Failure to comply with all federal and local bankruptcy laws or procedures can result in dismissal of your case without a discharge. However, under certain circumstances, you may be able to reverse a dismissal by filing a Motion to Vacate the Dismissal.
For more information on the bankruptcy process, visit our Procedures in the Bankruptcy Case: Start to Finish topic area.
Reasons Why Your Bankruptcy May Get Dismissed
To successfully complete your bankruptcy and obtain a discharge, you must follow all required federal and local rules and procedures. Failure to do so can result in dismissal of your case. The most common reasons for dismissal include not attending the mandatory 341 Hearing (also called the meeting of creditors) or failing to submit the required information and supporting documentation to the bankruptcy trustee.
What You Can Do If Your Bankruptcy Is Dismissed
When a court dismisses a case, the debtor may try to bring back the case with a Motion to Vacate Dismissal because filing a new case requires paying court costs again. In a Motion to Vacate Dismissal, the debtor explains his or her reasons for not following court rules or moving the case along.
For example, the debtor's attorney became suddenly ill, preventing the debtor from filing the necessary documents with the court. When a debtor files a motion, the court sets the matter for a hearing, but before the day of the hearing, the judge may issue a tentative ruling. The hearing is meant to provide due process so if a party does not like the tentative ruling he or she can show up in court to argue. The court does not like it if the person does not have any argument beyond what is in the court filings because the tentative ruling is meant to save time on the day of the hearing. The judge does not like wasting time when there are other cases scheduled. The court adopts the tentative ruling if there is no opposition.
Whether the court will grant or deny a Motion to Vacate Dismissal depends on your reasons for not complying with the applicable rules. For example, if you could not attend your 341 hearing because of a medical emergency, your motion will likely be granted.
When a debtor is not able to vacate a bankruptcy dismissal, the court lifts the automatic stay. The debtor may file a new bankruptcy case, but the court may ask the attorney who worked on the first filing to disgorge fees so the debtor can find a new attorney, or if the debtor stays with the same attorney, the court may ask the attorney to file the new case without charge.
Bankruptcy motions may require strategic legal argument, requiring the assistance of an experienced bankruptcy attorney.