What is a 707(b) Dismissal for Abuse in Bankruptcy?

In bankruptcy law cases, the term "707(b) dismissal" is one that you’d really prefer to avoid since it typically arises in cases involving potential abuse of the bankruptcy process. Understanding what this dismissal entails is crucial for individuals navigating financial challenges and considering bankruptcy as a solution. Now, we'll delve into the concept of a 707(b) dismissal and its implications for debtors.

Because this topic can be complicated, it is important to partner with an experience bankruptcy lawyer near you. At Fleysher Law, we are proud to serve our clients throughout the Florida region, and it would be our pleasure to work with you to put your financial case in the best position possible to be successful. Learn more below. Then, contact us to schedule a free case evaluation. 

An Overview of a 707(b) Dismissal: What To Know

A 707(b) dismissal refers to the dismissal of a bankruptcy case under section 707(b) of the United States Bankruptcy Code. This section empowers the court to dismiss a bankruptcy case if it finds that the filing is abusive or constitutes an abuse of the bankruptcy process.

If a case is deemed abusive, this typically means the filer has sufficient financial resources to pay their debts and is unfairly attempting to avoid payment. The court thoroughly examines the filer's income, expenses, and overall financial situation to determine if the filing is in bad faith. If dismissed under 707(b), the debtor may face challenges in attempting future filings and could be subject to further legal consequences.

What Are The Criteria for a 707(b) Dismissal?

To determine whether a bankruptcy case should be dismissed under section 707(b), the court evaluates various factors. Some of the top factors include:

1. Abuse of Chapter 7 Filing: Section 707(b) dismissals are most commonly associated with Chapter 7 bankruptcy cases. The court assesses whether the debtor's filing for Chapter 7 relief is an abuse of the provisions of this chapter.
2. Means Test Calculation: The court examines the debtor's income and expenses to determine whether they meet the eligibility criteria for Chapter 7 bankruptcy. If the debtor's income exceeds certain thresholds or if they have the ability to repay debts through a Chapter 13 repayment plan, the court may dismiss the Chapter 7 case.
3. Bad Faith Filing: The court scrutinizes the debtor's actions leading up to the bankruptcy filing to determine whether the filing was made in bad faith or with the intent to abuse the bankruptcy system. This may include hiding assets, making false statements, or engaging in other fraudulent behavior.

Before dismissing a bankruptcy filing, the court will take all of these factors into account to come up with a comprehensive view of what happened. Then, the court will issues its decision based on the factors above. 

Implications of 707(b) Dismissal

If a bankruptcy case is dismissed under section 707(b), the debtor may face several consequences. These may include:

• Loss of Bankruptcy Protection: The dismissal terminates the automatic stay, which protects the debtor from creditor actions such as collection efforts, foreclosures, and repossessions.
• Reinstatement of Debts: Debts that were discharged during the bankruptcy case may be reinstated, leaving the debtor liable for repayment.
• Potential Legal Consequences: In cases of abuse or fraudulent behavior, the debtor may face legal repercussions, including fines, sanctions, or even criminal charges.

Because the consequences of a dismissal under this section can be significant, you must make sure you have a valid bankruptcy filing before you move forward. That is where we can help you. 

Tips To Avoid a 707(b) Dismissal

• Provide Complete and Accurate Financial Information: Ensure all financial documents and information submitted are accurate and complete. Misrepresentations or omissions can be seen as attempts to manipulate the bankruptcy process.
• Consult a Qualified Bankruptcy Attorney: Working with a knowledgeable bankruptcy attorney can help navigate the complex rules and ensure compliance with all legal requirements. An attorney can also advise on the best type of bankruptcy filing based on your financial situation.
• Evaluate Your Financial Situation Thoroughly: Before filing, conduct a thorough review of your financial status to determine if bankruptcy is necessary or if alternative debt relief options are viable. This self-assessment can help demonstrate to the court the necessity of your bankruptcy filing.
• Avoid Luxury Purchases or Unnecessary Spending: In the months leading up to your bankruptcy filing, avoid making large, unnecessary purchases, especially luxury items. Such spending might be interpreted as fraudulent or abusive of the bankruptcy process.
• Attend Credit Counseling: Completing a credit counseling session from an approved agency is mandatory before filing for bankruptcy. This not only fulfills legal requirements but also shows the court your commitment to handling your financial situation responsibly.

Consulting with a Bankruptcy Attorney

Handling the obstacles of bankruptcy law, including potential 707(b) dismissals, requires expert guidance. Consulting with a knowledgeable bankruptcy attorney is essential for understanding your rights and obligations, as well as avoiding actions that could lead to dismissal or other adverse consequences.

A 707(b) dismissal for abuse in bankruptcy is a serious matter that can have significant repercussions for debtors. By understanding the criteria for 707(b) dismissal and seeking professional guidance from a qualified bankruptcy attorney, individuals can navigate the bankruptcy process with confidence and integrity. Avoiding actions that may be deemed abusive or fraudulent is essential for achieving a successful outcome in bankruptcy proceedings. We can help you position your bankruptcy petition for success.

Contact Fleysher Law To Schedule a Consultation With Our Florida Bankruptcy Lawyer

If you are considering filing for bankruptcy and want to ensure your process is smooth and compliant, contact Fleysher Law today. Our experienced Florida bankruptcy lawyers can provide you with the guidance and representation you need to avoid potential pitfalls like a 707(b) dismissal. We understand the complexities of bankruptcy law and are committed to helping you achieve a fresh financial start. Schedule your consultation now to discuss your financial situation and explore your options with our skilled legal team.