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Bankruptcy self dismissal & CR


Guest DocJohn
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Guest DocJohn

Thank you in advance for your help with this issue.

I was a sole prop. physician, in January 2006 I self dismissed a 13 BK due to the equity in some properties I own. Decided that I did not want the 13 trustee in control of that. I negotiated settlement with the biggest secured bank debt I had by giving a mortgage on one of my properties, but still have smaller unsecured debts to settle (creditcards, yellow pages) which I am now negotiating on. All of these debts go back to 2001-2003.

Area I need help with is answering the question: If you file for BK protection then self dismiss it, what do you do to get BK off credit report? Or does it follow the same rules if I discharged debts or not? Technically I got the BK protection for 6 months while I negotiated the secured debts, but I dismissed BK and did not not discharge any debts. Should I send copy of dismissal letter to big three CRA's?:confused:

I want to start rebuilding my credit score, just purchased the Sexy book, joined the forum, looking for feedback.

Thanks,

DocJohn

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If you file for BK protection then self dismiss it, what do you do to get BK off credit report?

A dismissed Ch 13 can legally be reported for the full 10 years. If you'd had the 13 discharged, it would only stay for 7. Sending a copy of your dismissal letter will do you no good, it will only solidify the dismissal and the 10 yr reporting.

You can try the disputes and rebuilding the same as others here, but NEVER send bk papers to the CRA's.

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  • 3 months later...

I have a similiar type of situation going on, I had to drop my chap 13.

How does the SOL now play into this ?

Is it from the date of last payment still, or does it start from the date of the dismissal?

How does the OC's reporting play into this now ? What way do they have to report this?

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I did an early dismissal on my CH13. The dismissal was listed on my CR within a month. The CH13 stayed on my TU and EX for seven years from the file date. It listed the date filed and the date dismissed.

EQ says that it will stay on for 10 years because it shows a $0 balance and that is "positve" info. I am disputing that with them now.

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Shine, I have no idea why EQ would say that. But the truth is, a DISMISSED BK 13 stays for 10 years. A DISCHARGED BK13 comes off at 7. This was done to encourge filings of a BK13 vs a BK7. CRAs do not differentiate when you 'self-dismiss' or the Trustee dismisses it. What it appears to them to be is that you did not make your trustee payments and they want to show you are still a really bad risk.

BTW, the CRAs never care what date it is discharged or dismissed. The law provides that BKs are deleted based on date filed not date discharged.

DocJohn, I empathize with you, but not sure what advice I can give. Your debts are business related so the laws are a bit different. The truth is that BKs are some of the most difficult deletions.

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Whatever they're smoking, they know the rules. They need to share.

Funny I had that same picture in my head when she told me that.

I sent them a nice new letter disputing what their operator told me. I said I appreciated their concern but if they were keeping it on just for my benefit then I would rather have it taken off.

I also sent them a credit denial letter I recently received giving the CH13 as the only reason for their decision to not give me credit at this time.

It sucked because I thought I had it with my FICOs being:

TU-644, EX-623, and EQ-661

They weren't even this good when I bought my house 10 years ago.

(Thank heaven for FHA)

I have come to the conclusion that:

EQ will drop the little stuff easy but they hang on to the big guns for dear life.

EX seems to be nothing but phone robots, sorry a** report updates and web addresses.

and TU well, they seem like a big,slow,stubborn and broken down turtle to me.

I picture some guy behind a curtain somewhere like in The Wizzard of OZ running the whole show.

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Hi Sportlife9:

Under a Chapter 13, all accounts are there until the Chapter 13 disappears. I have found that some accounts will dissappear under one or two of the credit bureaus. Why....I don't know:roll: Some will be listed as included in the Chapter 13 whereby they can keep them listed until the removal of the Chapter 13. As far as the statue of limitations, it doesn't apply when these accounts are included in the bankruptcy...the bankruptcy law takes precedence. Hope this helps!:)++

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Hi Sportlife9:

Here is some information regarding a dismissed bankruptcy:

Once the case is dismissed, you lose protection from the court allowing all of your creditors to come after you again. In addition, the amount to be paid to some of your creditors may have been reduced by your plan, and the dismissal will allow them to collect the full original balance plus interest. This means that secured creditors, such as the company financing a car, may be able to repossess it even if they have been paid the full amount they were going to get under the plan. It may also mean that IRS could levy your wages for interest, penalties, and that portion of the taxes which would have been discharged had you completed the plan. All in all, it could be a very bad situation.

