Why Was My Chapter 13 Case Dismissed
Typically, bankruptcy cases are a 60-month commitment. Some individuals might qualify for a 36-month plan. Many things can happen over this period, and there are various reasons your Chapter 13case might get dismissed, including:
- Voluntary dismissal Since a Chapter 13 case is a voluntary repayment plan, a debtor can quit at any time.;
- Missed Chapter 13 payments You must pay your Chapter 13 payments on time except for extreme hardship. In this case, most bankruptcy attorneys will allow for a three month suspension of payments. However, the reason for these cases are examined very closely before granting a debtor this grace period.;
- Failed to attend hearings The court may dismiss your case if you fail to attend any of your Chapter 13 hearings.;
- Failure to complete bankruptcy courses Youre required to complete two bankruptcy courses in Chapter 13. If you dont complete them, the court may dismiss your case.;
- Failure to file required tax returns You must file all mandatory tax returns on time for your bankruptcy case to be eligible.;
- Failure to file all bankruptcy courses You must complete all required bankruptcy forms or your case may be subject to dismissal.;
- Failure to submit required documents to the Chapter 13 trustee Some additional documents might be required. If you fail to submit these to the Chapter 13 trustee, your case could be dismissed.;
Consequences If You Don’t Make Your Plan Payments And How To Save Your Bankruptcy
Updated By Cara O’Neill, Attorney
Defaulting on your Chapter 13 plan has many unfortunate consequences. It can lead to your creditors obtaining permission from the court to foreclose on your house or repossess your car. Or the court might dismiss your case or never approve it in the first place. Learn about some of the possible consequences you could run into if you don’t make a Chapter 13 repayment plan payment, as well as options to save your bankruptcy.
What Are My Chapter 13 Options If I Face A Dismissal
If your case is dismissed, you might be eligible to re-file under Chapter 13, depending on the reason for your cases dismissal. If youve filed multiple bankruptcy cases within a short period, the bankruptcy court can deny your request to re-file right away. Since Chapter 13 is more complex than Chapter 7, navigating this process with a trusted bankruptcy attorney is recommended and worth the investment.
You also might be eligible to re-file under Chapter 7 if youre within the income limits. In this case, youll want to ensure that available bankruptcy exemptions protect all of your property. Additionally, you might be able to get rid of unsecured debts in Chapter 7 even if your Chapter 13 case was dismissed.;
If youre at risk of having your Chapter 13 case dismissed and you act quickly, you might be able to convert to a Chapter 7. You can request to convert by filing a simple notice and paying a conversion fee. A common reason you might qualify for converting from Chapter 13 to Chapter 7 is that you lose your job and cant find comparable work for a while. However, you might be at risk of other things if you convert, such as losing your property because youre behind on our mortgage payments or if you have a property that can be liquidated by the Chapter 7 Trustee. Therefore, its essential to weigh all of your options upfront before making any decisions that could affect your financial future.;
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What Are Your Chapter 13 Dismissal Options
You have several options for debt relief after a Chapter 13 dismissal.;You can re-file under Chapter 7 or Chapter 13. However, depending on the reason for the dismissal, the automatic stay may not go into effect without filing an additional motion with the court. There could also be a penalty period before the automatic stay becomes effective. During this time, creditors could continue to pursue actions to collect debts. Also, the dismissal of a Chapter 13 case with prejudice may result in a mandatory waiting period to re-file bankruptcy.;
Regardless, we built the following debt relief options calculator to help you compare your different options once your Chapter 13 has been dismissed. The most common may be debt settlement or converting to a Chapter 7 before a dismissal. The Debt Relief Options calculator uses bankruptcy forms to estimate whether you would qualify for a Chapter 7,. We provided some additional information below the calculator for you to review.
Common Reasons For A Dismissal Without Prejudice
After filing your case, you must comply with the bankruptcy rules and procedures. The court dismisses most matters because of the failure of debtors to:
- file the correct forms with the court
- submit supporting documentation to the bankruptcy trustee
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How Does A Chapter 13 Bankruptcy Plan Work
You are eligible to file for chapter 13 bankruptcy protection if your unsecured debts total less than $419,275 and your total secured debts are less than $1,257,850. The government also regularly adjusts those limits for inflation.
