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Bankruptcy Dismissal Vs Discharge

What Is The Meaning Of A Closed Bankruptcy Case Without A Discharge

Dismissal vs. Discharge – Maryland Bankruptcy Attorney

A third possible outcome from a bankruptcy court, aside from dismissal and discharge, is that a case may be closed without a discharge. This happens in what are sometimes called Chapter 20 cases.

Thereâs no formal âChapter 20â in the bankruptcy code itâs shorthand for 7 plus 13.

What it means is that you canât get debts discharged under Chapter 13 if you file sooner than four years after youâve filed for Chapter 7. Closing a case simply means that all motions have been ruled upon, and all activity in the bankruptcy process has been completed. This can be done with or without a discharge.

How Long Does It Take To File For Bankruptcy

Bankruptcy is a time-consuming procedure. It is anticipated that the filing process will take around five months. During that time period, your creditors will be informed and given the option to file claims against you, after which your assets will be liquidated. Following that, a hearing will be conducted to determine whether you should be declared bankrupt. Remember bankruptcy will stay on your credit report for 7-10 years!

What Does A Bankruptcy Dismissal Mean

Once your bankruptcy is dismissed, you no longer have protection from collection actions. Creditors can begin contacting you to recover the debt again.

However, a dismissal isnt always the end of your bankruptcy options. A bankruptcy lawyer can review your case and help you determine the best path for you to go from there.

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Can Creditors Still Call After A Bankruptcy Has Been Discharged

When a debtor files for bankruptcy, whether its Chapter 7 or Chapter 11, an automatic stay of collection is put into place. When the case is discharged, then creditors have no legal right to continue their collection efforts. Those creditors who continue to call after the debtor has filed Chapter 7 or Chapter 11 bankruptcy or after the debt has been discharged are in violation of the law. The debtor may have legal recourse against them unless the court has granted the creditor the right to continue their collection activities. If a creditor continues to attempt collection efforts despite being informed of the bankruptcy, then they may be liable for legal action, especially if they threaten to place a lien or garnish wages. Its essential to keep detailed records of their activities, including names, dates, times, and types of contact, whether its email, phone, text, or U.S. mail.

What Is The Required Waiting Period For A Bankruptcy

Bankruptcy Dismissal vs. Bankruptcy Discharge


A four-year waiting period is required, measured from the discharge or dismissal date of the bankruptcy action.

Exceptions for Extenuating Circumstances:

A two-year waiting period is permitted if extenuating circumstances can be documented, and is measured from the discharge or dismissal date of the bankruptcy action.


A distinction is made between Chapter 13 bankruptcies that were discharged and those that were dismissed. The waiting period required for Chapter 13 bankruptcy actions is measured as follows:

  • two years from the discharge date or
  • four years from the dismissal date.

The shorter waiting period based on the discharge date recognizes that borrowers have already met a portion of the waiting period within the time needed for the successful completion of a Chapter 13 plan and subsequent discharge. A borrower who was unable to complete the Chapter 13 plan and received a dismissal will be held to a four-year waiting period.

Exceptions for Extenuating Circumstances:

A two-year waiting period is permitted after a Chapter 13 dismissal, if extenuating circumstances can be documented. There are no exceptions permitted to the two-year waiting period after a Chapter 13 discharge.

Multiple Bankruptcy Filings

For a borrower with more than one bankruptcy filing within the past seven years, a five-year waiting period is required, measured from the most recent dismissal or discharge date.

Exceptions for Extenuating Circumstances

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How Do I Know If A Bankruptcy Case Is Closed

When viewing a credit report, you might not immediately be sure about whether or not a bankruptcy case is closed. Its essential to look at the listed dates on the report to understand its status. Usually, the report will include the month and year that the bankruptcy petition was filed and when the bankruptcy was closed.

If you cannot parse out this information, you may be able to ask the applicant directly or search public records to see if you can get a little more insight.

