Reasons for a Bankruptcy Dismissal

Following a bankruptcy filing, many individuals enjoy discharge of debt obligations. However, in the case of Chapter 13, as well as for non-dischargeable debts in Chapter 7, the courts must establish a repayment plan with the individual and all interested creditors present at the meeting of the creditors.

The terms of repaying these debts, as well as of any negotiated settlements made by a bankruptcy attorney, require individuals to meet all commitments, or otherwise, face dismissal of their bankruptcy. Since the implementation of the latest bankruptcy code amendments, failure to make Chapter 13 payments, unreasonable delays in payments, and other issues may immediately cause bankruptcy dismissal.

What Causes Bankruptcy Dismissal

If a bankruptcy dismissal is not voluntary, the courts will essentially rule that an individual debtor has not adhered to the arrangements set forth in either a Chapter 7 or Chapter 13 ruling. This can range from gross fraud during the bankruptcy process, which will lead to bankruptcy dismissal due to fraud, or to relatively minor infractions.

In any case, the dismissal of the bankruptcy, whether to unreasonable delay or failure to make payments, will essentially nullify any arrangements made during the filing for both the debtor and creditors.

What Happens after a Bankruptcy Dismissal

Whether the dismissal occurs shortly after a petition for bankruptcy or following an approved bankruptcy repayment plan, the status quo of the creditor and debtor’s rights return if a bankruptcy is dismissed. This means, for most debtors, that creditors will resume liens on property and automobiles, continue with wage garnishment, and continue all other collections actions. Additionally, these liens and other outstanding debts may force a debtor into involuntary bankruptcy, assuming it is in the best interest of the creditors.

Getting Legal Help from a Bankruptcy Attorney

An attorney is one’s best resource for understanding all of the procedures and protocol for obtaining bankruptcy relief, as well as ensuring your right to maintain this relief following bankruptcy court arrangements.

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