What Happens if My Bankruptcy Application Is Dismissed?

There are two types of personal bankruptcy: Chapter 7 and Chapter 13. Each type can be dismissed for several reasons. Bankruptcy dismissal will have different consequences for debtors, depending on which chapter was filed and what the reason for dismissal was.

Chapter 7 Dismissal

If a Chapter 7 case is dismissed, this means the case has been thrown out of court. This usually happens when a petition is suspected of fraud or the case has been determined to be invalid. Once a case is dismissed, creditors may once again resume collection activities such as foreclosure, auto repossession and wage garnishments. If your case has been suspected of fraud, such as hiding assets, an investigation will begin that could have legal consequences.

Chapter 13 Dismissal

Since a Chapter 13 bankruptcy sets up a repayment plan, the case may be dismissed if the debtor stops making payments. If a debtor is having trouble making the required Chapter 13 payments, the payments can be modified. It is important to stay in contact with your trustee and communicate any challenges you are having.

Voluntary Dismissal

A case may also be voluntarily dismissed by a debtor. If a case is dismissed voluntarily, the debtor becomes solely responsible for all of the debts that were originally included in the bankruptcy case. Any collection activities may resume and the debtor must once again begin paying his creditors.

Bankruptcy Discharge

While a dismissal means that the case has been thrown out of court, a discharge means that the case has been successfully completed. When a bankruptcy case is discharged, all debts are wiped out and collection activities do not resume.

References

• United States Bankruptcy Courts: Bankruptcy Basics
• United States Bankruptcy Courts: Chapter 7 Bankruptcy
• United States Bankruptcy Courts: Chapter 13 Bankruptcy
• United States Bankruptcy Courts: Bankruptcy Discharge