You should also have filed your tax returns for the previous four years. And you would have to attend credit counseling before filing for the bankruptcy.
Once you file your petitionalong with a repayment planwith a bankruptcy court, a trustee will step in to handle the case. This trustee will hold a meeting of your creditors and you will have to answer questions, under oath, that they and the trustee might pose to you. After that, the court will hold a hearing about your chapter 13 bankruptcy case.
This type of bankruptcy is also called a wage earners plan since it applies to those who get a monthly income to develop a plan to get out of their debt. Your plan will allow you to make these regular payments over a period ranging from three to five years.
If your income is below your states median income, your plan will run three years. In cases where the debtors income is higher than the state median income, the plan period will run five years. You will be allowed to keep the funds you require from your income to pay your reasonable living expenses. The remainder of your income, which is your disposable income, will go toward paying off your debts.
What If My Case Is Dismissed
Depending on why your case was dismissed, you might be able to refile right away. If you can not refile right away, work with your attorney to determine what you need to change about your bankruptcy petition to have it accepted by the court.
When a bankruptcy case is dismissed for procedural reasons, meaning that the petitioner did not follow the court’s procedures and might have missed a deadline or filed the wrong forms, he or she can refile right away. This is known as dismissal without prejudice.
Dismissal with prejudice refers to cases where bankruptcy is rejected because of dishonesty or abuse on the part of the petitioner. Examples of cases that may be dismissed with prejudice include those where the individual attempted to hide assets or filed the case in bad faith.
Individuals whose cases are dismissed with prejudice may be barred from filing for bankruptcy again for a specific period of time or even barred from discharging those specific debts forever.
In any case where a bankruptcy petition is dismissed, the individual loses the protection of the automatic stay. This means his or her creditors can resume their collection attempts until he or she gains bankruptcy protection again by successfully filing a case.
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The Chapter 13 Hardship Discharge
After confirmation of a plan, circumstances may arise that prevent the debtor from completing the plan. In such situations, the debtor may ask the court to grant a “hardship discharge.” 11 U.S.C. §;1328. Generally, such a discharge is available only if: the debtor’s failure to complete plan payments is due to circumstances beyond the debtor’s control and through no fault of the debtor; creditors have received at least as much as they would have received in a chapter 7 liquidation case; and modification of the plan is not possible. Injury or illness that precludes employment sufficient to fund even a modified plan may serve as the basis for a hardship discharge. The hardship discharge is more limited than the discharge described above and does not apply to any debts that are nondischargeable in a chapter 7 case. 11 U.S.C. §;523.
Middle Tennessees Top Bankruptcy Attorneys
Navigating the bankruptcy process can be daunting. Enlisting the help of a trusted attorney is invaluable and will ensure a smoother process.;
Flexer Law has been serving the legal needs of Middle Tennessee residents since 1981. Our experienced bankruptcy attorneys will work diligently on your behalf to provide the best financial outcome for you.;
We have three office locations throughout Middle Tennessee to accommodate your legal needs. Contact us for a free consultation, and well find the best solution to get your financial life back on track.;
Nov Chapter 13: What If My Case Just Got Dismissed
If your chapter 13 case was recently dismissed, is the situation truly hopeless? What if the chapter 13 was filed to catch up on past due house payments, or to avoid repossession of a much-needed automobile, or to stop a wage garnishment by the IRS? In these situations, the chapter 13 was probably a godsend; its dismissal is a financial calamity. What can the debtor do?
One idea is to pay your lawyer to petition the bankruptcy court to reinstate the case, based on the legal standard of excusable neglect by the debtor. This might take only a few hours of attorney time. If you can explain how the problem which resulted in dismissal of your case was due to excusable reasons, this could be the simplest remedy.
The next idea to consider is filing a whole new chapter 13 case, which is not as simple as it sounds. This is because the bankruptcy protection expires after 30 days in a case filed within one year of a case which was dismissed, unless your lawyer immediately files a motion to extend the stay. Consequently, for such a new filing, your lawyer is likely to want an advance fee payment which is much bigger than normal. Also, to succeed in such a motion, your lawyer has to show that you wont be likely to repeat the problematic conduct in the new case. Its fair to say that many debtors can meet this standard, but it certainly chews up financial resources to allow chapter 13 cases to be dismissed, and the reinstate them or file new ones.
