Tensed about what disqualifies you from filing bankruptcies?
It’s not always as simple as debt. Legal, financial and procedural factors can save you from filing. Let’s break down exactly who qualifies and who doesn’t.
Filing for bankruptcy is the last option when the debt spiral is out of control. But not everyone qualifies. There are strict rules about who can and cannot file and violating those can disqualify your case.
The U.S. Bankruptcy Code sets clear standards depending on the type of bankruptcy you file, Chapter 7 or Chapter 13 these are the most common for everyone. Let’s discuss all the disqualifying conditions, chapter by chapter.
Legal Factors That May Disqualify You from Filing Bankruptcies
Many think bankruptcy is open to all who are struggling financially. There are clear legal thresholds and red flags that can block you from filing.
Failure to Complete Credit Counseling
Before you even file, you’re legally required to complete a credit counseling from an approved provider within 180 days. Want to skip this step? You’ll be disqualified immediately.
Previous Bankruptcy Discharges
Timing matters. If you’ve filed before and received a discharge, there’s a waiting period before you can file again:
- Chapter 7 after Chapter 7: 8 years
- Chapter 13 after Chapter 7: 4 years
- Chapter 7 after Chapter 13: 6 years
- Chapter 13 after Chapter 13: 2 years
Filing before these timelines expire can lead to your case being dismissed or denied.
High Income That Fails the Test
Chapter 7 bankruptcy wipes out unsecured debt. If your income exceeds the state median for your household size and you fail the test, you may be disqualified from Chapter 7 and pushed into Chapter 13 repayment instead.
Intentional Dishonesty or Fraud
If the court believes you’re:
- Hiding assets
- Lying about income
- Transferring property to avoid debt
You could be disqualified and charged with fraud.
Too Much Disposable Income (for Chapter 7)
Even if your total income seems modest, if your disposable income after necessary expenses is high enough to repay creditors, you may not be eligible for Chapter 7. Instead, the court may require you to file under Chapter 13.
Dismissed Bankruptcy Case in the Last 180 Days
If your bankruptcy was dismissed voluntarily after creditors moved to lift the stay or due to failure to appear with court orders, you are barred from filing again for 180 days from the dismissal.
This rule is to prevent abuse of the bankruptcy system, especially if you are trying to file just to delay.
What Disqualifies You from Filing Bankruptcies Under Chapter 7 vs Chapter 13
Not all bankruptcies are the same. Chapter 7 and Chapter 13 are the two most common types of consumer bankruptcy, but they need different eligibility requirements and very different disqualifiers.
Let’s break down the reasons you might be ineligible for each chapter and how to know which one is best for you.
Chapter 7 Bankruptcy Disqualifiers
Chapter 7 does not always mean “bankruptcy”, where unsecured debts (like credit cards and medical bills) are wiped out. But not everyone qualifies.
The Chapter 7 Means Test
The means test is the biggest gatekeeper. It calculates whether you have enough income, after necessary expenses, to repay at least some of your debts.
If your current monthly income is higher than the median income in your state for your household size, you must complete the full means test.
If the test shows you have disposable income that could be used to pay creditors, you’re disqualified from Chapter 7 and may be required to file under Chapter 13.
Excess Non-Exempt Assets
While rare, if you have too many non-exempt assets (things the court can liquidate), it may make Chapter 7 less favorable or even denied. Some filers choose Chapter 13 to protect such assets.
Disqualifying Past Filings
You cannot file Chapter 7 if:
- You received a Chapter 7 discharge in the last 8 years or
- A Chapter 13 discharge within the past 6 years (with some exceptions).
Chapter 13 Bankruptcy Disqualifiers
Chapter 13 means creating a 3-5 year repayment plan based on your income. It’s more flexible than Chapter 7.
Debt Limits
Chapter 13 has strict debt thresholds:
- Unsecured debts (like credit cards) must be under $465,275
- Secured debts (like mortgages, car loans) must be under $1,395,875
(as of 2024 figures)
If your total debts cross these limits, you’re disqualified from Chapter 13.
Regular Income Requirement
You must show the court you have a reliable, regular income sufficient to pay the monthly payments during repayment plan. No steady income? Then chapter 13 isn’t an option.
Multiple Prior Dismissals
If you’ve had two or more bankruptcies dismissed within the last year, the automatic stay (which protects you from collection) might not apply and the court may deny your new case altogether.
