Yes, bankruptcies can be denied, dismissed, or result in a discharge of only some debts, often due to fraud, failing eligibility tests (like the means test for Chapter 7), incomplete paperwork, not following court rules, or concealing assets, though outright denial of the entire petition is less common than non-completion or debt exceptions. While many filings succeed, strict legal requirements mean errors or dishonesty can prevent debt relief, making thoroughness and legal guidance crucial.
Bankruptcy generally does not cover debts like child support, alimony, most taxes (especially recent ones), student loans (unless undue hardship proven), court fines, restitution, and debts from fraud or drunk driving, plus debts not listed on the petition or incurred for luxury goods shortly before filing. These non-dischargeable debts remain even after bankruptcy, meaning you're still responsible for paying them, notes.
Understanding Bankruptcy Denials
According to recent data from the Administrative Office of the U.S. Courts, approximately 0.4% of Chapter 7 and 13 bankruptcy cases are dismissed due to denial. Bankruptcy petitions may be denied for various reasons, ranging from procedural errors to legal challenges from creditors.
It's partly true: most negative items like late payments and collections are removed from your credit report after about seven years, but the underlying debt often still exists, and bankruptcies (Chapter 7) last 10 years, so your credit isn't entirely "clear" but mostly refreshed from old negatives. The 7-year clock starts from the date of the original delinquency, not when you paid it off or sent to collections, and the debt itself can still be pursued by collectors.
Banks would much rather you not file for bankruptcy when you're in need of debt relief. They'd rather steer you toward other debt settlement options that could more benefit them. The bank may nudge you toward things like payday loans, maxing out all credit options, or borrowing money from family and friends.
You can be disqualified from bankruptcy for recent filings, fraud (hiding assets, lying), failing mandatory credit counseling, or, for Chapter 7, having too high an income (failing the means test), while Chapter 13 has debt limits. Not filing required documents, making large luxury purchases or cash advances just before filing, or having a previous dismissal for non-compliance are also major disqualifiers.
Declaring bankruptcy can raise a number of concerns and cause immense pressure. It is crucial to be aware that while bankruptcy itself is not a criminal act, fraudulent activity associated with bankruptcy proceedings can lead to serious legal consequences, including imprisonment.
The person filing for bankruptcy pays most of the costs, including court filing fees and attorney fees. In some cases, creditors may receive payments through asset liquidation or a court-approved repayment plan.
Medical bills and loss of job or income are consistently the top reasons people give for why they file for bankruptcy.
Federal law, specifically 11 U.S.C. §525, prohibits employers from discriminating against job applicants or employees solely because they have filed for bankruptcy. This means an employer cannot legally refuse to hire, promote, or retain someone based only on their bankruptcy history.
There are two types of bankruptcies that can be filed that may impact your ability to buy a home: Chapter 7 and Chapter 13. The good news is that buying a house after filing for bankruptcy is possible, but most buyers with a past bankruptcy will need to go through a waiting period and rebuild their credit first.
To qualify for Chapter 7 bankruptcy in California, your income must be below the state's median income for your household size. For example, as of 2025, the monthly income limit is $5,030 for a single-person household and $8,620 for a four-person household.
Wealthy people often end up in over their heads with debts. When you have a lot of money, it is easy to get overambitious about borrowing, and it is easy for lenders to get overambitious about lending to you.
Bank accounts and bankruptcy
Barclays, Santander, Royal Bank of Scotland (including NatWest), HSBC, Nationwide, Co-operative Bank, Lloyds (including Halifax and Bank of Scotland), TSB and Virgin Money (including Clydesdale and Yorkshire Bank) must now allow undischarged bankrupts to open a basic bank account.
The majority of Chapter 7 filers successfully discharge their debts. However, higher earners, those with complex financial situations or anyone who's made questionable financial decisions right before filing may face serious challenges. Learn about the debt relief options you can use to avoid bankruptcy here.
Many people who file Chapter 7 or Chapter 13 bankruptcy can keep their home, but it depends on several factors. To keep your home in Chapter 7, you'll need to be up to date on your mortgage payments and your home equity must be covered by the homestead exemption in your state.
The Chapter 13 Trustee is required to report to the Bankruptcy Court if you fail to make payments on time or in full. The Court may then enter an order dismissing your case and withdrawing the protection of the Bankruptcy Court. If that occurs, you then could be subject to creditor collection efforts and other actions.
There's no one-size-fits-all limit on how much money you can have in the bank when you file. The exact amount you can have and protect depends on the bankruptcy exemptions available in your state.
Individuals can file bankruptcy without an attorney, which is called filing pro se. However, seeking the advice of a qualified attorney is strongly recommended because bankruptcy has long-term financial and legal outcomes.
Non-exempt assets could be sold with the proceeds used to pay debt. Those who own luxury possessions probably will lose them. Bankruptcy remains on a credit report for 7-10 years and may affect the filer's ability to borrow in the future. Your credit score will plummet 100-200 points.