What is “Bad Faith” in Bankruptcy in New York City?

What is “Bad Faith” in Bankruptcy in New York City?

Generally speaking, bad faith is abuse of the bankruptcy system.  If you are trying to take advantage of the bankruptcy system by omitting or misrepresenting financial information on your bankruptcy petition, or using your filing as a way to intentionally delay your creditors then your filing can be deemed to be in bad faith.  Bankruptcy cases filed in bad faith can have some severe consequences so it is never a good idea to intentionally try to exploit the bankruptcy system.  With a good attorney at your side it is also very unnecessary to do so.

The Bankruptcy Court in New York will look at the “totality of circumstances” when looking at a possible bad faith filing.  Consumer Bankruptcy Law and Practice looks at it like this, “If the presumption of abuse is rebutted or does not arise, a court may still dismiss the case if the petition was filed in bad faith, or “the totality of the circumstances” of the debtor’s financial situation demonstrates abuse sec 13.4.7.4.”

So for example, if you have had a number of previous bankruptcy filings that were dismissed in the past, or had no intention of complying with the terms of the bankruptcy the filing could be deemed in bad faith even if there was no other presumption of abuse.  Financing luxury items before filing in an attempt to increase expenses, or using bankruptcy as a way to stall your creditors along with omissions, misrepresentations and other forms of egregious conduct can also result in a bad faith bankruptcy.  If the bankruptcy court thinks you are trying to trick them in some way or that you are filing for some reason other than financial protection they can declare a bad faith filing.

Depending on how naughty you were and what non exempt assets were involved, a bad faith bankruptcy filing could get you into a lot of trouble.  Your case could be dismissed, you lose the right to discharge other debts in your case and you may lose significant property.  What’s worse is sometimes it’s hard to even know if your actions can be considered to have been in bad faith.

If you are concerned about protecting assets and getting financial relief by filing bankruptcy speak to an attorney.  You’ll find much more protection with the help of an experienced professional than by taking advantage of the bankruptcy process.  If you live in New York and are looking for a proactive bankruptcy attorney with your best financial interests at heart please contact the Law offices of William Waldner online or by calling 212.244.2882.  We are thorough and make the bankruptcy process easy and affordable for our clients while maintaining a 100% Chapter 7 Bankruptcy discharge record in New York City as of 11/19/2013.

This article is intended for educational purposes only.  By reading this article no attorney-client relationship has been created.