If you have filed a Chapter 7 or Chapter 13 personal bankruptcy case, the case may end in either of two ways. The bankruptcy court may grant a discharge, or your case can terminate. The termination of your case is called a dismissal. Because you filed for bankruptcy to rid yourself of debt, you should be aware that a dismissal could land you in the position you were in prior to filing for bankruptcy.
You file for personal bankruptcy, Chapter 7 or Chapter 13, with the aim of receiving a discharge from the bankruptcy court. By granting a discharge, the bankruptcy court forgives the debt you owe. You then no longer have the responsibility of paying that debt. If the bankruptcy court decides that you should not receive a discharge, the bankruptcy court will dismiss your case. A dismissal terminates a bankruptcy case, and removes the protection from debtors that the court had provided to you during the bankruptcy process.
Filing Under Wrong Chapter
The bankruptcy court may file a motion to dismiss a bankruptcy case if you filed it under the wrong chapter of bankruptcy law. This rule applies to both Chapter 7 and Chapter 13 bankruptcy cases. For example, you can only file for Chapter 7 bankruptcy if your income falls under a certain level. Suppose that you and your significant other live in the state of Georgia, and your combined income must fall under $50,000 to file for Chapter 7 bankruptcy. If your income hovers above that level, the bankruptcy court can dismiss your case if you file for Chapter 7 bankruptcy. You can then file for bankruptcy again, but you will have to file for Chapter 13 bankruptcy. The court also can convert the case, with your consent, to a Chapter 13 case.
In both Chapter 7 and Chapter 13, the bankruptcy court must afford you due process before dismissing your case for cause. That means that the bankruptcy court can only dismiss the case for cause after giving you notice and holding a hearing. The following are some of the circumstances that can give cause for dismissing any bankruptcy case: The filer causes unreasonable delay that prejudices his creditors, the filer fails to pay fees to the bankruptcy court, or the filer fails to file the required documents with the bankruptcy court within 15 days of filing his bankruptcy petition.
Consequences of Dismissal
Not only can a bankruptcy court terminate your bankruptcy case by dismissing it, but you can also terminate your bankruptcy case. You may dismiss your own Chapter 7 or Chapter 13 case for any number of reasons, but you should use care in deciding whether to terminate it. If you voluntarily dismiss your case to prevent a creditor from recovering property on which the creditor has a lien, you cannot file another bankruptcy case until 180 days after the dismissal. If the bankruptcy court dismisses your case because you failed to appear before the court or failed to comply with a court order, you cannot file another bankruptcy case until 180 days after the dismissal. During the 180 days after a dismissal, you do not enjoy any protection from your debtors.
- Jupiterimages/Photos.com/Getty Images