My Bankruptcy Was Dismissed. What Happens Now?

Filing for bankruptcy requires filling out a lot of forms to give the court a sense of your financial situation. You must also meet certain deadlines. If you don’t meet all the requirements laid out in the Bankruptcy Code, you risk having the bankruptcy court dismiss your case. 

In this article, we cover your obligations as a filer, how to prevent a bankruptcy case dismissal, and what your options are f your case has already been dismissed. We’ll also look at why you might want to initiate a dismissal in some cases.

Bankruptcy Case Dismissal vs. Discharge

A dismissal is different from a bankruptcy discharge. Having your case dismissed means it’s thrown out without having your debts discharged. When a court grants a bankruptcy discharge, it means you’re no longer responsible for paying certain debts. In rare cases, you may want your bankruptcy case dismissed. If so you can file a Motion for Voluntary Dismissal. We cover this more below.

You can avoid having your Chapter 7 or Chapter 13 bankruptcy case dismissed by making sure you meet all your responsibilities as a filer.

Your Responsibilities as a Filer in a Bankruptcy Case

You have a few obligations when it comes to filing for debt relief under Chapter 7 of the Bankruptcy Code. 

• Complete the bankruptcy petition and schedules to the best of your ability.

• Submit the required filing fee or a petition to have it waived.

• Be forthcoming and honest with the bankruptcy court and the bankruptcy trustee.

• Complete two mandatory educational courses. A credit counseling course is required before filing and financial management course is required after you file bankruptcy.

• Attend your meeting of creditors and any other required court appearances.

An Additional Responsibility for Chapter 13 Bankruptcy Filers

If you’re filing a Chapter 13 bankruptcy case you must complete all requirements listed above that apply to Chapter 7 bankruptcy and an additional obligation. You must also submit a repayment plan. If you don’t make Chapter 13 plan payments on time, you risk having your case dismissed.

Why Would a Bankruptcy Trustee Request a Case Be Dismissed?

A bankruptcy trustee assigned to a Chapter 7 case usually requests the dismissal of a case when the filer doesn’t attend their mandatory meeting of creditors. However, other common reasons a Chapter 7 case may be dismissed by a trustee include:

• A filer not properly completing and submitting required bankruptcy forms 

• Not turning over requested documentation

• Not complying with court orders or other mandatory directions provided by the bankruptcy judge or the trustee

A Chapter 13 trustee may dismiss a case for any of the above reasons. But they may also dismiss a Chapter 13 case if a filer fails to create and submit a repayment plan or fails to make their scheduled plan payments. They can also request dismissal if the filer fails to meet other plan obligations, such as selling real estate. Because there are so many more opportunities for a Chapter 13 bankruptcy filer to misstep over a 3–5 year repayment period, dismissal requests by trustees are far more common in Chapter 13 than in Chapter 7 bankruptcy cases.

You can avoid dismissal of your bankruptcy case by avoiding the missteps noted above. But if the trustee assigned to your case has requested dismissal, you may be able to successfully defend your position. If the trustee has incorrect information, you can provide evidence countering their assumptions. If your payment plan is failing, you may be able to request a modification. If you missed a required meeting or appearance due to an emergency, you can present evidence to that effect.

Why Would Someone Request a Dismissal of Their Own Case?

Some people want to have their case dismissed because they experienced a change in circumstances. For example, maybe they inherited a valuable asset or successfully negotiated a loan modification that makes their mortgage payments more affordable. In other cases, people need to refile because they’ve incurred significant debt since submitting their bankruptcy petition. This can happen due to an accident or a significant medical diagnosis. 

If you hope to get your case dismissed, you can file a Motion for Voluntary Dismissal. But this part of the bankruptcy process is subject to conditions and barriers, which make it complicated. If you find yourself in this position, you may want to seek guidance from an experienced bankruptcy lawyer.

A dismissal motion is more likely to succeed if you file Chapter 13 bankruptcy, partially because the court knows that a lot can change during a 3–5 year repayment period. This plan is a reorganization of your debts, and it requires monthly payments. If your financial situation changes considerably, it may be difficult to meet the plan requirements.

Chapter 7 voluntary dismissals are much less likely to succeed because filers must demonstrate that they are making the motion in good faith. Courts rarely grant these dismissals. If you do submit a Motion for Voluntary Dismissal and it isn’t granted, you may be barred from refiling a new case for a minimum of 180 days and a maximum of several years, depending on your circumstances.

Consequences of Bankruptcy Dismissal

If you have more than three dismissals in a one-year period, you won’t benefit from an automatic stay for any new bankruptcy cases. This is true whether the dismissals were voluntary or involuntary. That means that you won’t receive protection from the automatic stay, which prevents foreclosures, collection activity, repossessions, wage garnishments, and calls from credit card servicers, lenders, or debt collectors. 

Also, bankruptcy filings are reported to the major credit bureaus, which means the filing itself may impact your credit score. Bankruptcy filers who get their unsecured debts, such as credit card debt, discharged can work to rebuild their credit. This may be more difficult to do if your case is dismissed and your credit score has already taken a hit from missing payments or having debts sent to collections.

Let’s Summarize…

If you want to benefit from a bankruptcy discharge, you must meet all obligations under the law. These obligations don’t differ much between Chapter 7 and Chapter 13 bankruptcy, but Chapter 13 does require filers to also complete a payment plan. Failure to meet all obligations can result in a bankruptcy dismissal. Multiple dismissals result in you losing the protection of the automatic stay should you ever need to file again.

If you have a simple Chapter 7 case, you may qualify to use Upsolve’s free filing tool to file your case without a bankruptcy attorney. If you have questions about a case dismissal, you can also schedule a free consultation with a bankruptcy lawyer.