The Difference Between a Bankruptcy Dismissal with Prejudice and Without

The court can order the dismissal of a bankruptcy petition in two ways.  Bankruptcy petitions can be dismissed with prejudice and without prejudice.  The consequences of each dismissal are vastly different.

Dismissal without Prejudice

When a bankruptcy petition is dismissed without prejudice the parties were put back into the position they were in before the filing of the petition.  Creditors can resume collections efforts on their debts.  Some of the reasons petitions are dismissed without prejudice include

• Discovery of debts that are not dischargeable
• Discovery of assets that negate the need for bankruptcy protection
• Voluntary dismissal by the debtor
• Failure to meet filing fee installment payments 
• Failure to complete require documentation

Dismissal With Prejudice

The dismissal of a bankruptcy petition with prejudice has serious consequences.  If a petition is dismissed with prejudice, the dismissal is a final adjudication of all issues before the bankruptcy courts.

Debts listed in this petition cannot be discharged later in another filing.  This is the most serious consequence of a dismissal with prejudice.  Reasons for dismissal with prejudice include

• Concealing information about yourself
• Concealing assets or other property
• Abuse of process
• Providing incorrect information
• Trustee determination that the debtor has ability to repay a portion of the debt

Dismissal with prejudice can also affect your ability to file a bankruptcy petition in the future.

Do you need a lawyer?

The process of preparing and filing a bankruptcy petition is complicated. There are different requirements under the different chapters of bankruptcy that must be met. To get the benefit of the fresh start that bankruptcy filing will give a successful debtor, it is wise to seek legal counsel.  Consult an attorney experienced in bankruptcy law to assist you in the proper preparation and prosecution of a bankruptcy.