Advice For Your Chapter 7 Or Chapter 13 Bankruptcy
By Ryan C. Wood
There are many reasons why a Chapter 13 bankruptcy case would be dismissed. But what happens after the case is dismissed before the Chapter 13 plan is confirmed or approved? One of the most common questions is what happens to the Chapter 13 Plan payments I made to the Chapter 13 trustees office? What about my car payment or other people I owe money to after the case is dismissed?
Chapter 13 Trustee Payments
This is probably the most common question because everyone wants to get the money back they paid into the Chapter 13 plan when the case is dismissed. The money you get back depends upon how many months ago the case was filed and the language of the plan and what is going on in your case. If you have provided for pre-confirmation adequate protection payments to a creditor like a car loan company then those payments plus the Chapter 13 trustee percentage will be subtracted from the amount you get back. Some Chapter 13 plans include a provision that your bankruptcy lawyer will receive some of their attorney fees in the event the case is dismissed. So you may have to subtract all or a portion of your bankruptcy attorney fees from the amount you will get back. This same respect of course was not given to attorneys for debtors. In Chapter 13 cases, rarely at the fault of the attorney for the debtor, the Chapter 13 Plan is not confirmed and the case is dismissed.
What About The Attorney For The Debtor? How Do They Make Out Upon Pre-Confirmation Dismissal?
What It Means To Be Dismissed With & Without Prejudice
Courts dismiss most bankruptcy filings without prejudice, which means youâre free to file again with an updated payment plan. However, if the court determines that you tried to hide assets or attempted to abuse the system in any way, they may dismiss your case with prejudice.
If your case is dismissed with prejudice, the court may require you to wait 180 days before filing a new petition. They may also bar any debts included in the initial filing from your next case.
How Can You Reduce Your Risk For Having Your Bankruptcy Dismissed
1. File Complete and Accurate Schedules
People filing for bankruptcy need to submit schedules and statements that provide the court information about the filers financial status. Mistakes or omissions in this paperwork is one of the most common reasons for case dismissal. The court gives filers about 14 days to complete their paperwork once they begin the filing process. Working with an experienced bankruptcy attorney ensures your paperwork is correct, complete, and submitted on time.
2. Meet the Requirements for Bankruptcy Education
To qualify for bankruptcy debt discharge, you must meet certain education requirements. The first comes early in the process and helps you confirm that filing is right for you. A second education requirement you must meet later details helps you learn to manage your finances and understand what to do once your bankruptcy is complete.
Failing to meet either of these requirements or failing to provide proof that you met them makes you ineligible for debt discharge. Your lawyer will help you find courses that are approved by the bankruptcy court.
3. Attend the Meeting of Creditors
For many people, the 341 Meeting of Creditors is the most intimidating part of filing for bankruptcy. No matter how you feel about it and how concerned you are about coming face-to-face with your creditors, you must attend the meeting.
The good news is that, for most people, this meeting is a lot better than expected.
Also Check: How Many Times Has Trump Declared Bankruptsy
Dismissal Of Bankruptcy Cases And Your Assets
Weve talked about the dismissal of bankruptcy cases, the reasons behind a dismissal and how to avoid a dismissal but what happens to the assets which have become a part of the bankruptcy estate after a case is dismissed?
Lets take a look at a few facts:
In the case of both a Chapter 7 bankruptcy and a Chapter 13 bankruptcy if the case is dismissed, the assets held by the bankruptcy estate are usually returned to the debtor:
The bankruptcy law says:
The dismissal of a bankruptcy case revests the property of the estate in the entity in which such property was vested immediately before the commencement of the case unless the court orders otherwise. 11 U.S.C. § 349.
In laymen terms, any assets of the debtor held by the bankruptcy estate are then returned to the debtor upon dismissal of the bankruptcy case unless otherwise ordered by the bankruptcy court. What this means is that if a debtor made payments of lets say $10,000 to the bankruptcy estate in a Chapter 13 bankruptcy and the case was dismissed BEFORE the money was distributed to creditors, the money would be returned to the debtor unless otherwise ordered by the court.
My Bankruptcy Case Was Dismissed What Do I Do Now
If you receive a notice in the mail from the court that states your bankruptcy case is dismissed, then you need to look at the other items you have received from the court or communications from your attorney. If you are a client of our office,
then you will likely have been notified of any issues, such as outstanding documents due to the Trustee that may have been due.
The reasons for dismissal can range from falling behind on your payments, not complying with a request of the trustee, or failing to provide a document vital to the trustees investigation that required by law to be provided or that you agreed to provide.
If your case was dismissed for failure to provide a document or make a particular filing, then your case can be reinstated given that you are able to provide the document or file the missing items with the court. If you are unable to cure the deficiency , then you may have to wait until the prejudice period passes to try to file a new case.