Failure to File Required Documents
Failing to submit the required documentation (tax returns, pay stubs, repayment plan etc.) or not acting in good faith will be a reason for immediate disqualification.
Comparing Chapter 7 and Chapter 13 Disqualifications
| Factor | Chapter 7 | Chapter 13 |
| Means Test Required? | Yes | No |
| Income Limits? | Yes (must be below state median) | No, but must have regular income |
| Debt Limits? | No | Yes (secured and unsecured) |
| Prior Discharge Waiting Period | 8 years from Chapter 7, 6 from Chapter 13 | 2 years from Chapter 13 |
| Asset Protection | Less protection (possible liquidation) | More protection (you keep assets) |
Actions That Could Disqualify You from Filing Bankruptcies
Legal and financial conditions determine whether you qualify to file, many people make mistakes after they’ve already filed. This may cause bankruptcy cases to be dismissed or denied. So, it’s not just who you are, it’s also what you do.
Let’s learn the most common behaviors and missteps that can disqualify you from filing bankruptcies or ruin your chance of receiving a discharge.
Fraudulent Transfers and Hidden Assets
One of the fastest ways to be disqualified from filing bankruptcies is by trying to hide assets or transfer property out of your name before filing. The court looks at your financial activity going back two years or more.
Examples of Disqualifying,
- Gifting a car to a relative “just in case”
- Moving large sums to a friend’s account
- Selling property for less than market value
- Failing to report valuable items like jewelry, artwork, or collectibles
If you’re caught, the court can dismiss your case with prejudice, meaning you can’t refile for a period of time. Worse, you could be charged with bankruptcy fraud, a federal crime with serious penalties.
Incomplete or Inaccurate Bankruptcy Filings
Bankruptcy requires a lot of paperwork. You’ll need to file:
- A full list of creditors
- All sources of income
- A detailed breakdown of monthly expenses
- Tax returns, pay stubs, and more
Filing incomplete or intentionally misleading forms is one of the most common reasons for disqualification. Any mistakes can delay or derail your case so double check everything and ask for help from a legal aid or bankruptcy attorney.
Using Bankruptcy to Delay or Manipulate Creditors
Bankruptcy isn’t a tool to dodge or buy time indefinitely. Filing multiple times just to trigger the automatic stay (which pauses collections and foreclosures) is seen as abuse. If the court sees a pattern of bad faith filings, they may:
- Dismiss your case
- Deny the stay
- Disqualify you from refiling for months or years
If you’ve had a bankruptcy dismissed within the last 180 days for failing to obey court orders or attend at hearings, you’re also automatically disqualified from refiling during that period.
Withholding Tax Returns or Lying About Income
Another major red flag is not submitting tax returns, or misrepresenting your income. The bankruptcy trustee reviews your financial history thoroughly. If your reported income doesn’t go with IRS filings or bank statements, your case can be disqualified for dishonesty or incomplete documentation.
You’re also expected to keep up with taxes during the bankruptcy process. Failing to do so may cause dismissal in Chapter 13, where your repayment plan is based on income estimates.
Conclusion
Filing for bankruptcy is a powerful financial reset button but it’s also a legal process. If you think what disqualifies you from filing bankruptcies, the mixed answer is of timing, income, past filings, debt levels and most importantly your honesty and transparency.
FAQs
Can I be disqualified from bankruptcy just because I earn too much?
Yes, for Chapter 7. If your income is above your state’s median and you fail the means test, you may be disqualified from Chapter 7. However, you could still qualify for Chapter 13, this has a repayment plan.
What happens if I file bankruptcy too soon after my last case?
You may be temporarily disqualified from receiving another discharge. For example, you must wait 8 years between Chapter 7 filings, or 2-6 years between other chapter combinations. Filing too soon may cause case dismissal or no discharge.
Can hiding money or assets disqualify me from bankruptcy?
Absolutely. This is one of the most serious violations. If you hide assets or lie under oath, you risk case dismissal, a ban on refiling and criminal charges for bankruptcy fraud.
Does a dismissed bankruptcy case mean I’m permanently disqualified?
Not always. If your case was dismissed for a procedural reason (like missing a document), you may be able to refile immediately. But repeated dismissals or dismissals with prejudice could block you from refiling for 180 days or longer.
Can I still qualify for bankruptcy if I have a high income but lots of debt?
Possibly. If you can’t pass the Chapter 7 means test, you might still be eligible for Chapter 13.
