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It is a very sad thing to see a bankruptcy case dismissed. This is for many reasons.
Failure to comply with the bankruptcy code will result in the dismissal of your bankruptcy case. Seek legal advice from an experienced bankruptcy attorney before filing.
You will be put back under the mercy of your creditors and collection efforts can resume. The discharge, in this case, will also not be issued and the automatic stay which freezes creditor collections, will be lifted.
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Common Reasons to Dismiss
The 2005 U.S. Bankruptcy Code changes now require that all debtors complete a credit counseling program from an “approved credit counseling agency” within 180 calendar days of filing their petition. This requirement is mandatory and will lead to the automatic dismissal. A bankruptcy case can also be dismissed if the debtor fails or is absent from the meeting.
Another reason for bankruptcy dismissal is:
- To defraud creditors, conceal or transfer property within one year of filing for bankruptcy
- Incapable of explaining missing assets
- Neglecting to maintain good records or destroying them
- Lying under oath
Best Practice for Filing Bankruptcy After Dismissal: How Long Should I Wait? What is the Shortest Period I Can Wait Before Refiling?
What do you do when your bankruptcy case dismissed?
It depends on the reasons why your case got dismissed. In that case, you should wait 180 days to file a fresh bankruptcy. The dismissal of a case under Chapter 7 or Chapter 13 means that a debtor cannot file another bankruptcy in 180 days after filing if:
The case was dismissed because of the “willful failure” of the debtor to comply with the orders made by the court or to appear in court for proper prosecution.
It filed a petition for relief under the Automatic Stay, after which the debtor sought and obtained voluntary dismissal.
Although the definition of “willful failure” is always a fact-specific question that would need to be determined on a case-by-case basis, it is doubtful that any creditor or U.S. trustee will object if a case was dismissed simply because the debtor failed to participate in the debt counseling or financial management courses. These cases will almost always permit the debtor to refile the case immediately, hassle-free.
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Is Chapter 7 Possible After Chapter 13 Has Been Dismissed?
What’s Important to Know The first time you get a discharge, it makes a difference what order you file under Chapter 7 or Chapter 13. But you can only get discharged a certain number of times.
If the Chapter 13 case gets dismissed, it is feasible to file another one under Chapter 7, but some conditions are required. Filings in terms of time are also different because waiting periods are different depending on the type and outcome of a prior bankruptcy. Depending on your case, you may be restricted from filing Chapter 7 for at least four years from the date of your discharge in Chapter 13. However, in some cases, if it is dismissed and no discharge was issued, you are permitted to file for Chapter 7 depending on the grounds why your case was dismissed. Discuss your case with a bankruptcy attorney to learn the rules and to know what best to do in your case.
The United States Courts
The court shall not grant a discharge in the Chapter 7 case if a debtor was discharged under Chapter 7 or Chapter 11 when that case was filed within eight years of the date the second petition was filed. It will not be granted when the debtor has been granted a discharge under a Chapter 12, or a Chapter 13 case within six years before the date of filing the second petition. If a debtor has been discharged in Chapter 13, it is not possible to discharge if the discharge was in Chapter 7, 11, 12, or 13 cases filed 4 years before the current case, or in a Chapter 13 case filed 2 years before the current case.
If you were able to get your bankruptcy case dismissed you may still proceed to file a new bankruptcy case under Chapter 7 or Chapter 13 after such dismissal. This is unless the court tells you otherwise.
Because of the power and ability of the automatic stay to stop creditors from being stopped, the 180-day waiting period for a bankruptcy case that has been dismissed was established. The automatic stop is an order issued by the bankruptcy court to prevent any collection activity after a case has been filed. Particularly in real estate, repeated filing bankruptcy and then voluntarily dismissing a case can indefinitely hinder lender foreclosure attempts. This loophole is addressed by the Bankruptcy Code. It prevents a case from ever being refiled if it has been dismissed by a creditor who has sought to lift the automatic stay.
Summing Up!
A bankruptcy case dismissed may occur if the Bankruptcy Code is not followed, if credit counseling was missed, or if fraudulent action has been committed. If dismissed, creditors may resume collection, but a refiling could require 180 days depending on the reasons for dismissal. If you are dismissed for willful misconduct or dismissal voluntarily, this can also keep you from filing for 180 days. When switching from Chapter 7 to Chapter 13 discharges there are specific waiting periods. If abuse is suspected, the automatic stay that halts collection can be reduced or lifted. To navigate these issues, it is best to consult a bankruptcy lawyer.
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