What Happens If Chapter 7 Is Denied?

Many clients ask: What happens if a Chapter 7 case is denied or dismissed?

If your Chapter 7 bankruptcy is denied, your debts are not discharged, and creditors can continue or resume collection actions. Depending on the reason for denial, you may be able to refile, convert to another bankruptcy chapter, or appeal the court’s decision.

If your Chapter 7 filing has been denied or you’re worried it could be dismissed, we can help you protect your rights and pursue other debt relief options. Call Kostopoulos Bankruptcy Law at 877-969-7482 to speak with an experienced bankruptcy attorney. With decades of experience successfully resolving complex bankruptcy cases, we’ll guide you through refiling, appeals, or alternative solutions to achieve financial freedom.

In this article, I’ll explain the common reasons Chapter 7 is denied, what happens afterward, and the steps you can take to move forward.

Understanding a Chapter 7 Denial vs. Dismissal

While “denial” and “dismissal” are sometimes used interchangeably, they have distinct meanings:

• Denial of Discharge: The court refuses to eliminate your debts, typically due to fraud, misconduct, or legal violations during the case. Your bankruptcy remains on record, but debts are still owed.
• Case Dismissal: The court stops your bankruptcy before discharge. This could be voluntary (you withdraw your case) or involuntary (court finds issues with eligibility or procedure).

Both outcomes leave you responsible for your debts, but the path to refiling or pursuing other relief differs.

Common Reasons Why Chapter 7 Is Denied or Dismissed

There are several grounds on which a court or trustee may deny or dismiss your Chapter 7 case:

1. Fraud or Misrepresentation

If you hide assets, falsify documents, or commit bankruptcy fraud, the court can deny discharge.

2. Ineligibility Under the Means Test

If your income is too high under the Chapter 7 means test, the court may dismiss your case and suggest conversion to Chapter 13.

3. Failure to Complete Requirements

Missing credit counseling, debtor education courses, or not filing required forms can result in dismissal.

4. Previous Bankruptcy Filings

If you’ve received a Chapter 7 discharge in the past eight years, you are not eligible for another discharge.

5. Court Order Violations

Failing to comply with trustee orders, hearings, or court deadlines can lead to denial or dismissal.

What Happens Immediately After Chapter 7 Is Denied

When a denial occurs:

• The automatic stay that stopped creditor actions is lifted.
• Creditors can resume collection efforts, including lawsuits, wage garnishments, and foreclosures.
• Your debts remain enforceable, and you continue to owe balances.
• Any nonexempt assets already turned over to the trustee may still be sold to repay creditors, depending on the timing and reason for denial.

Can You Refile After Chapter 7 Is Denied?

In many cases, you can refile for bankruptcy, but timing and eligibility matter:

• Voluntary Dismissal: If you requested dismissal yourself, you can often refile right away.
• Involuntary Dismissal: The court may impose a waiting period (e.g., 180 days) before you can refile.
• Denial Due to Fraud or Misconduct: A denial of discharge for dishonesty can bar you from discharging those same debts in future bankruptcies.

An experienced bankruptcy attorney can review your situation and determine when and how you can safely refile.

Converting to Another Bankruptcy Chapter

If your Chapter 7 case is denied or dismissed due to income or eligibility issues, you may be able to convert to Chapter 13 bankruptcy:

• Chapter 13 allows you to repay debts over 3–5 years while keeping more assets.
• Conversion can often happen without dismissing your case entirely, reducing time and costs.
• A bankruptcy lawyer can handle the motion to convert and create a feasible repayment plan.

Appealing a Chapter 7 Denial

If you believe the court made a legal error in denying your Chapter 7 case:

• You have the right to appeal the decision to a higher bankruptcy court or district court.
• Appeals require strict adherence to deadlines and legal procedures.
• Success depends on showing that the judge misapplied bankruptcy law or overlooked evidence.

Legal representation is crucial during the appeals process to maximize your chances of success.

Preventing Denial of Chapter 7 Bankruptcy

Most denials can be avoided with proper preparation:

• Fully disclose all assets, debts, and financial information.
• Complete required credit counseling and education courses on time.
• Work with an experienced bankruptcy attorney to pass the means test and handle trustee inquiries.
• Avoid transferring or hiding assets before filing.

Taking these steps significantly reduces the risk of having your Chapter 7 case denied.

Financial Consequences of Denial

A denied Chapter 7 case can have lasting effects:

• Creditors immediately resume lawsuits and garnishments.
• Your credit report reflects a bankruptcy filing without discharge.
• Assets surrendered to the trustee may still be sold to satisfy debts.
• Legal fees and costs from the denied case cannot be recovered.

This makes timely consultation with a skilled bankruptcy attorney critical when facing potential denial.

Final Thoughts

Having a Chapter 7 case denied or dismissed is stressful but not the end of the road. Depending on the reason for denial, you may still:

• Refile for bankruptcy after waiting periods
• Convert to Chapter 13 and reorganize your debts
• Appeal the court’s decision

At Kostopoulos Bankruptcy Law, we’ve helped thousands of individuals avoid and overcome bankruptcy denials. Our experienced attorneys ensure your filing is accurate, compliant, and strategically designed to secure a discharge.

Call Kostopoulos Bankruptcy Law Today

If you’re concerned about a Chapter 7 denial or need to refile after a dismissal, we can help protect your rights and guide you toward lasting financial relief.

Call 877-969-7482 for a free consultation with a bankruptcy lawyer who has over 15 years of experience helping more than 10,000 clients successfully discharge their debts.

Resources:

U.S. Courts – Bankruptcy Basics – Official federal court resource explaining bankruptcy types, eligibility, and the filing process.

Department of Justice – U.S. Trustee Program – Government program overseeing bankruptcy cases and trustees nationwide.

Consumer Financial Protection Bureau – Dealing with Debt Collection – Federal guidance on managing debt collection actions before, during, or after bankruptcy.

Further Reading:

What Happens If the Trustee in Chapter 7 Denies Your Bankruptcy?

How to File Chapter 7 with No Money

When Do I Have to Surrender My Vehicle in a Chapter 7?

Will Filing Chapter 7 Affect My Spouse?

FAQs

Can a denied Chapter 7 bankruptcy be reopened?
Yes, in some cases, you can request to reopen or appeal a denied bankruptcy case if the issue is fixable or based on a legal error.

Does denial mean you can never file again?
Not always. Waiting periods and restrictions vary depending on why the case was denied or dismissed.

Will creditors start collecting again after denial?
Yes. Once the case is denied or dismissed, the automatic stay ends, and creditors can resume collections.

Is it better to convert to Chapter 13 than have Chapter 7 denied?
Often yes, because conversion allows repayment and avoids dismissal, protecting you from immediate creditor actions.

What’s the most common reason Chapter 7 is denied?
Fraudulent conduct, hiding assets, failing the means test, or not meeting procedural requirements are common causes.