Individuals and businesses rarely want to file bankruptcy, but sometimes it can help save your home or your business and provide one place to deal with all of your creditors at once. Did you know you can lose the right to file bankruptcy? Like virtually all court systems, there are rules and expectations, and if you don’t follow them, you can be precluded from filing bankruptcy.
An appeals court for the Sixth Circuit (which covers Kentucky) recently agreed with a bankruptcy judge’s decision to prevent two individuals from filing a bankruptcy for two years! In re Pertuset,(6th Cir.BAP12/18/12). Some of the factors which created this result were: the case was the second bankruptcy in a two year period; the debtors refused to provide any details about the contracts which were supposed to provide income or to testify at court hearings; the debtors provided inconsistent and incomplete financial information; the debtors waited until the last minute to file a plan; and the debtor filed several documents directly with the court even though they had an attorney (and what they filed had nothing to do with bankruptcy). The appeals court agreed that the debtors did not have the “good faith” required to get the benefits of a bankruptcy. Now they can’t even ask for bankruptcy protection for two years.
Bankruptcy is a very powerful tool for dealing with creditors and getting a fresh start. The trade-off is to fully disclose your financial dealings and follow the rules and requirements of the court and the judge. If your situation has you considering bankruptcy, be prepared to do the work and follow the rules so you can get the benefit. Don’t get locked out!