Dismissing Chapter 13 Bankruptcy and Filing a New Case

Dismissing Chapter 13 bankruptcy will occur if a person is not able to make the repayment installments on schedule to the trustee appointed by the bankruptcy court. He/She is given a reprieve to make up the first missed payment, usually 21 days, along with the next due payment. If, however, he/she fails to do this, the reorganization plan under Chapter 13 bankruptcy is eligible for dismissal and many types of restrictions are imposed.

What Occurs After Chapter 13 Bankruptcy Dismissal

When a debtor is unable to pay his/her payments according to the installment plan established in Chapter 13, the Chapter 13 bankruptcy case is dismissed. The same Chapter 13 bankruptcy case cannot be filed again, and filing a new Chapter 13 bankruptcy case may not be possible.

Options You Have After Chapter 13 Bankruptcy Dismissal

You can apply for refinancing of your loans after your case is dismissed in an attempt to make it easier, and therefore, more able for you to pay your debts.
If your house is up for foreclosure, the bank may be more willing to entertain loan modification negotiations after your Chapter 13 case is dismissed, since the bank can now proceed with foreclosure without restriction.
You could file an amended Chapter 13 case that deals with only unsecured debt and not mortgage payments, which could lead to the bankruptcy court approving the new Chapter 13 filing, as you’ll be more able to pay the installments of the new plan.
If you move to another state and live there for the stipulated time period (varies by state), you could file another Chapter 13 bankruptcy case in the new state.
You may have to file a Chapter 7 case, or total liquidation of your assets, in order to satisfy your creditors and Trustees, if you cannot regularly pay the installments of your Chapter 13 case.

It is preferable to keep your old Chapter 13 case and regularly pay your installments rather than filing a new Chapter 13 case. Additionally, Chapter 13 gives you the chance to keep your home, whereas there is virtually no escaping foreclosure if you must file Chapter 7.

If your Chapter 13 case is dismissed either by you or the court, the following circumstances will still take place:

The case stays on your credit report for 7 years.
You will still owe all of the debt to your creditors and trustees.

Attaining Legal Help

Knowing what to do and how to do it after a dismissal of a Chapter 13 bankruptcy case is very important, yet very complex. An experienced bankruptcy attorney will provide you with all of your legal options and the knowledge to choose the best option for your particular case so that you can repay your debts without losing all of your assets.

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