Bad Faith Dismissal and the U.S. Bankruptcy Code

Each year in the United States, thousands of individuals and businesses use bankruptcy as a lawful way to permanently discharge debts they can’t repay. If you’re one of the many people struggling to meet monthly debt payments, bankruptcy might be the best solution. There are two main bankruptcy chapters individual consumers can utilize to permanently resolve debts: Chapter 7 and Chapter 13. Chapter 7 works to completely discharge most debts within 90 to 120 days and Chapter 13 works to reorganize debts into a manageable repayment plan under much more favorable repayment terms which lasts 3 to 5 years. No matter which chapter you file under, however, you will have to meet all the requirements set forth by the bankruptcy code, and above all, prove that your case has been filed in “good faith.”  With the help of Behm Law Group Ltd. expert attorneys, you can build a good faith case and successfully navigate the U.S. bankruptcy code in Jackson, MN, and the surrounding areas.


Bad faith cases can be filed with ulterior motives to manipulate the bankruptcy system in abusive ways rather than just simply receiving the intended, lawful benefits of debt discharge or debt reorganization. One example of a current case with allegations of bad faith is the National Rifle Association (NRA) Chapter 11 case. The NRA filed for Chapter 11 bankruptcy in January 2021. Chapter 11 bankruptcy works similarly to Chapter 13 reorganization, but it is designed for very large business entities and for individuals, such as Wayne Newton or 50 Cent, who have a lot of assets and massive debt loads.


The NRA stated that it planned to reorganize its debts and then move from New York to Texas, reincorporating in Texas while its debts were repaid through a Chapter 11 plan of reorganization. However, New York Attorney General Letitia James has had an open investigation into the NRA operations since 2019, and she immediately posed questions as to the possible bad faith filing of the NRA’s bankruptcy case.


In a press statement, James said, “While we review this filing, we will not allow the NRA to use this or any other tactic to evade accountability and my office’s oversight.”


In contrast to a bankruptcy filing, the NRA also announced that it was “in its strongest financial condition in years.”


The NRA’s petition also revealed the nonprofit organization’s business dealings to be solvent according to the debt-to-income ratio. After the New York Attorney General filed a lawsuit against the NRA in 2020 for allegedly acting fraudulently to allegedly displace $64 million from charitable work to support the wealthy lifestyles of executives, the NRA filed its own lawsuit against the Attorney General, claiming that her office had violated its rights.


By its filing for bankruptcy in 2021, the NRA will likely significantly delay the New York Attorney General’s suit and possibly the entire investigation. If the NRA is reorganized in Texas, the Attorney General would no longer be able to continue her office’s investigations. The revelations from the NRA’s bankruptcy petition and its apparent lack of financial woes have led to questions about whether the case has been filed in good faith.


Whether a case involves a business or individual, hints of bad faith will most likely lead to a dismissal. While the NRA case has a way to go until all these details are worked out, the attorneys at Behm Law Group would most certainly ensure that your bankruptcy case would be filed in good faith.


To learn more about the bankruptcy code in Jackson, MN, call Behm Law Group Ltd. at (507) 387-7200 or email