The best tenant screening services that provide this type of information will clearly present the information so this doesnt need to be challenging to figure out. Be sure to work with a high-quality company to get this type of service.

Dismissals In Chapter 13 Vs Chapter 7

The difference between Chapter 7 and Chapter 13 is that a Chapter 13 bankruptcy typically costs more than a Chapter 7 bankruptcy and takes much longer to complete. Chapter 13 filers must create a Chapter 13 plan to repay a portion of their debt and follow that monthly payment plan for three or five years. Because of this, a Chapter 13 bankruptcy case is much more likely to be dismissed at some point before a discharge is granted. If the filer misses a payment on their repayment plan, it could lead to a dismissal of their case. In fact, missing a payment is the most common cause of dismissal in Chapter 13 cases.

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What Is The Difference Between Bankruptcy Dismissal Vs Discharge

Bankruptcy dismissal occurs when you fail to meet any of the requirements of their case. The bankruptcy court will provide you with notice and grant you a period to fix the mistake. If you dont fix it within their given time frame, your case will be dismissed. On the contrary, a bankruptcy discharge is when youre relieved of a large sum of your debts. In turn, the creditors cant sue you or attempt to collect those debts again in the future.

What Is A Voluntary Dismissal

FHA Loans With Bankruptcy Dismissal Versus Bankruptcy Discharge

In very rare cases, you may want to dismiss your own bankruptcy case. To do so, you must get permission from the court. Whether permission will be granted depends on the type of bankruptcy you filed and why youâre requesting the voluntary dismissal. Typically, most courts donât allow filers to voluntarily dismiss Chapter 7 bankruptcy cases. This is especially true if the filer is trying to do so to avoid giving up non-exempt property.

A request to dismiss a Chapter 13 bankruptcy, on the other hand, will usually be granted. Although if youâre doing so to avoid surrendering an asset or turning over funds to the court, a bar may be imposed along with the dismissal preventing you from filing bankruptcy again for a specified period of time.

Finally, unlike a bankruptcy discharge which is considered a public record and will remain on your credit report for 7â10 years, a dismissed bankruptcy may not appear on your credit report at all if no discharge was entered.

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Which Bankruptcy Is Better To See

Depending on the landlords standards, either filing may be a warning sign.

Weve seen some landlords who were comfortable with dismissed bankruptcies on tenant background checks, while others see it as a sign of financial trouble. We wrote about finding bankruptcies on tenant screening reports previously, so we suggest you check out that article for more information.

Remember that according to the FCRA, bankruptcies are only reportable for 10 years from the date of filing.

Despite the differences between dismissed and discharged bankruptcy, its still helpful information to have when considering applicants. If you dont look into an applicants financial history at all, you could be completely blindsided by how things turn out.

This is just one of the many reasons thorough and accurate tenant screening is essential to complete. Landlords can get assistance from high-quality services such as the tenant screening packages at RentPrep, to gain the most precise picture of a potential tenants background and current financial health.

With this information, you can make better, more informed decisions about which tenant to sign a rental agreement with.

Different Types Of Debt

Chapter 13 only covers unsecured debts such as personal loans or credit cards. Chapter 7 can provide relief from both types of obligations secured and unsecured but it takes a different approach depending on which section applies. If your home is at risk of foreclosure, filing under Section 1322 offers protection from eviction proceedings until the repayment schedule is complete.

In other words, once a Chapter 7 or Chapter 13 debtor is discharged, creditors may not contact them to request repayment. In addition, the filer’s credit report generally will not reflect any information about their debts or bankruptcy.

In contrast, asking for relief under Section 706 suspends foreclosure proceedings but doesn’t prohibit your lender from attempting to repossess your home once the filing is complete. If an individual’s Chapter 7 or Chapter 13 bankruptcy petition is dismissed, they remain responsible for repaying some types of debt creditors may attempt to collect these debts after the case is dismissed.

