By Kyle Olson
Although about one in eight Americans have considered filing for bankruptcy protection, many consumers may not realize their petition can be easily rejected if they make certain mistakes during the application process. To guide consumers through a bankruptcy filing, the website WalletPop has listed some common reasons that bankruptcy courts reject consumer petitions.
Consumers often file for either Chapter 7 or Chapter 13 bankruptcy in order to help them reduce unmanageable debts and get a somewhat fresh start with their finances. However, individuals filing for Chapter 7 protection often don't realize that they must pass a "means" test imposed by a court before their petition goes through, according to the financial website. Essentially, if the court decides the petitioner has too much disposable income, he or she will not qualify. WalletPop suggests consumers consult an attorney prior to their petition to see what form of personal bankruptcy protection they may qualify for.
Failure to provide necessary financial documents can also lead to a rejected filing. A court can dismiss a case if they deem a consumer has misrepresented their tax information or do not provide tax records. While the laws vary by state, the news source reports that filing tax records is now required across the board for individuals interested in applying for bankruptcy.
Finally, a petition may be rejected if another party challenges a consumers bankruptcy request. Because of that, WalletPop says individuals must not hide assets, make false statements about their circumstances or do anything else that could result in a challenge.
More than 1.5 million Americans filed for bankruptcy protection in 2010, according to the American Bankruptcy Institute, a 9 percent increase from the year before.