The practice of the trustees and the courts regarding reinstating a case may differ from district to district, you should check with your attorney for the policy in your district.

If a case has been dismissed, the trustees and the courts will usually allow the case to be reinstated if you make up all of the missed payments and file a motion to reinstate the case. If you do not act promptly, the court may close the case which would require that you also request that your case be re-opened and pay the filing fee again before they will consider a motion to reinstate. As stated above, you will need to check with your attorney in your district to verify if these laws apply in your state.::linedancers::

You might need to also ask them how the statue of limitations applies. I would suggest asking your attorney or just calling the chapter 13 bankruptcy trustee listed in your phone book and their office should be able to tell you information regarding the statue of limitations in regards to a dismissed bankruptcy. :)%

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So then once the CH13 is dismissed, I know collections start up again but does that mean that the SOL also starts all over again? That stinks if it does!!

sportlife9,

Here is an excellant case of SOL after BK dismissal:

"A recent opinion issued by the North Carolina Court of Appeals should serve to remind all creditors of the necessity of vigilance when a debtor is in bankruptcy. In Person Earth Movers, Inc. v. Buckland, N.C. App. , 525 S.E.2d 230 (2000), the Court reviewed a matter in which a contractor performed work which was billed in a lump sum in August, 1989. The bill was not paid and in March, 1992, the contractor filed a petition for bankruptcy seeking protection under Chapter 13 of the United States Bankruptcy Code. In his petition, the debtor, who disputed the amount owed, did not list Person Earth Movers as a creditor. Aware of the bankruptcy, Person Earth Movers went ahead and filed a Proof of Claim which was allowed by the Trustee.

Over the course of the bankruptcy, the Trustee made payments totaling approximately 10% of the debt. The debtor’s bankruptcy was dismissed in March, 1994 and Person Earth Movers filed a state court action to collect the debt in December, 1994. The trial court denied the debtor’s motion to dismiss the matter. The motion was based on the affirmative defense that the statute of limitations within which the action could be brought had run. After an award for Person Earth Movers, the debtor appealed, based upon the trial court’s denial of the motion to dismiss. The Court of Appeals agreed with the debtor and ordered that this matter be dismissed, i.e. no award for Person Earth Mover.

So, what does this mean for creditors? The clock starts ticking the date the contract is breached. If a debtor files for protection from the bankruptcy court, then the clock essentially stops ticking, a sort of suspended animation. The key is that if the debtor does not complete the bankruptcy and is dismissed, as opposed to having the debt discharged, then the clock instantly begins ticking again, at the precise point in time where it stopped. Using Person Earth Movers as an example, the breach occurred the day the bill was due and went unpaid (August, 1989). The clock ticked up to the date the bankruptcy was filed - the Court computed this as being two years and 267 days. Simple math tells us that 98 days remained on the clock at the time the bankruptcy was filed.

When the debtor’s bankruptcy was dismissed on March 4, 1994, the clock began to tick again. In mid-June, the statute of limitations, the time in which the creditor could bring the lawsuit expired. As noted earlier, the creditor did not bring the action until December 1, 1994. The primary argument the creditor raised in attempting to overcome the statute of limitations problem was that the payments made by the Trustee served to reaffirm the debt and start the statute of limitation clock again. The Court rejected this argument."

So, it seems If a debtor files bankruptcy the tolling of time stops. If the bankruptcy is subsequently dismissed then the tolling of time begins where it left off. It does not begin from the date of dismissal. SOL's can be amended and change over time so be sure you know your state's SOL's. You may want to check with your AG's office as well, or as thomassl said- check with the chapter 13 bankruptcy trustee

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