Utah bankruptcy cases aren’t dismissed often, but it happens.
If the court dismisses your Chapter 7 case, you won’t receive a discharge. And your creditors will have the right to restart their debt-collection efforts. To avoid this financial nightmare, it may help to understand some of the most common reasons Utah courts dismiss bankruptcy cases.
No. 1: Debtors Transfer Assets Before Filing for Bankruptcy
When filing for Chapter 7, Utah debtors are required to list all their assets. The court often requires that nonexempt, valuable property, such as a second vehicle or expensive jewelry, be sold to pay off creditors.
Some debtors try to get around this requirement by transferring ownership of nonexempt assets to friends or relatives. Utah bankruptcy courts consider this to be fraud.
Transferring property within the 12-month period immediately preceding a Chapter 7 filing is a surefire way for debtors to face a dismissal.
No. 2: Debtors Hide Financial Information
Utah bankruptcy courts expect debtors to be honest and forthright about their financial affairs. But debtors sometimes try to withhold information from the bankruptcy trustee, in an attempt to conceal their true financial status. They make false statements, lie about assets or destroy financial documents, for example.
Hiding financial information from the courts is also considered fraud, and usually leads to dismissal.
No. 3: Debtors Fail to Complete Required Bankruptcy Classes
Federal law dictates that, within the six-month period before filing for Chapter 7, debtors complete a credit counseling class through an approved agency. In addition, they must complete a debtor-education course just prior to the conclusion of the case, in order to obtain a Utah bankruptcy discharge.
If a debtor fails to meet these requirements, the court will dismiss their case.
No. 4: Debtors Submit Incorrect Bankruptcy Paperwork
When filing for Chapter 7 in Utah (or any state), debtors must accurately complete and submit all required forms to the courts. Debtors must also submit the required court and filing fees.
Bankruptcy law mandates the specific forms, petitions and schedules that you must file. Failure to turn in all the proper paperwork, or to pay all the required fees, typically results in dismissal.
What Happens When Bankruptcy Cases Are Dismissed?
Chapter 7 cases that are dismissed for compliance issues — such as not completing a required bankruptcy class or failing to correctly complete the proper paperwork — can often be filed again immediately.
If the dismissal is based on fraud, however, the Utah courts can block debtors from receiving a discharge for a certain period of time.
Because Utah bankruptcy procedures can be complex and convoluted, debtors may lack the legal knowledge to complete the process correctly. An experienced bankruptcy lawyer can assist you with every part of the process, providing support and making sure that you don’t commit any violations that could result in the dismissal of your case.
The experienced attorneys of Lewis Adams & Associates, serving the greater Salt Lake City area, can alleviate your concerns and put you on the path toward a brighter financial future. To schedule a complimentary Utah bankruptcy consultation, contact our West Jordan office today.