Voluntary Dismissals
If you have filed for Chapter 13 bankruptcy, you may voluntarily request the dismissal of your case. Typically, a dismissal is only requested voluntarily when the courts inform the debtor that their debts cannot be discharged through bankruptcy. Additionally, you may request dismissal if you have sufficient income to repay your debts without filing for bankruptcy. In Chapter 7 bankruptcy, the ability to request a dismissal is limited. Once a Chapter 7 bankruptcy petition has been filed, the court must sanction a voluntary dismissal.
Involuntary Dismissals
Typically, a dismissal is the result of a bankruptcy court's decision. If you fail to comply with court orders or pay the required fees, the court will dismiss your case. The bankruptcy laws mandate that anyone registering for bankruptcy must complete a credit counseling course; failure to do so can result in the dismissal of your case. If you have not filed a tax return in the four years preceding your bankruptcy petition, your case may also be dismissed. In addition, your case will likely be dismissed if you fail to make the required Chapter 13 payments without requesting a voluntary dismissal.
Consequences of a Dismissal of Bankruptcy
Dismissal can have negative repercussions for the debtor, resulting in more problems than before the bankruptcy petition. Once a case is dismissed, you are no longer protected from creditors' collection efforts. Without assistance from bankruptcy provisions, you will be responsible for administering their debt payments to creditors. In addition, dismissal from bankruptcy means you are no longer protected from further credit damage. The Fair Credit Reporting Act regulates credit reporting practices and permits a bankruptcy petition to remain on a credit report for as long as ten years. There is no assurance that the filing will remain on your credit report for that length of time. Even if you do not conclude the bankruptcy proceeding, your credit report will still reflect a bankruptcy if you receive a dismissal. Receiving a bankruptcy dismissal may also result in future filing complications. Any violation of court orders will result in a filing ban of at least 180 days. You may be able to reinstate your bankruptcy, however, if it was dismissed involuntarily for failure to meet documentation or fee requirements. In addition to affecting your protection from creditors, dismissals result in an automatic stay that prevents creditors from making collection attempts. If your bankruptcy case was dismissed within the past year, the automatic stay will only protect you from creditors for 30 days.
To prevent your bankruptcy petition from being denied, you should seek the counsel of a qualified bankruptcy attorney. Your attorney will ensure that you are eligible for bankruptcy, assist you in completing and filing all required documents, and make payments on your behalf. You must be forthright and honest about your financial hardship and any assets you own. The concealment of crucial information can result in bankruptcy fraud, which entails severe legal consequences.
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