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Skipping The Section 341 Meeting

Debtors are required to attend a meeting of creditors, which is also called a Section 341 meeting. The name comes from the bankruptcy code that requires you to attend.

Even though it is called a meeting of creditors, in modern bankruptcy practice, creditors rarely attend. It does allow the trustee to clarify anything in the debtors paperwork that raises a question.

The meeting is held under oath, and the debtor is required to speak truthfully. The debtor must provide identification, usually a state-issued identification card like a drivers license and a Social Security card.

The court sets the time and date for the 341 meetings. If the debtor cannot attend for some reason, the session can sometimes be moved to another date. Courts have adapted to these issues by using the telephone or video conferencing when it is not practical for the meeting to be continued until the debtor is available.

Can I Restart The Bankruptcy Process If My Case Was Dismissed

Differences Between Chapter 7 and Chapter 13

If you want to restart your bankruptcy case after it was dismissed, you have to file a Motion to Reinstate. A Motion to Reinstate is a written request to the judge presiding over your case to set aside the dismissal order. Setting aside the dismissal order means they cancel the order.

When you file a Motion to Reinstate, you must also explain how you corrected the deficiency or error that resulted in the dismissal. If you fail to do this in the time allowed by your local court rules, your case will be closed. Once your bankruptcy case is closed you must file a motion or request to reopen the case or file a completely new case.

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What Is Chapter 13 Discharge

A chapter 13 discharge occurs when a petitioner completes all payments as prescribed by the repayment plan. In addition, the petitioner must:have completed and approved course in personal financial management have not received a discharge from chapter 13 bankruptcy in the last two years, or a discharge from chapter 7, 11 or 12 bankruptcy in the last four years and,does not have any outstanding domestic support obligations .In addition, the court must be satisfied that there is no pending proceeding that could impact the debtors homestead exemption.Once the discharge is approved, the debtor is released from the debts noted in the repayment plan, and creditors governed by the plan cannot start or continue any action, legal or otherwise, to collect any debts.

Discharge Vs Dismissal: What’s The Difference

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In a Nutshell

When filing bankruptcy for the first time, many people get confused about the different terms lawyers and courts use. Two words that frequently confuse first-time filers are âdismissedâ and âdischarged.â This article explains each term, what the differences are, and when lawyers and the court are most likely to use them when referring to your case.

Written bythe Upsolve Team. Legally reviewed byAttorney Andrea Wimmer

  • Letâs Summarizeâ¦
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    What Does Dismissal Without Prejudice’ Mean

    Unless specifically stated otherwise, every dismissal entered in a bankruptcy case is entered âwithout prejudice.â Without prejudice is a legal term that means the dismissal doesnât prevent the person from filing again. But if a dismissal is specifically entered âwith prejudice,â it typically means the dismissal canât be set aside, the case canât be reinstated, and a new case may be challenged for the same reasons.

    Most dismissals with prejudice will include a bar on how long you have to wait before you can file again. This bar can range from 90 days to one year, depending on the situation. Fortunately, almost all dismissals are entered without prejudice.

    Do Not Mislead Or Engage In Bankruptcy Fraud

    Two ways a chapter 13 ends: Dismissal or discharge

    Willfully misleading or concealing information on your bankruptcy is a felony. In addition, you must provide accurate financial information, which includes all of your income, assets, liabilities, and other required financial details. If you file misleading bankruptcy schedules at a minimum, your case will be dismissed.

    In most cases, you can oppose the trustees motion to dismiss, including the one you were terminated with prejudice. You must submit the necessary or correct paperwork and fulfill all of the requirements. At this point, a bankruptcy judge will decide if your case is dismissed.

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    When Chapter 7 Or Chapter 13 Debt Is Discharged

    When a Chapter 7 or Chapter 13 debt gets discharged, the court will sign an order to release you from personal liability for that debt. Under Chapter 7 and Chapter 13, you are released from all debts that can be discharged.

