denial can be a stressful setback. The good news is, there are still options available. Here’s what you can do if your bankruptcy petition is denied:

  • Develop Debt Management Strategies: Even if bankruptcy isn’t the best path right now, you can get strategies for managing your debt.
  • Explore Debt Management Alternatives: You can explore alternative solutions to manage your debt burden.

What are My Alternatives to Bankruptcy?

While bankruptcy offers a fresh start for some, it might not be the best solution for everyone.  If you’re facing a bankruptcy denial, here are some options to explore:

Debt Negotiation

A qualified credit counselor or attorney can negotiate with your creditors on your behalf. Their goal is to:

  • Reduce your interest rates: Lowering your interest rates can significantly decrease your monthly payments, making your debt more manageable.
  • Waive late fees: Negotiating a waiver of late fees can free up some extra cash each month to put towards your debt.
  • Extend your repayment terms: Spreading your debt out over a longer period can lower your monthly payments, but it also means you’ll be paying interest for a longer time.

This option can provide immediate relief by lowering your monthly payments. It can also avoid the stigma associated with bankruptcy.

Debt Consolidation Loan

This involves taking out a single loan to pay off multiple debts. Ideally, the new loan will have a lower interest rate than your existing debts, simplifying your repayment process with one monthly payment.

This streamlines your debt management into one monthly payment. Potentially lower interest rates can save you money in the long run.

Credit Counseling

Non-profit credit counseling agencies offer a variety of resources and tools to help you manage your debt. They can provide:

  • Budgeting assistance: Develop a realistic plan to manage your income and expenses more effectively.
  • Debt management strategies: Learn how to prioritize your debts and develop a plan to pay them down.
  • Pre-bankruptcy counseling: Even if bankruptcy isn’t the best option now, credit counseling can help you explore alternatives. It also improves your financial situation.

These are educational resources for better financial management. It can help you avoid future debt problems. Free or low-cost services are often available.

Are There Any Drawbacks to These Alternatives?

While exploring alternatives to bankruptcy offers numerous benefits, some drawbacks are important to consider:

Not a Quick Fix

Depending on the option, achieving debt freedom through alternatives can take time and discipline. Negotiation might involve back-and-forth communication with creditors. Debt consolidation or repayment plans also require consistent payments.

Requires Commitment

Alternatives like Chapter 13 repayment plans or credit counseling programs often involve sticking to a budget. This also makes consistent payments. This requires dedication and may require lifestyle adjustments.

Qualification Challenges

Debt consolidation loans typically require good credit scores to qualify for favorable interest rates. Negotiation success depends on creditor cooperation, and credit counseling doesn’t directly eliminate debt.

Potential Fees

Debt consolidation loans come with origination fees. Some credit counseling agencies might charge for services.  Negotiation with creditors might involve fees for a credit counselor or attorney.

Limited Debt Coverage

Debt consolidation loans or negotiation might not cover all your debts.  For example, some creditors like student loan providers might not be open to negotiation.

Denied Bankruptcy Relief? Move Forward With Our MA Bankruptcy Lawyer!

Debt can be a heavy burden, but having your bankruptcy denied shouldn’t discourage you. Remember, you are not alone. Many people face debt challenges, and there are resources available to help.

At the Law Office of Eric Kornblum, we understand the challenges of debt and can provide compassionate legal guidance. Our bankruptcy lawyer in Springfield, MA, can:

  • Review your situation
  • Analyze your denial
  • And discuss your options for achieving financial well-being

Don’t let your finances overwhelm you.  We’ll help you achieve debt-free days & peaceful nights. Schedule a conversation now. Together, we can find a path forward. 

Law Office of Eric Kornblum

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Sidebar
MA bankruptcy lawyer Eric Kornblum graduated from State University of New York, Binghamton in 1989 and received his law degree in 1992 at Western New England College, School of Law. Since opening his own practice, Eric has been dedicated to helping his clients resolve their financial problems both in and out of court.
As a MA bankruptcy lawyer with over 25 years of experience in bankruptcy law and intimate knowledge of the Massachusetts legal system, Eric provides clients with expert guidance through Chapter 7, and Chapter 13 bankruptcy proceedings. He believes in aggressive, diligent and compassionate representation.

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