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Avoiding pitfalls in bankruptcy cases, Part 2

In the last post, this blog began a discussion of a few of the avoidable potential errors and omissions that can disrupt a bankruptcy case. The discussion left off with the effect the means test may have on a person's ability to file for chapter 7 relief.

Experienced Cincinnati bankruptcy attorneys know income is an important feature in a chapter 13 bankruptcy as well. In chapter 13, a bankruptcy petitioner files a payment plan based upon an individual's debts, income, and other available assets. The payment plan pays some or all of the outstanding debt on a formulated budget during a three to five year period. If the bankruptcy court determines the payment plan is not realistic, the court can reject the bankruptcy petition. In this case the individual may be able to refile or convert the case, but an experienced bankruptcy attorney can prepare and review the information in advance to reduce the risk of the extra hassle.

Tax documents and issues.

Errors or omissions in tax information can disrupt a bankruptcy case. Misrepresentations in tax information or missing tax returns in the bankruptcy filings can result in dismissal of a bankruptcy case. For instance, in a chapter 13 bankruptcy case, an individual must submit tax returns or tax transcript from the IRS covering each of the four years prior to the bankruptcy filing. Failing to properly and timely submit the tax records can result in a case being rejected.


In Chapter 7, the bankruptcy trustee or a creditor can challenge a bankruptcy petition to try to prove an individual is not entitled to bankruptcy relief. A chapter 7 discharge is often granted in a matter of course. However, if the trustee or a creditor believes a bankruptcy petitioner has been dishonest or committed fraud in some way, a challenge to the proceeding can arise.

Alleged false statements about circumstances relevant to the bankruptcy case, assets allegedly hidden from the bankruptcy court or failing to complete the necessary credit counseling or debtor education programs can result in a challenge to a petition. The challenge could result in a denial or revocation of the chapter 7 bankruptcy. Allegations of bankruptcy fraud can also lead to more serious criminal issues.

A seasoned bankruptcy attorney can help to guide an Ohio resident through the complex rules and timelines involved in a chapter 7 or chapter 13 bankruptcy proceeding.

Source:, "Bankruptcy Blunders: Top Reasons Your Bankruptcy Filing May Be Rejected," Lynnette Khalfani-Cox, 14 June 2011

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