What Happens After a Bankruptcy Dismissal

People who are overloaded with debts see bankruptcy as the last resort. But even this option may fail if the court orders for a dismissal of your bankruptcy case. Bankruptcy dismissal means that your bankruptcy petition is not approved and your debts are not discharged. In order to deal with such unfortunate circumstance, here are some important pieces of information that you should know.

Reasons for Bankruptcy Dismissal

Knowing the reasons that can possibly contribute to the dismissal of your bankruptcy petition will help you avoid them to give your better chances for approval. Some of the common factors that may drive the court to dismiss your case include inability to follow rules, failure to pay costs and fees, cause for unnecessary delay, lack in paperwork or required information, abuse of chapter 7, no repayment plan presented, and untimely payments. The last two reasons apply only for chapter 13 bankruptcy filing.

What Happens After Bankruptcy Dismissal

When you file for bankruptcy, there is what they call an “automatic stay” that comes into effect. This is a court ruling that prevents creditors for taking legal course of action against you such as foreclosure, lawsuit, and even debt collection. Upon dismissal of the bankruptcy case, the automatic stay is revoked. This means that your creditors will come back chasing after you again to collect your outstanding debts. Apart from this, a bankruptcy dismissal will also affect your credit report from 7 to 10 years. (See also Rebuilding Credit after Bankruptcy).

Possible Options on Bankruptcy Dismissal

You have several options when your bankruptcy case is dismissed. First, you can re-file for the same bankruptcy within one year. However, the automatic stay this time will only be effective for 30 days. You are allowed to file a motion for extension of the automatic stay after you re-file your case. It is imperative that you find out the reasons behind the dismissal of your case so you don’t make the same mistake twice. It is also possible that you cannot re-file the case. This happens when your previous bankruptcy case was dismissed after one of your creditors petitioned for a relief from the automatic stay, when you don’t obey court orders, or when you filed a fraudulent case. Another option you have is to switch from chapter 7 to chapter 13 and present a viable repayment plan so you have better chances of approval this time.

Getting Legal Help

To avoid having your case dismissed, be sure to get help from a reputable bankruptcy lawyer. Your attorney will help ensure that you have all the right requirements to have your case approved.