Payment Plans That Are Not Feasible
Chapter 13 cases are more complicated than Chapter 7 cases. They require that a payment plan be filed and approved by the court. In addition, the debtor has to show that all the debts that are required to be included are provided for and that the plan is feasibleconsidering the debtors income and expenses.
Often, the debtor will file a plan with estimates for the claims of creditors, and the plan will have to be adjusted after the creditors file their claims. It is only after the claims are filed that the debtor will know how much she will be required to pay back with her plan payments.
What Is A Dismissal In Bankruptcy
When most people file for bankruptcy, the goal is to obtain a discharge of debt. But that doesn’t always happen. A bankruptcy dismissal closes your bankruptcy case, and if it occurs before you receive a discharge, it will mean that:
- you’ve lost the protection of the automatic stay , and
- you’ll continue to be liable for your debts.
The process starts when the debtor, trustee, or creditor files a motion requesting the dismissal. But, just because you ask for a voluntary dismissal, or another party asks for an involuntary dismissal, doesn’t mean that the court will grant the request and close the case. The court’s decision will depend on a number of factors, including the reason for the request, whether you filed a Chapter 13 bankruptcy or a Chapter 7 case, where you’re at in the bankruptcy process, and how the dismissal will affect your creditors.
When Your Bankruptcy Case Is Dismissed
If you don’t follow all of the bankruptcy rules, the court might dismiss your bankruptcy case. The court might also dismiss your case if it believes you’ve engaged in bankruptcy fraud. But sometimes you might want to dismiss your bankruptcy case yourself — perhaps your circumstances have changed.
Below you learn more about when the court might dismiss your case, whether you can dismiss your case yourself, and what to do if your case is dismissed.
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Can I Take A Dismissal And Get Out Of My Bankruptcy
A question we sometimes receive after a bankruptcy is filed is what steps should I take if I no longer want to be in a bankruptcy and want to take a dismissal? As with most aspects of bankruptcy, the answer depends on your particular case. To best answer the question we are going to try to break it down into a few important questions.
What Happens To Chapter 13 Plan Payments If Case Is Dismissed
If your Chapter 13 case is dismissed, funds held by the Chapter 13 trustee that are not yet distributed will be returned to the debtor much like in a conversion situation. Chapter 13 payments if bankruptcy case is converted or dismissed are returned to the debtor. However even moreso than in a converted case, they are subject to levy by the IRS or state or local taxing authorities since there is no automatic stay like there is in a converted case. Likewise, it could arguably be subject to a writ of garnishment from a judgment creditor. It is rare that this would happen but it is possible. Lastly, an attorney with unpaid professional fees could seek approval for payment from these undistributed funds. Chapter 13 trustees in Arizona usually hold the funds for 30 days for any IRS levy or professional claim and if no claims are made, they are returned to the debtor.
If you have questions about bankruptcy including conversion from Chapter 13 bankruptcy to Chapter 7, call the Barski Law Firm at 602-441-4700. Our firm has handled hundreds of bankruptcy cases including numerous conversions from Chapter 13 to Chapter 7. We have the experience and compassion to help you.
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Paying The Court Filing Fees
If you want to file for bankruptcy, you must pay a filing fee to the court for the administration of your case. In Chapter 7 cases, if you have little or no income, you may apply for a waiver of your court fees. The court will take into account your income and expenses when granting or denying your waiver. Unless you receive a waiver, the court will dismiss your case if you fail to pay the required filing fees.
What Happens If A Bankruptcy Is Dismissed
The law says that a person who has received a discharge in bankruptcy must wait several years before being eligible for discharge in another case. However, if you were in a Chapter 13 case that was dismissed before you received a discharge, then this limitation doesn’t apply. You would be free to refile immediately.
Likewise, what does bankruptcy dismissed mean on a credit report? If the court eventually dismisses your bankruptcy petition, your case will cease to exist in the legal system but it will live on in your . Depending on the type of petition you filed, a dismissed bankruptcy can show on your report for up to 10 years.
Similarly, it is asked, what can I do if my Chapter 13 is dismissed?
If the court dismisses your Chapter 13 bankruptcy, it can do so with or without prejudice. Most cases are dismissed without prejudice meaning that you can file another bankruptcy case right away. But if you acted in bad faith or otherwise abused the bankruptcy process, the court may dismiss your case with prejudice.
What is the difference between dismissed and discharged bankruptcy?
When the court grants your discharge order, it cancels your obligation to repay the discharged debt. If the court enters a dismissal order, it ends your bankruptcy case without your debt being discharged or eliminated. A case that has been dismissed means that it is like you never file for bankruptcy.
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Work With A Chicago Bankruptcy Attorney
Bankruptcy is complicated. No two bankruptcy cases are alike each has to be carefully developed around the bankrupt party’s individual needs. If you are considering filing for bankruptcy, work with an experienced Illinois bankruptcy attorney to ensure that your rights are protected and your interests are represented accurately to the court. Contact our team at Newland & Newland, LLP today to schedule your free legal consultation with our firm. We are here to help you get through your bankruptcy as smoothly as possible.