Dismissal with prejudice in a different court may mean you cannot refile the claim or case. The prejudice period in bankruptcy is the amount of time the court says you must wait before filing a new case which is customarily 180 days or 6 months unless the judge provides otherwise in the dismissal order. It does not mean you can never file a bankruptcy case again.
Also Check: Cinlegal Com
Taking Action After A Dismissal
In cases of involuntarily dismissal or dismissal without prejudice, you can try to get your bankruptcy case reinstated if you move quickly and proactively. Youll often have a small window to continue pleading your case before its thrown out, so you have to pursue the issue immediately.
An honest mistake, or administrative dismissal, can sometimes be rectified by a motion to reconsider the case. This is your first step, combined with ascertaining and resolving the reason for the dismissal.
A reinstatement is always an option, even if your mistake was an accident. There is also sometimes the option of filing an appeal.
If a dismissal is final, sometimes you can immediately file a new one. But any case of dismissal with prejudice, or for abuse, involves a waiting period, usually of 180 days. After that time you can file a new case, but your automatic stay might be limited to one month, making it more difficult to get approved.
Worth repeating a final time is the fact that a bankruptcy filing will be recorded on your credit report as soon as you file it, and it could remain on your report even if your case is dismissed. Filing a second time will drop your credit scores still further.
Failing The Means Test
If you fail the Chapter 7 Bankruptcy Means Test
This could be because you have enough disposable income between the amount of money you having coming in monthly, and your outgoings, then your case will be dismissed.
However, your Chapter 7 Bankruptcy application could be converted to a Chapter 13 Bankruptcy which is a repayment plan.
Also Check: Renting A House After Bankruptcy
Can I File Chapter 7 After Chapter 13 Is Dismissed
Although the order for filing Chapter 7 and Chapter 13 matters when you receive a first discharge and are looking to file again years down the road, there are limits to how many times you can receive a discharge.
Per the United States Courts:
The court will deny a discharge in a later chapter 7 case if the debtor received a discharge under chapter 7 or chapter 11 in a case filed within eight years before the second petition is filed. The court will also deny a chapter 7 discharge if the debtor previously received a discharge in a chapter 12 or chapter 13 case filed within six years before the date of the filing of the second case unless the debtor paid all allowed unsecured claims in the earlier case in full, or the debtor made payments under the plan in the earlier case totaling at least 70 percent of the allowed unsecured claims and the debtors plan was proposed in good faith and the payments represented the debtors best effort. A debtor is ineligible for discharge under chapter 13 if he or she received a prior discharge in a chapter 7, 11, or 12 case filed four years before the current case or in a chapter 13 case filed two years before the current case.
However, if your first bankruptcy case was dismissed, including a voluntary dismissal, you can generally file again for either Chapter 7 or Chapter 13 at any time. That is, unless the court says differently.
For other reasons for case dismissal, check out these informative posts:
My Bankruptcy Was Dismissed What Happens Now
4 minute read â¢Upsolve is a nonprofit tool that helps you file bankruptcy for free.Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we’ll never ask you for a credit card.Explore our free tool
In a Nutshell
A bankruptcy case is much like any other legal proceeding in that it may be affected by delays, impacted by other legal action, and subject to dismissal. This guide provides bankruptcy filers with a sense of their obligations as a debtor, how to prevent dismissal of a bankruptcy case, how to better ensure that a case is dismissed when bankruptcy dismissal is the goal, and options filers may want to consider if their case has already been dismissed.
Written byAttorney Kassandra Kuehl.
Filing for bankruptcy is not always a straightforward process. A bankruptcy case is much like any other legal proceeding in that it may be affected by delays, impacted by other legal action, and subject to dismissal. You may be in a position where youâre trying to avoid dismissal of your Chapter 7 bankruptcy case or your Chapter 13 bankruptcy case. If so, there are steps you can take to better ensure that your case is ultimately successful. However, you may also be in a position wherein youâre hoping to get your bankruptcy case dismissed. If so, you may be able to accomplish this goal by taking a certain approach.
Recommended Reading: How Many Bankruptcies Did Trump File
We’ve Helped 205 Clients Find Attorneys Today
Self-help services may not be permitted in all states. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Your use of this website constitutes acceptance of the Terms of Use, Supplemental Terms, Privacy Policy and Cookie Policy. Do Not Sell My Personal Information
How The Automatic Stay Protects You In A Bankruptcy
When a Chapter 7 or Chapter 13 bankruptcy case is filed, protections afforded by theautomatic stay are immediately put into place. Essentially, the automatic stay halts repossession actions, foreclosures, garnishments, and collection activity while the filerâs case remains active. Similarly, the automatic stay prohibits creditors from sending collection letters and making collection calls demanding payment. This safeguard allows the bankruptcy court time to evaluate the merits of a Chapter 7 or Chapter 13 bankruptcy case while granting the debtor relief from collection action and creditor harassment.
