{"id":5426,"date":"2012-05-31T09:00:21","date_gmt":"2012-05-31T09:00:21","guid":{"rendered":"http:\/\/www.duncanlawonline.com\/?p=5426"},"modified":"2012-05-31T09:00:21","modified_gmt":"2012-05-31T09:00:21","slug":"what-does-bad-faith-mean-in-bankruptcy","status":"publish","type":"post","link":"https:\/\/www.duncanlawonline.com\/staging\/8350\/what-does-bad-faith-mean-in-bankruptcy\/","title":{"rendered":"What Does \u201cBad Faith\u201d Mean in Bankruptcy?"},"content":{"rendered":"

\"Bankruptcy<\/a>As it sounds, this is not a term you care to associate yourself with if you can help it.\u00a0 Bad faith refers to certain actions and circumstances that cover fraudulent bankruptcy filings.\u00a0 In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act was legislated to define and outline situations associated with bad faith bankruptcy filing.<\/p>\n

One of the roles of the bankruptcy court and bankruptcy Trustee<\/a> is to protect creditors from debtors who are maliciously trying to defraud the system.\u00a0 Most debtors are really struggling under the weight of their debt without much hope of ever breaking even, but unfortunately, there are people who are just trying to stall or manipulate creditors.\u00a0 There are 5 situations in which a debtor is considered to act in bad faith.<\/p>\n

First, if there is evidence that a debtor is trying to unfairly thwart a creditor\u2019s efforts to collect on a debt, this is considered a bad faith filing.\u00a0 For example, a client files bankruptcy in order to stall a foreclosure with no intention of ever completing the bankruptcy.\u00a0 Bad faith is relevant when a client files bankruptcy to save a home, then does not make any of the required plan payments and is dismissed.\u00a0 This of course can be a very fine line and cannot always be proved; especially if a client has a very tight budget and unforeseen circumstances arise.\u00a0 Most Chapter 13 bankruptcy<\/a> clients are in this position and have every intention of completing their bankruptcy.\u00a0 This is why bankruptcy is a very involved process and should be taken seriously by all potential debtors.<\/p>\n

Another bad faith filing revolves around a debtor filing a bankruptcy while already in an active one.\u00a0 How does this happen?\u00a0 Most commonly, a debtor is dismissed from a bankruptcy and files before they have received a Final Decree that officially releases them from the first bankruptcy.\u00a0 Or, a Chapter 13 client cares to convert to a Chapter 7 bankruptcy<\/a> and files a Chapter 7 while still in the Chapter 13 without permission from the court.\u00a0 Or a debtor tries to file bankruptcy within the time limitations, such as with 8 years of previously filing a Chapter 7 bankruptcy or 4 years for a Chapter 13 bankruptcy.<\/p>\n

The third example would be prevalent among the debtors who care to file pro se or without an attorney.\u00a0 There are certain documents and motions that must be filed with the court.\u00a0 Two very important documents are the financial management certification and the motion for discharge.\u00a0 Don\u2019t know what these are?\u00a0 That is why an attorney comes in handy!\u00a0 A bankruptcy case may be dismissed under bad faith if required documents are not filed or presented to the bankruptcy court or bankruptcy Trustee.<\/p>\n

Fourth, if a debtor is continually filing and being dismissed from a Chapter 13 due to non-payment, the bankruptcy Trustee may reject the case due to bad faith.\u00a0 If you are dismissed from a Chapter 13 you may turn around after the final decree and file again as long as the court has not placed some limitation on your ability to file again like dismissing your case with prejudice. The big question to determine bad faith is \u201cwhy do you keep being dismissed?\u00a0 And what is different about your situation from your previous filings?\u201d\u00a0 Usually, this is just a due diligence question, but it is very important.<\/p>\n

Lastly, if you fail to make adequate protection payments, your bankruptcy is automatically noted as being filed in bad faith.\u00a0 Adequate protection is rather loosely defined as the initial payments in a Chapter 13 bankruptcy.\u00a0 On the other hand, in a Chapter 7 bankruptcy, unprotected equity must be compensated to the Trustee in order for the debtor to keep the non-exempted asset.\u00a0 If this adequate protection payment is not made to the Trustee in the mandated time frame, your case can be dismissed.<\/p>\n

Be sure to avoid a situation in which your case may be dismissed for \u201cbad faith.\u201d Contact an experienced bankruptcy lawyer who can help you navigate the, often times, tricky path through bankruptcy.<\/p>\n","protected":false},"excerpt":{"rendered":"

As it sounds, this is not a term you care to associate yourself with if you can help it.\u00a0 Bad faith refers to certain actions and circumstances that cover fraudulent bankruptcy filings.\u00a0 In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act was legislated to define and outline situations associated with bad faith bankruptcy filing. … Read more<\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[6,7,8,16,10,56],"tags":[],"class_list":["post-5426","post","type-post","status-publish","format-standard","hentry","category-bankruptcy","category-chapter-13","category-chapter-7-2","category-creditors","category-duncan-law-blog","category-fraudulent-transfers"],"yoast_head":"\nWhat Does \u201cBad Faith\u201d Mean in Bankruptcy?<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.duncanlawonline.com\/staging\/8350\/what-does-bad-faith-mean-in-bankruptcy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Does \u201cBad Faith\u201d Mean in Bankruptcy?\" \/>\n<meta property=\"og:description\" content=\"As it sounds, this is not a term you care to associate yourself with if you can help it.\u00a0 Bad faith refers to certain actions and circumstances that cover fraudulent bankruptcy filings.\u00a0 In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act was legislated to define and outline situations associated with bad faith bankruptcy filing. ... 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