If Your Bankruptcy Case Is Dismissed Can You Refile
If the bankruptcy court dismisses your bankruptcy case, your chances of refiling depend on the reason for the dismissal. Why was your bankruptcy case dismissed? If the bankruptcy court dismissed your case because they suspected fraud or otherwise decided you were taking advantage of the system, you might be required to wait 180 days before refiling bankruptcy. According to Section 109 of the Bankruptcy Code, debtors whose case was dismissed must wait 180 days to refile if the court dismissed their case due to alleged willful failure to fulfill court orders, appear before the court, or if the debtor requested and obtained a voluntary dismissal of the bankruptcy case after filing a request for relief from the Automatic Stay order.
If you are unsure whether or not your bankruptcy case was dismissed due to willful failure to fulfill court orders, or if you arent sure whether or not you need to wait to refile bankruptcy, Call Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney. We help good people through bad times.
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What Can You Do If You Cant Afford Your Chapter 13 Plan Payments
It is often possible to save a Chapter 13 plan that falls into arrears. Making additional payments or a lump sum payment from future income, such as a tax refund, are possible fixes. An agreement for a Strict Compliance Order, which allows the plan to continue as long as all future payments are on time, is another option.
However, if you cannot afford to make your monthly payments, you may be able to modify your plan to reduce your obligations, request a hardship discharge, or convert your Chapter 13 bankruptcy to a Chapter 7. Sometimes, converting to a Chapter 7 is less costly than having the case dismissed and then filing a new Chapter 7 case.
Let your attorney know if you cant afford your Chapter 13 payment due to a change in your circumstances. Changing your repayment plan to a lower monthly payment may be a possibility. Youll have to prove the change in circumstances by filing paperwork and providing documentation. A modification wont be an option if you cant make minimum mandatory payments due to a drop in income. Remember that plan rules require payment in full for many bills, such as your mortgage payment, some taxes, and support arrearages.
Converting To A Chapter 7 Case To Avoid A Dismissed Chapter 13 Case
Depending on why youâre at risk of having your Chapter 13 case dismissed, you may be able to convert it to a Chapter 7 case. Most bankruptcy courts allow you to do so by filing a simple ânoticeâ and paying a small conversion fee.
Whether conversion is an option depends on your situation. For example, if youâre unable to stay in the Chapter 13 payment plan because youâve lost your job and itâs not looking like youâll be able to get anything comparable anytime soon, you likely qualify for Chapter 7 relief even if you didnât when the case was first filed.
Of course, you want to make sure that you will not have any other problems when converting to a case under Chapter 7 to avoid a dismissed Chapter 13 case. If youâre behind on your mortgage payments or have property with non-exempt equity, you could face losing this property in a Chapter 7 case.
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Forgetting The Financial Management Course
After the case is filed, each debtor has to complete a financial management course before the case can be discharged. This course is available in person, by phone, or online, and it is offered by several providers.
If the debtor fails to take the financial management course or fails to file a certificate of completion after they complete the course, the case will be dismissed. Hence, it will be necessary for the debtor to file a motion with the court requesting that the case be reopened to file the certificate and the discharge order.
In most cases, the court and the debtor’s attorney will charge a new filing fee. But without the financial management course certificate, the case will forever be dismissed without a discharge, and the debtors creditors will be allowed to resume actions to collect on their debts.
What Happens To Chapter 13 Payments If Bankruptcy Case Converted Or Dismissed
In Chapter 13 bankruptcy in Arizona, you make regular monthly payments to a trustee in a fixed amount for a period of usually 36 or 60 months. The first plan payment is made 30 days after the filing date and is based upon a debtors projected budget completed on their bankruptcy schedules. The Chapter 13 trustee escrows these monthly payments only to be distributed to creditors in amounts and priorities set forth in a Chapter 13 plan. These Chapter 13 payments if bankruptcy case is converted or dismissed are of great importance to individual debtors.
In some circumstances, you may want to dismiss your Chapter 13 bankruptcy or convert it to Chapter 7 proceedings. Some of the reasons for doing this include that a debtor is unable to afford Chapter 13 plan payments, has lost their job, or that the reason for filing was to benefit from the automatic stay to stop a foreclosure and perhaps a modification was worked out with the lender. If this is the case, you will want to know what will become of the funds escrowed by the Chapter 13 trustee. What happens to Chapter 13 payments if bankruptcy case is converted or dismissed? Most are be surprised to learn that the undisbursed funds are in most circumstances returned to the debtor both in a conversion or a dismissal. The Chapter 13 trustee is not required to send it to your creditors and usually must return the funds to you.