Also Check: Trump’s Yacht Repossession
Bankruptcy Attorney Serving Twin Cities
While it is not something that happens often, it is possible for your Chapter 7 bankruptcy case to be dismissed by the court. What a bankruptcy dismissal means is that you do not qualify for the bankruptcy process and thus the filing is dropped. While this sounds particularly scary, if bankruptcy is your last option, it is unlikely to happen to you. Yet, it is best to understand why it might happen and what your options are. Usually a chapter 7 bankruptcy is dismissed if the client didnt tell the lawyer that they owned something valuable, like a car, house or business. Walker & Walker works with you to make sure we have everything. In my experience, most people have nothing to hide because bankruptcy laws are actually quite generous on what you can keep in bankruptcy.
Why Are Bankruptcies Dismissed
Filing for bankruptcy is a complicated process with many steps, forms, rules, and criteria for eligibility. The stresses of declaring bankruptcy can contribute to easy mistakes. One single mistake with any aspect of the process can be grounds for dismissal, so there is a lot of room for error.
Also, because bankruptcy provides a much-desired relief, some candidates attempt to misrepresent their situation. This is grounds for a type of dismissal that has more serious consequences than dismissals related to honest mistakes.
You May Like: Can I Lease A Car After Bankruptcy
What Happens After A Chapter 13 Case Is Dismissed
While you are in a bankruptcy case, you are protected by the automatic stay. Creditors are prohibited by the bankruptcy stay from taking any actions to collect a debt without court approval.
Once a bankruptcy case is dismissed, the automatic stay is no longer in effect. That means creditors can take all collection action allowed by law. Collection activities may include collection letters, debt collection lawsuits, wage garnishments, repossessions, and foreclosures.
The only way to stop creditors from taking action to collect a debt after a dismissed Chapter 13 case is to pay the debt or re-file a new bankruptcy case.
I Received Notice That My Bankruptcy Case Is Being Dismissed What Should I Do
While in a bankruptcy case a party can move to have the case dismissed. Dismissal put simply, ends the bankruptcy case and you no longer have the protection of the bankruptcy code and its automatic stay. When your case is dismissed your creditors can restart collection actions, this means that they can call you, file lawsuits and/or if you are behind on your house or car payments, then they can foreclose or repossess the collateral. If you get a notice that your bankruptcy case is in the process of being dismissed the first thing to do is CONTACT YOUR ATTORNEY. There are ways to avoid a dismissal, but without first speaking with your attorney it may not be avoidable.
There are a variety of reasons why your bankruptcy case may be up for dismissal below are the most common examples and some possible solutions to resolve a dismissal.
Another reason for dismissal is failure to confirm your chapter 13 case. This will typically be filed if you miss your first plan payment, failed to provide documents, file amendments, failed to conclude your 341 meeting, or other confirmation issues. The best way to resolve these dismissal actions is to work with your attorney to make sure they have all the required documentation and information needed to confirm your case. If you fail to get the case confirmed, the case can be dismissed.
Don’t Miss: How Many Bankruptcies Has Donald Trump
What If The Trustee Files A Motion To Dismiss Your Case
When the trustee files the motion to dismiss, you will have a chance to review and oppose it. If you don’t oppose the trustee’s motion, the court will dismiss your bankruptcy without a discharge of your debts. But if you just had a temporary setback and want to continue with your bankruptcy, you can oppose the trustee’s motion.
The specific procedures for opposing a motion to dismiss will depend on the rules in your jurisdiction. But in general, when you oppose the trustee’s motion to dismiss, you must show the court that you can afford your plan payments and explain why your case should not be dismissed.
In most cases, if you have a valid reason that caused you to temporarily fall behind on your payments, the court or the trustee will work with you and allow you time to catch up on your missed payments. But if the court believes that you can’t afford to continue with your Chapter 13 plan, it will dismiss your bankruptcy.
What Happens When A Chapter 13 Case Is Dismissed
4 minute read â¢Upsolve is a nonprofit tool that helps you file bankruptcy for free.Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we’ll never ask you for a credit card.Explore our free tool
In a Nutshell
If you have a dismissed Chapter 13 case, you may have several options. You might be able to file a Chapter 7 bankruptcy case, even if you can’t afford to pay another attorney to help you.
Written byAttorney Jonathan Petts. Reviewed byAttorney Andrea Wimmer
When an individual doesnât qualify for debt relief under Chapter 7 because they make too much money or had a prior Chapter filing, that person can file Chapter 13 instead. A Chapter 13 bankruptcy case is a debt reorganization.
When you file under Chapter 13, you propose a repayment plan for your debts. You make a payment each month to a Chapter 13 trustee who pays your creditors according to the terms in the Chapter 13 plan. The amount of your Chapter 13 plan payment depends on several factors. Only certain debts – like mortgages – may be paid directly while the case is open. In some cases, you may pay some creditors outside of the plan, such as your mortgage payment.
Don’t Miss: Epiq Data Breach
