When considering whether bankruptcy is the right process for you, it will be essential to consult with an experienced bankruptcy lawyer to ensure that you have a clear understanding of your options and the events that will transpire once you begin the process. Typically, once someone has committed to bankruptcy, they hope to see their case through and either have their debts discharged (Chapter 7) or enter into a repayment plan (Chapter 13). In some cases, it may be possible for your case to be dismissed — whether it is your request or the request of another party. There are several reasons for bankruptcy dismissals, and it will be important to understand the grounds for the dismissal and the next steps to take.
Bankruptcy Dismissal
When a person files for bankruptcy, they would like to see the process through the end. A dismissal is when your case is closed before debts are discharged. A dismissal will stop the bankruptcy process and can be requested by the creditor, debtor, or trustee. However, be aware that just because dismissal is asked for doesn’t mean it will be granted. There will be many factors to consider — the type of filing, the reason, and the impact on creditors. When a case is dismissed, know that two things will happen: you will still be responsible for your debts, and the automatic stay will be lifted.
Reasons for a Bankruptcy Dismissal
There are several reasons that a bankruptcy dismissal might be requested. Some situations may result because the debtor has decided that they would no longer like to proceed with the bankruptcy process. There are many reasons for this. You may realize that you will not be able to keep your home or other assets that you thought would be protected. However, be aware that in some cases, once you start the process, you may not be able to have your case dismissed, especially if the dismissal isn’t in the best interest of your creditors. While Chapter 7 cases are difficult to dismiss, it may be easier to dismiss a Chapter 13 filing. Before getting to this point, consult with your lawyer to ensure that you have made the right decision based on your needs. In other situations, you may wish to complete the bankruptcy process only to find that another party has requested a dismissal. This may be due to misconduct or an error during the process, like failing to file the proper paperwork. There are many reasons for a dismissal to occur, including:
- Disclosing inaccurate information on paperwork (fraud)
- Failing to complete a credit counseling course
- Not passing the means test
- Incomplete paperwork
- Not filing the right paperwork
- Failing to attend the meeting of the creditors
When enduring the bankruptcy process, it will be critical that paperwork is accurately completed and filed correctly. Simple mistakes like that can result in having your case dismissed and even being considered fraud. In most cases, you were not looking to have your case dismissed, which is why taking the right steps from the start will be critical to prevent any of these problems from occurring.
After a Dismissal
If another party has filed a motion for dismissal, your lawyer may be able to work to stop it by gaining an understanding of the reason why. In some cases, you may be able to correct documents or provide and documents that may be missing so that the process can continue. If your case has been dismissed, your next steps will be contingent upon whether it was filed with or without prejudice. If dismissed without prejudice, you may not have any restrictions for filing again. However, if your case was dismissed with prejudice, you may have to wait a significant period before you can file again.
If you consider whether bankruptcy is the right decision for you, or to learn more about the process, contact a lawyer, like a Chapter 7 bankruptcy lawyer, for more information.