How to Cancel a Bankruptcy After It's Been Filed

A Chapter 7 bankruptcy can only be dismissed if the court permits.

As a debtor, you do not have an automatic right to cancel a Chapter 7 bankruptcy case. You can, however, file a motion to have the case dismissed. A judge will hear reasons for the dismissal and determine whether bankruptcy is the best option your creditors have of collecting their money. Chapter 13 cases can be dismissed if you show cause.

Instructions

1. Consult the trustee handling your case. Explain your reasoning behind the proposed cancellation, such as an alternative agreement with your creditors or a change in your circumstances. The trustee acts on behalf of your creditors and may object to a request to cancel or dismiss a bankruptcy case. Offer as much information related to your case as possible to determine if such an objection is likely. The courts permit you to file a motion to cancel or dismiss a bankruptcy case whether or not a trustee objects.

2. Complete Form 20A, Notice of Motion or Objection. Use plain English to explain to the parties involved why you wish to dismiss your bankruptcy case. Provide copies for the court and all the creditors listed in the case.

3. File Form 20A at the district bankruptcy court handling your case. Filing fees apply. Verify your hearing date or wait to receive notice by mail.

4. Have the parties involved served with a "Notice of Motion to Dismiss," which is also done with Form 20A. Provide advance notice prior to the hearing so the parties involved may respond. Advance notice can vary from 20 to 30 days depending on the court. Contact the court to determine how much advance notice you are required to give.

5. Appear in court to argue your case for a dismissal. You have the burden of establishing cause. Although a Chapter 13 case can be dismissed as of right, the court may order otherwise. Show that a dismissal is in your best interest and will not prejudice your creditors. For example, if you've reached an alternate repayment agreement in a Chapter 13 case or your circumstances have changed and a Chapter 7 bankruptcy is no longer necessary, provide supporting documentation to the court.

Tips & Warnings

• Typically, an automatic stay, which protects creditors from taking legal action against you, starts when a bankruptcy case is filed and extends until bankruptcy proceedings end. After your debt is discharged, the court will issue a permanent injunction against legal action on the debt. In some cases, a bankruptcy attorney can file a Motion to Extend Stay and convince the judge overseeing the case to extend the shortened stay. However, the attorney must prove that your circumstances have changed and that the extension is justifiable.

• If you file a motion to dismiss a bankruptcy case and file again, you might get only a 30-day automatic stay for the second case.

References

• Florida Bankruptcy Law Blog; Voluntary Dismissal of Your Own Chapter 7 Bankruptcy; Jonathan Alper; August 2006
• The BK Lawyer: Can I "Cancel" a Chapter 13 Bankruptcy if I Changed My Mind?; Jonathan Ginsberg; October 2006
• Bankruptcy in Brief: Automatic Stay
• Judge Richard G. Opiela: Notice Regarding District Court Hearings

Resources

• United States Courts: Notice of Motion or Objection
• United States Courts: Official Form 20A; December 2003