In general, all American citizens have the right to file bankruptcy as long as they meet the minimum requirements set forth in the applicable laws. However, there are times when an otherwise eligible debtor may be barred from filing for chapter 7 or chapter 13 bankruptcy. Here's more information about this issue and what you can do to avoid getting kicked out of bankruptcy court.

Two Reasons You May Be Barred

The U.S. bankruptcy court only allows debtors to file petitions once every few years. So, the primary reason you may be barred from filing bankruptcy is if you successfully filed for protection previously and are still in that period of time you must wait before you can file again. If you have already obtained a chapter 7 discharge, you must wait eight years before seeking another discharge under this chapter or four years to initiate a chapter 13 case. If your previous discharge was from a chapter 13 bankruptcy, you must wait a minimum of two years before filing another chapter 13 or six years to file for chapter 7.

These rules apply across state lines. Even if you move to another state and try to file bankruptcy in your new home, you will still be subjected to the waiting period and your case will be dismissed once the court locates your prior bankruptcy records.

The second reason you may be barred from filing bankruptcy is if the court suspects you're trying to abuse or game the system. For instance, a man who had filed for bankruptcy six times since 1994 was banned from submitting a petition for protection for 180 days. The ruling came after the court discovered the man had failed to submit several important documents and didn't attend the hearing to discuss the issue.

In another case, 85 Florida homeowners were barred from filing bankruptcy after they were caught repeatedly submitting petitions and not following through. In that case, the people were allegedly trying to stave off foreclosure. After that occurred, judges in that area began banning abusers from filing bankruptcy for a minimum of two years.

Avoiding the Ban Hammer

You can avoid being barred from filing bankruptcy by always working with the court in good faith and not engaging in any abusive or unscrupulous practices such as:

  • Repeatedly filing petitions and not following any one to completion
  • Failing to complete or submit all relevant paperwork and ignoring repeated requests to correct the omission
  • Not showing up for hearings or following court procedures
  • Attempting to hide assets
  • Lying or making false claims under oath
  • Filing bankruptcy in multiple states
  • Using someone else's identity to file bankruptcy (identity theft)
  • Engaging in fraud against the court, creditors, or others (e.g. buying luxury items before filing a petition)

Many times, people who are not familiar with bankruptcy proceedings will inadvertently make mistakes that put their petitions in jeopardy. It's a good idea to work with a bankruptcy attorney, such as Russell & Silver, to ensure you are following the law and maximizing the benefits you receive from the filing.