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When Dismissal Is Nevertheless Appropriate
If the consequences of dismissal sound pretty bad, often they can be. So why would somebody ever want to dismiss their Chapter 13 case? ;Simply because in some peoples situations the advantages of dismissal outweigh any disadvantages. Chapter 13 cases can take such different forms and be filed for so many different reasons that its impossible to give a neat and tidy answer to this. So here is one scenario that illustrates when a dismissal can be the best choice.
Assume that a single mom with a young child has a vehicle loan, a home mortgage, and owes back income taxes. During a period of 10 months of unemployment she had managed to keep current on her vehicle loan because that was her absolutely highest priority. But while she was unemployed she could only do this and still take care of her necessary living expenses by not paying her mortgage. So she fell behind 10 payments of $1,500, or a total of $15,000. She also owed $2,000 to the IRS for the prior years income taxes because of not paying any withholding on her unemployment benefits. So she filed a Chapter 13 case a year ago in order to have three years both to catch up on that $15,000 mortgage arrearage and to pay off the income tax. She continued paying the vehicle loan so shes still current on that.
If Your Chapter 13 Bankruptcy Case Is Dismissed Because Of Nonpayment You Can Appeal But There Are Often Better Ways To Deal With The Problem
By Baran Bulkat, Attorney
If you don’t make your Chapter 13 bankruptcy monthly plan payments, the bankruptcy trustee will ask the court to dismiss your case. If the court does dismisses your Chapter 13 bankruptcy for nonpayment, you may be able to appeal the dismissal to a higher court. However, in most cases you can work something out before the case is dismissed, or refile a new case after dismissal.
Below you can learn about your options if you cannot make your plan payments, what to do if the trustee files a motion to dismiss your case, and if, in the rare instance, your case is dismissed with prejudice, how to appeal the dismissal.
For more information on how the Chapter 13 repayment plan works, see our topic area on The Chapter 13 Repayment Plan.
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Leaving Chapter 13 Protection Enables Debt Collection Efforts
Once you file a chapter 13 case, you will have protection from debtors collection efforts. There will be a stay against such efforts and collectors will not be able to initiate a case or continue to pursue one, garnish your wages or call you about the debt.
And in case anyone has co-signed a loan with you, a creditor may also not pursue collection efforts with them . Filing for a chapter 13 case also stops foreclosure efforts on your home.
Given that you will be losing all these; protections by leaving chapter 13 protection due to a hardship, it may be in your best interests to only do so as an absolute last resort.
Can You File Another Chapter 13 After Dismissal
Yes, as long as there is not a prohibition in the Order dismissing your last case, your last case was not dismissed within the last 180 days for violation of a court order, or you did not request the dismissal after a creditor asked for relief from the automatic stay.
Depending on the number of cases you have had dismissed in the year before re-filing, you might have to take extra steps to get the automatic stay extended past 30 days or even to have it put back in place.
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What Are The Debtors Obligations In A Bankruptcy Case
When an individual or spouses filing jointly apply for debt relief under Chapter 7 of the Bankruptcy Code, they are obligated to complete their bankruptcy petition and schedules to the best of their knowledge and ability, and they must submit the required filing fee . They must be forthcoming when submitting information and documents to the court and the bankruptcy trustee assigned to their case. Finally, they are obligated to attend twomandatory educational courses , their meeting of creditors, and any other court appearances required in their case.
Dismissal And Starting Over
Failing to respond to a motion to dismiss likely will result in a dismissal without prejudice, which allows a debtor to refile at any point. Until and unless you file again, you will lose the protections provided by bankruptcy, such as the automatic stay. However, if you have suffered a substantial financial blow and cannot convert to Chapter 7, this may be your only option if you cannot get a hardship discharge. You can file again as soon as you qualify for either Chapter 7 or Chapter 13. This will also involve filing a separate motion with the court to ask for an extension of the automatic stay, assuming that you file within a year of the dismissal.
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