Dismissal
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Chapter 7 starting at $999, plus filing fees and costs.
Chapter 13 starting at $2,500, plus filing fees and costs.
VOLUNTARY DISMISSAL
Dismissal by Debtor
The debtor can ask the court to voluntarily dismiss the bankruptcy case. While a Chapter 7 debtor does not have an absolute right to dismiss a Chapter 7 case (the court may dismiss only if no creditors will suffer legal prejudice because of the dismissal), a Chapter 13 debtor has a statutory right to dismiss a case if the bankruptcy began as a Chapter 13.
Dismissal of a bankruptcy case, however, may have serious consequences. Therefore, a conversion to another chapter of bankruptcy may be a better option. See Conversion.
INVOLUNTARY DISMISSAL
Dismissal by the Court
Dismissal by the court may occur for several reasons. The most common dismissal of a consumer bankruptcy Chapter 7 case is for abuse or, to put it simply, ability to repay some or all of the debts. (See Means Test).
A bankruptcy case may also be dismissed because of a lack of “good faith” in filing (for example, lying on the bankruptcy forms about income, assets, expenses, or hiding assets), failure to complete the required credit counseling or appear at the meeting of creditors, failure to cooperate with the trustee (failure to provide additional information upon request, tax returns, pay stubs, etc.), the non-payment of the filing fee, failure to file the required schedules and lists of creditors (see Required Financial Disclosure), etc.
The most common reason for dismissal of a Chapter 13 case by the court is tied to a Chapter 13 plan, such as failure to timely file a plan, failure to make plan payments, material default under a plan, failure of a debtor to make domestic support obligations or to file all tax returns for the past 4 years, etc.
Consequences of Dismissal
The major effect of bankruptcy dismissal depends on whether a case is dismissed before a discharge is granted or after and whether the dismissal is with prejudice or without.
Impact on Re-Filing Subsequent Bankruptcy
If a Chapter 7 case is dismissed after the entry of discharge, the debtor is not able to file another bankruptcy for 8 years. A dismissal before discharge generally results in the ban on re-filing for 180 days, although the bankruptcy court has power to bar the debtor from re-filing for a greater period in some situations.
A dismissed Chapter 13 case can be re-filed at any time.
A dismissal with prejudice precludes later discharge of debts covered by the dismissed case, whereas a dismissal without prejudice (the norm) does not.
Impact on Automatic Stay
The dismissal of a bankruptcy case also has major impact on the automatic stay protections. See Automatic Stay. First of all, the dismissal automatically terminates the automatic stay and creditors may resume collection activities.
Second, if the debtor refiles a Chapter 7 or a Chapter 13 case within one year of the dismissal, the automatic stay protection in the re-filed (second) case is limited only to 30 days (but, the court can extend this time upon a motion and a showing of good faith for re-filing).
If the debtor had two Chapter 13 bankruptcies dismissed within one year prior to the third Chapter 13 filing, then there is no automatic stay.
Impact on Debts
Furthermore, because the pre-discharge dismissal of a bankruptcy case often restores the original terms of any agreements modified through bankruptcy, the debtor’s debts are re-instated as they were before (less payments received during the case) and most interest and penalties stopped during the case are added back on.
Impact on Credit Score
Finally, a dismissal of a bankruptcy case may have a negative effect on the debtor’s credit score, depending on their credit profile prior to bankruptcy. Generally, bankruptcy may drop the credit score by up to 200 points. However, if the debtor’s credit profile is not in good shape prior to bankruptcy and has a lot of missed payments, repossessions, foreclosure, etc., bankruptcy may not hurt it much more.
Chapter 7 bankruptcy stays on the credit report for 10 years from the date of filing. Chapter 13 bankruptcy is reported for 7 years. However, the negative impact of bankruptcy can diminish over time, especially if the debtors take affirmative steps to build their credit.
How can we help?
Usually, the debtors’ goal is to get a bankruptcy discharge and have the case dismissed. The involuntary dismissal is rarely in the debtors’ best interests. The debtor’s chances of successful bankruptcy are better with legal representation than without. Timing of the bankruptcy filing is also critical to maximize the discharge potential as it can affect the debtor’s eligibility for bankruptcy, the dischargeability of time-dependent debts, and retention of assets. We thoroughly review and evaluate each case to determine whether bankruptcy is appropriate, whether it is the best option, and whether it is filed at the right time.
At Anna Handy Law Firm, P.A., we are acutely aware of the financial strain of our clients. We do not charge you for the initial phone consultation. We do not push you to file bankruptcy to get a retainer. We don’t judge – we find solutions. We give you honest advice about your options and rights, including the “doing nothing” approach. As such, we offer very affordable bankruptcy fees. We make our fees competitive and in certain cases, we offer payment plans to address each case individually as each case has a different set of circumstances.
If you are overburdened by your debts, being sued or harassed by creditors, or subject to wage garnishment, do not hesitate to call us now for a free initial phone consultation. The attorney’s direct business cell phone number is (386) 248-3000. You may also email us at [email protected].