The dismissal of a chapter 13 or chapter 7 bankruptcy case is bad and a discharge of a bankruptcy case is good. If the case is dismissed, this means that there is a problem associated with your case, which was thrown out. A bankruptcy dismissal, puts the debtor in the same position, as if the debtor never filed a bankruptcy case.

At the time of dismissal, the debtor, again, is not protected from a creditors’ commencement or continuation of an action against the debtor. Also, at the time of dismissal, the debtor will owe the amount of debt due to each creditor, including interest and costs, at of the time of the dismissal. Therefore, with regard to most debt, the amount due to each creditor at the time of dismissal is more than the amount that was due initially upon the filing.

Chapter 7 Dismissal

A case may also be dismissed if the debtor does not meet the general criteria of a Chapter 7 (see our section on Chapter 7 document requirements). A person who meets all of the chapter 7 criteria may have their case dismissed as a result of the following: fraud in connection with the accuracy of the bankruptcy petition; failure to disclose or conceal assets or records; failure to cooperate with the court or trustee; false statements made to the court; and other actions listed in connection with the reasons for exceptions to discharge.

If the trustee requests the dismissal of a case, she must file the required documents with the court. The debtor may oppose the request and defend himself.

A person that does not meet the chapter 7 general criteria is permitted to convert their case to a chapter 13 and pay a portion of their monthly disposable income towards their debt. Converting the case will avoid the chapter 7 dismissal, in this scenario.

A creditor may contest a discharge of the debt due to them, based on fraud, by filing with the bankruptcy court an “Adversary Complaint”. This type of complaint is a lawsuit within the bankruptcy case. The lawsuit is handled by the same bankruptcy court judge that is assigned to handle the bankruptcy case. When proving fraud, the creditor will likely present to the court certain facts that were relevant at the time the debt was incurred, such as the debtor’s: lack of disposable income; luxury item purchased with credit; number of payments made on the debt; and, if the debtor used credit immediately prior to the filing.

Chapter 13 Dismissal

A Chapter 13 case may be dismissed if the debtor fails to meet any of the criteria of a Chapter 13 debtor, which is stated in another portion of this website. Every debtor in a Chapter 13 case must make a payment to a trustee, in compliance with their bankruptcy plan. The case may be dismissed if the debtor fails to make the required payments under the plan.

In addition to the monthly trustee or plan payments, a debtor may be required to make a direct payment to an auto finance company or a mortgage company. A Chapter 13 case may be dismissed if the debtor is substantially in arrears with their direct monthly mortgage and/or auto finance payment. However, if there are substantial arrears regarding the monthly mortgage or auto finance payments, the debtor may be able to prevent a dismissal by modifying their bankruptcy plan.

Furthermore, a Chapter 13 case may be dismissed for filing the bankruptcy petition in bad faith, in addition to the list of reasons that a Chapter 7 case may be dismissed.

Consulting a Bankruptcy Attorney in New Jersey

If you are considering filing for bankruptcy protection, you should consult with an experienced lawyer about your situation. The bankruptcy code is complex and errors during proceedings can result in very poor results. A veteran bankruptcy lawyer can guide you through the process and ensure that your case is not needlessly delayed or dismissed. For a free consultation, contact Robert Manchel at (866) 503-5655 or contact us online.