Difference Between Bankruptcy Closing and Dismissal
A closed bankruptcy represents the end of your case, while a dismissed bankruptcy represents how the end came about. The aim of a bankruptcy case generally involves ending the case by way of a discharge, not a dismissal. Whether your bankruptcy case closes by dismissal or discharge can have a significant effect on your rights and protections as a debtor.
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Dismissal
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Unlike a case closed following a discharge, a dismissed bankruptcy generally leaves you in the same position you were in prior to filing your case. A dismissal represents the premature and unsuccessful end to your bankruptcy. Following a dismissal, you still owe all your debts, and you are no longer protected from collection activity. Dismissal may occur voluntarily or involuntarily. Voluntary bankruptcy dismissals occur when the court grants your request for it to dismiss the case. An involuntary dismissal occurs when the court, in spite of your wishes, dismisses your case. An involuntary dismissal may arise when you fail to comply with the bankruptcy court's requirements.
Discharge
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Ideally, your bankruptcy case closes after you receive your bankruptcy discharge. Aside from stopping collection activities, the primary benefit of bankruptcy is the discharge. The bankruptcy discharge releases you from responsibility for your dischargeable obligations and makes creditor collection efforts unlawful. Unless you, the trustee or one of your creditors successfully makes a motion to reopen your case, the discharge signals that your business with the bankruptcy court has ended.
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Time Limits
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If your case closes because you received a discharge, you will have to wait several years before you may receive another discharge. If your case was a Chapter 7, you can't obtain another Chapter 7 discharge for eight years, or Chapter 13 discharge for four years. If your case was a Chapter 13, you can't receive another Chapter 13 discharge for two years, or Chapter 7 discharge for six years. If your case was dismissed, rather than discharged, you generally may immediately refile your case, unless the court specified otherwise when it dismissed your case.
Credit
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A bankruptcy will negatively affect your credit regardless of whether it closed following a dismissal or a discharge. Bankruptcy is among the public records, like tax liens and foreclosures, that courts report to Experian, TransUnion and Equifax, the nations major credit bureaus. In spite of how the bankruptcy ends, once filed, a Chapter 7 will stay on your credit report for up to 10 years, and a Chapter 13 will stay on your credit report for up to seven years.
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References
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