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Can I Get Out Of My Bankruptcy
Technically, you can request a dismissal in either a Chapter 7 or Chapter 13 bankruptcy. However, it is typically more difficult to get out of a Chapter 7 bankruptcy. As weve explained in other blog posts, a Chapter 7 bankruptcy is like a runaway train. Once it gets going it is difficult to stop it. If you want to get out of a Chapter 7 bankruptcy because you have more non-exempt equity that you anticipated you will likely have problems. Its rare that someone would want to get out of or dismiss a Chapter 7 bankruptcy. As explained in our Chapter 7 bankruptcy timeline, a Chapter 7 bankruptcy is fairly quick. It typically lasts for about four to six months.
On the other hand, there are times where it would make sense to get out of a Chapter 13 bankruptcy. You always will have the right to voluntarily request a dismissal in a Chapter 13 bankruptcy. Those voluntary dismissal requests are almost always approved by the bankruptcy judge and your case would then be dismissed.
The important question to ask is should you take a dismissal from your bankruptcy.
Refiling Chapter 13 Bankruptcy
In keeping with its founding principal provide debtors the best possible chance at a second chance bankruptcy law allows failed Chapter 13 petitioners a second bite at the apple. Debtors whose wage-earner plans didnt work out, may refile immediately.
This does not mean there are not caveats. The automatic stay that accompanies a refiled Chapter 13 petition usually lasts only 30 days. Debtors must file a motion to extend the automatic stay, which most likely will involve a hearing before the judge in which the debtor must lay out his situation and explain why the proposed plan will succeed this time.
As demonstrated above, Chapter 13 bankruptcies are complex legal undertakings with lots of precise moving pieces. The failure of any single link can cause the entire structure to collapse. Whats the key to failure? Facing the court without professional legal representation.
Unless youre intimately familiar with bankruptcy law yourself, you need legal counsel, says Jake Hill, CEO of DebtHammer.com, a personal finance advice publication. There are a lot of ways to get a case dismissed based on technicalities and a legal team can help mitigate this.
A key study from the American Bankruptcy Institute examining Chapter 13 bankruptcies from 2010-2016 shows the self-represented debtors filing first-time petitions fail to reach the discharge finish line nearly 98% of the time. Refilers representing themselves result in a washout rate approaching 99%.
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Whats The Process If I Miss A Chapter 13 Payment
In order to get a Chapter 13 discharge, you must complete your plan payments. That puts you in a bad position if you miss your Chapter 13 plan payments. Dont worry though, there are normally ways that you can fix it. Before we get there though, lets talk about the process.
First, its important to recognize that every Chapter 13 trustee handles missed payments differently. Additionally, every bankruptcy district handles the process slightly differently. This is not intended to be a substitute for contacting your Chapter 13 attorney. In fact, that should be your first call if you miss a payment. Instead, this is an overview of the general process that applies when you miss payments.
Bankruptcy Case Dismissed With Prejudice
If a Chapter 7 bankruptcy or Chapter 13 debt consolidation plan is dismissed, then it’s usually dismissed without prejudice. This means that the debtor can file again right away however, if you have abused the bankruptcy process or if you intentionally disobey court orders, then your Chapter 7 bankruptcy or Chapter 13 debt consolidation plan may be dismissed with prejudice. Dismissal will generally mean that you are prohibited from filing another bankruptcy case for a certain period of time. Our Montgomery, Selma, and Central Alabama bankruptcy attorneys have seen this occur and the ban from filing that we have seen ranges from a minimum of 6 months to a maximum of 3 years.
When the bankruptcy court has dismissed your case with prejudice you generally simply have to wait until the time ban has passed. After the time has passed, as long as you file in good faith you simply refile your case and move forward. In some instances, if you feel the judge dismissed your case in error then you may appeal the judge’s decision to the federal district court. Generally, this is a very expensive process and we have only seen this in Chapter 11 cases, but this is not to say that it could not occur in a Chapter 7 case or Chapter 13 case. On appeal the debtor must prove that the bankruptcy judge committed some type of legal error in dismissing the case with prejudice. Regardless, it is very difficult to win the appeals.
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Voluntary Vs Involuntary Dismissal
Cases are voluntarily dismissed when the prosecuting party chooses to dismiss the case. In criminal cases, that would be the county prosecutor or district attorney. In civil cases, the prosecuting party would be the individual or organization that filed the lawsuit.
The victim in a criminal case may influence a prosecutors decision to voluntarily dismiss a case, but the decision ultimately rests with the prosecutor. As a result, you may see cases where the district attorney chooses to pursue a case after the victim declines to press charges. In contrast, the victim in a civil lawsuit is the prosecuting party, and therefore retains the right to have the case voluntarily dismissed at any time.
When a case is involuntarily dismissed, the judge chooses to dismiss the case against the wishes of the prosecution. This usually takes place when the defense files a motion to dismiss based on a legal reason, such as lack of evidence.