The impact of being dismissed from bankruptcy

To the average person, the phrase “bankruptcy dismissal” just sounds bad.  After all if your finances were bad enough to file bankruptcy in the first place, many people think “dismissal” means they’ve now failed at bankruptcy.  In some cases this is true, but there are other factors which lead to dismissal.

Having a Chapter 7 bankruptcy filing dismissed by the courts can make an already stressful situation even more frustrating and confusing. After the dismissal, you may be asking yourself questions like:

  • When can I file again?
  • Is there time limit on refilling?
  • What will the repercussions be of this dismissal?

Let’s take a closer look at what a Chapter 7 dismissal may mean for your financial future.

The End of Your Automatic Stay Period

When you file for bankruptcy, you enter what is known as an “automatic stay period”. This is one of the primary advantages of bankruptcy and describes the period when creditors and trustees are not able to take any legal action against you or attempt to collect on the debt you owe.

This is the part attorneys refer to when they say “get relief from creditors”, and when you get dismissed, this period ends.

When you re-file for Chapter 7 after a dismissal, your automatic stay period will be reduced to only thirty days. If your case is again dismissed, any future bankruptcy filings will not be accompanied by any automatic stay period and creditors will be allowed to continue to collect.

Dismissed With Prejudice

There are certain conditions under which you may have to wait to file again, or you may not be able to achieve the outcomes you were after.

If your Chapter 7 case is dismissed with prejudice, this means that the courts have found that you deliberately disobeyed court orders or you otherwise abused the bankruptcy process. An example of this would be if you misrepresented your financial information.

Having your case dismissed with prejudice can impact your ability to re-file in two ways:

  • The courts may specify a waiting period that you must adhere to before being able to file again.
  • Once you are able to file, the courts may prevent you from being able to wipe out any of the debts that would have been eliminated by the dismissed bankruptcy case.

As you can see, a bankruptcy case dismissal can potentially have a significant impact on your ability to recover financially, if you do not follow the court’s guidelines.

Why Are Chapter 7 Cases Dismissed?

As mentioned, the courts will dismiss the case if they find that you have provided false information or otherwise abused the system, but there are numerous other ways in which you could unintentionally make mistakes when filing.

The most common reasons people are dismissed is that they fail to meet the requirements of the courts. This can mean missing meetings, not completing credit counseling, not paying filing fees or not filing forms correctly. Even the smallest administrative error on your part could lead to a dismissal that will set you bank for quite some time.

Ways to Avoid Having Your Bankruptcy Case Dismissed

Even if you are extremely careful and meticulous as you file your case, there is still a great risk that you will make a mistake, if you are not extremely familiar with the laws and procedures. The best way to ensure that your case is not dismissed is to enlist the help of a qualified bankruptcy attorney.

These professionals make it much easier to follow every step of the process as necessary, making certain that all of the requirements are met and that the correct forms are filed accurately and on time. In the event that your case is dismissed, it is also advantageous to consult with a bankruptcy lawyer to correct any mistakes before re-filing.