What Happens After a Chapter 7 Bankruptcy Is Dismissed?
If your Chapter 7 bankruptcy case is dismissed, your case is effectively thrown out of court. Although the filing will still appear on your credit report, you do not receive any relief from your debts from the court. Your creditors are entitled to pursue you as if you had never filed bankruptcy in the first place. However, in many situations the court allows you to re-file for bankruptcy if your original petition is dismissed.
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Definition
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Dismissal means you are no longer involved in a bankruptcy proceeding. Typically, it means that something has gone wrong with your case. An improperly prepared petition can result in dismissal, as can cases of fraud. Dismissal is not to be confused with discharge, which is the objective of filing for bankruptcy. A discharge grants you relief from your creditors and the elimination of all of your qualifying debt.
Lifting of Automatic Stay
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The automatic stay is a legal protection granted to you when you file a bankruptcy petition. Creditors are legally barred from trying to collect a debt from you while you are under the automatic stay. If your case continues through to discharge, the automatic stay effectively becomes permanent. However, when the court dismisses your case, it also lifts the automatic stay. Creditors are legally permitted to resume collection activities after the dismissal of your case.
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Creditors and Collections
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You must include the contact information for all of your creditors when you file a bankruptcy petition so they may be kept apprised of the status of your case. When your case is dismissed, your creditors are automatically notified. Typically, they will begin calling you in an attempt to collect the debt you owe them. In some cases, they may file a lawsuit. As you no longer have the protection of the bankruptcy court, a creditor will most likely win a lawsuit against you and be entitled to garnish your wages.
Re-Filing
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Generally speaking, if your Chapter 7 bankruptcy case is dismissed, you can immediately file a new one with the court. The exception to this would be if you did not obey a court order, if you requested the dismissal yourself after a creditor petitioned for relief from the automatic stay, or if the court suspects fraud. In these instances, you must wait 180 days to file again. If you re-file within one year, the automatic stay is limited to 30 days unless you can prove to the court that your petition was in good faith.
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