If you are filing for bankruptcy the last thing you want is to have your petition labeled abusive and thrown out of court. The term ‘abusive’ refers to ‘an abuse of law’ – in other words, you are trying to scam the system. Unfortunately, there are some legitimate bankruptcy filings that receive the abusive label simply because of a few errors in the paper work.

If we look at what an abusive petition really is, you will see what areas a legitimate petitioner may have. So what makes a bankruptcy petition abusive?

  • Using bankruptcy to avoid debts that you can afford to pay
  • Using bankruptcy to avoid debts you have no intention of paying
  • Disposing of valuable assets prior to filing for bankruptcy
  • Hiding valuable assets prior to filing for bankruptcy
  • Using bankruptcy to evade fraudulent debts

Each of those is serious on its own. Where debtors often err is in filing their own petition for bankruptcy. For example, part of the process is to list all incomes and all living expenses. If this is not done correctly then you may appear to have more disposable income than is really the case. The court may feel that your disposable income is such that you can afford to meet your obligations and so dismiss your petition.

Other errors that frequently occur include leaving out assets that should be listed, and not adequately explaining the disposal of assets. With the latter, it’s quite possible the disposal was legitimate. For example, to pay down other debts, but it had not been documented correctly. To ensure your bankruptcy petition has a smooth path through the courts, engage a specialist bankruptcy attorney. Their fees are a lot cheaper than those associated with a failed bankruptcy petition.

If your bankruptcy petition is labeled as abusive and thrown out you may have trouble filing again, at least in the next two years. You may also find the courts looking closely at your petition to determine if there was any intentional fraud. Tens of thousands of bankruptcy petitions are thrown out each year because they fail to meet the requirements. Many of these are labeled as abusive – do the right thing and engage an attorney. That way, your petition won’t be one of those thrown out.

Related posts:

  1. The Pitfalls Of Engaging A Bankruptcy Petition Preparer
  2. What Is A Bankruptcy Petition Preparer?
  3. Preparation Is The Key To A Successful Bankruptcy Petition
  4. The Downside Of A Chapter 13 Petition For Bankruptcy
  5. Can You File A Bankruptcy Petition Online?