A common question bankruptcy debtors ask is, “How do I get bankruptcy dismissed?” There are two types of dismissals: 1) voluntary and 2) involuntary. A voluntary dismissal is initiated by the debtor, while an involuntary dismissal is initiated by the bankruptcy trustee, a creditor, or any other interested party. It’s important to note that whether a bankruptcy case is voluntarily or involuntarily dismissed, once the dismissal order is entered by the bankruptcy court, it’s as though the bankruptcy was never filed, leaving creditors free to pursue all state law collection remedies against the debtor including foreclosure, repossession, lawsuits, and garnishments.
The Bankruptcy Code gives Chapter 13 debtors the right to seek a voluntary dismissal at any time. The court must grant a Chapter 13 debtor’s request for dismissal even over the objections of creditors or the Chapter 13 trustee. If the debtor’s dismissal request is in response to a Motion to Convert filed by the trustee or a creditor, the dismissal must be honored.
In Chapter 7 cases, a voluntary dismissal will only be granted after notice and a hearing and only for cause. Most courts will grant a voluntary dismissal of a Chapter 7 case as long as no creditors have filed an objection.
Chapter 7 and Chapter 13 cases may be involuntarily dismissed for a variety of reasons. The most common of which are:
- Failure to pay the filing fee;
- Failure to file the bankruptcy schedules and other required documentation;
- Failure to attend the Meeting of Creditors;
- Failure to make the required Chapter 13 plan payments; and
- Failure to complete required counseling sessions.
An involuntary dismissal is initiated by the filing of a Motion to Dismiss by a creditor or the bankruptcy trustee. In most cases, before a case will be involuntarily dismissed, the bankruptcy court will issue a court order, known as a Notice of Intent to Dismiss in some jurisdictions, giving the debtor a deadline by which to perform or comply. If the debtor fails to perform by the specified deadline, the case will be dismissed. However, if the debtor offers a reasonable explanation for his failure to perform, the Motion to dismiss will be denied.
In most instances where a case is involuntarily dismissed, the dismissal will be without prejudice. This means that the debtor may immediately re-file. However, if a debtor has filed multiple cases and never followed through or completed any of them, the case will be involuntarily dismissed with prejudice. When a case is dismissed with prejudice, the debtor is prohibited from refilling for at least 180 days.
Getting Legal Help
If you have questions about dismissal, contact a qualified bankruptcy attorney in your area. A bankruptcy attorney will review your situation and explain all the ramifications of a voluntary dismissal as well as an involuntary dismissal.