    While a dismissed bankruptcy is on your record for ten years, a Chapter 7 or Chapter 13 discharge is removed from your credit report as soon as the Court issues it. That might make a significant difference in how lenders perceive you and might improve your chances of getting approved for future loans, mortgages and other lines of credit.

    Why Do Chapter 13 Bankruptcy Cases Often Get Dismissed

    Early on, Chapter 13 and Chapter 7 cases may be dismissed for similar reasons, almost all of them procedural: Failure to pay the court filing fee improper preparation for, or failure to attend, the meeting of creditors failure to attend the required financial management course failure to file all required bankruptcy forms.

    The complicated nature of Chapter 13 means, along with the benefits, there are more pitfalls. Among the reasons Chapter 13 plans get dismissed:

    • Voluntary dismissal. A debtor may quit Chapter 13 at any time.
    • Failure to meet court- or code-imposed deadlines.
    • Failure to propose a compliant Chapter 13 plan.
    • Failure to submit required or acceptable documentation to a Chapter 13 trustee
    • Failure to file tax returns or withholding a copy of the return from the trustee.
    • Failure to make payments. Beyond the monthly payment to the trustee, the consumer must keep current on mortgage payments, property taxes, income taxes, and domestic support obligations .
    • Serial filings of Chapter 13 cases. A debtor with two cases pending from the year before will have to provide testimony if he is seeking yet another stay. Testimony will include explaining why the other two cases were dismissed, and why the new plan will succeed.

    Because Chapter 13 bankruptcies involve long-term commitments, things can go wrong. Potential setbacks that could prove fatal for a Chapter 13 plan, leading to dismissal, include:

    • Lost job: Fired or laid off.
    • Injured, or fell ill.

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    What Is Discharge In Bankruptcy

    A discharge in bankruptcy is what happens when the bankruptcy court grants the elimination of a debt. This means the creditor is no longer legally allowed to pursue you for payment of the debt even though you never paid it.

    Bankruptcy discharges occur in both Chapter 7 and Chapter 13, but discharges are limited in Chapter 13 and debtors are usually required to pay a portion of the debt over time before a discharge occurs.

    Discharge typically takes a few months in Chapter 7 and 3 to 5 years in Chapter 13.

    A bankruptcy discharge is a good thing and its one of the primary reason people file for bankruptcy, especially Chapter 7. Discharge gives you a clean slate with debt and allows you to begin rebuilding your credit and financial well-being without a debt hanging over your head.

    What Is Chapter 13 Bankruptcy

    Bankruptcy Dismissal vs. Bankruptcy Discharge

    Before exploring dismissal vs. discharge, it may be helpful to quickly summarize how a chapter 13 bankruptcy filing works. Unlike a chapter 7 filing that typically wipes out most debts, chapter 13 is essentially a 3-5 year structured repayment plan.

    Some of the advantages of filing for chapter 13 bankruptcy include:

    Trustees may be somewhat flexible on the terms of payment, which could mean that debtors have more time to pay and/or pay lower and more affordable amounts.Debtors can maintain ownership of assets while theyre being repaid.Once the repayment plan is fulfilled, creditors cannot demand to be paid in full.If another major financial setback occurs, debtors can file for chapter 13 two years after a discharge .

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    Having Debt Discharged And Avoiding Dismissal During Bankruptcy

    The important thing to remember about bankruptcy is that your goal is getting a fresh financial start. This is the case with Chapter 7 or Chapter 13, even though it takes a while longer to achieve your goals in Chapter 13. Having your debt discharged is your ultimate goal and you need to do whatever the court requires to achieve this.

    An experienced bankruptcy attorney can help you avoid a bankruptcy case dismissal and get debt discharged. If you have questions about the process or youd like to learn more about filing for bankruptcy, contact the Law Office of Robert M. Geller at 254-5696 to schedule a free consultation to discuss your financial situation.


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