A bankruptcy petition can be either discharged or dismissed after it has been filed. Should your bankruptcy be discharged, this means that you have met the terms of your agreement, and your bankruptcy has been completed. A dismissal, however, occurs when the petitioner does not meet the terms of the bankruptcy. Bankruptcy dismissal may be either voluntary or involuntary.
A voluntary dismissal occurs when an individual decides that filing for bankruptcy was a mistake. You may wish to request a voluntary dismissal if the court informs you that the primary debt you wished to discharge is not dischargeable or you find employment that will permit you to successfully pay off your debts without the aid of the bankruptcy court.
If your bankruptcy case was filed under Chapter 13, you may secure a voluntary dismissal merely by filing a formal request for dismissal with the court. Should you choose to stop making payments to the bankruptcy trustee, this will also result in your Chapter 13 bankruptcy being dismissed.
Unfortunately, if you file under Chapter 7 of the U.S. Bankruptcy Code you may not have the same freedom to be granted a dismissal at any time. Once a Chapter 7 case is filed, it is up to the judge in the case as to whether or not to grant you a voluntary dismissal.
An involuntary bankruptcy dismissal occurs if you fail to meet the requirements of the court. This can be as simple as neglecting to file paperwork with the bankruptcy court or pay a fee. Your bankruptcy may also be dismissed if you fail to seek government-approved credit counseling or have neglected to file any of your tax returns over the previous four years.
When you stop making payments to the bankruptcy trustee on your Chapter 13 bankruptcy repayment plan, the court will issue an involuntary dismissal. Your decision to stop making payments, however, is a voluntary one.
Reinstating Your Dismissed Bankruptcy
If your bankruptcy was involuntarily dismissed, you may have the option to have the bankruptcy reinstated. When working to get your case reinstated, it is vital that you move quickly. Depending on your state of residence, you will have a very limited amount of time in which to plead your case before the dismissal becomes permanent.
Your first step should be to find out why the bankruptcy was dismissed. If the reason is not present on the formal notice of dismissal you were sent by the court, visit the courthouse and inquire about the reason the bankruptcy was dismissed. In the majority of cases, a bankruptcy is dismissed due to a simple oversight on the part of the debtor or his attorney. This is known as an administrative dismissal. To combat an administrative dismissal, you or your attorney must file a Motion to Reconsider with the bankruptcy court. You must also provide the court with any missing paperwork or fees.
If your bankruptcy dismissal occurs due to information provided by your creditors, you may have a more difficult time having your bankruptcy case reinstated. At this point, you will be required to present new evidence to the court formally contesting your creditors’ statements. Should the bankruptcy court decide in your creditors’ favor, you have the option to file an appeal and request a hearing on the case. Unless you are positive that you no longer wish to pursue bankruptcy, it is important that you adhere to all of the requirements of the bankruptcy court to prevent your bankruptcy from being dismissed. Once your bankruptcy is no longer in effect, you will lose the court’s protection from creditor lawsuits, foreclosure, and repossession.
Filing a Second Bankruptcy After Dismissal
If you are unable to have your bankruptcy reinstated or change your mind after requesting a voluntary dismissal, you have the right to file for bankruptcy again. Federal restrictions state that you must wait 180 days after your bankruptcy dismissal before attempting to file for bankruptcy a second time. It is irrelevant whether your initial bankruptcy was filed under Chapter 7 or Chapter 13 if it was dismissed prior to being discharged.
You must remember that bankruptcy is recorded on your credit report as soon as it is filed with the court. The bankruptcy filing then may appear on your credit report for the full duration of the federal reporting period even if it was dismissed. Filing a second bankruptcy will result in yet another bankruptcy record being placed on your credit report and your credit score will drop by a significant amount.