Many debtors entertain second thoughts and consider backing out of their bankruptcy petitions. Before you decide to change directions, carefully consider the numerous and costly consequences of backing out of your bankruptcy. These costs spring from places you may have never considered. So, discuss the ramifications with your attorney. In addition to losing some or all of the retainer you paid your attorney for initiating the bankruptcy, consider a few other costly possibilities.
As soon as you back out of a bankruptcy, creditors can and will add charges, late fees and interest to what you owe them. You will likely have to contend with considerably more debt than you owed at the time your bankruptcy filing froze your creditors' ability to continually heap fees on top of your debt. If you consider backing out of your bankruptcy, do not underestimate the ability of these additional fees for growing your already burgeoning debt.
Sometimes, a debt consolidation company offers a consolidation loan which rolls your debt into one big, but more-affordable, payment option. This entices some who have filed a Chapter 7 or Chapter 13 and then backed out of bankruptcy. Many debtors seriously consider avoiding bankruptcy by consolidation. It can be a very tempting option. But, if you back out, your protection from creditors ceases and any wage garnishments and lawsuits which occurred before filing for bankruptcy resume almost immediately. If garnishments resurface, for instance, you may not have sufficient income for repaying the consolidation loan payments, despite the rosy picture painted by your loan consolidation company. Consult your attorney before you decide between a bankruptcy and a consolidation loan.
In a Chapter 7 bankruptcy, there is a limit to how many assets you may retain. Once debtors realize that they must give up certain assets during their Chapter 7, they may have second thoughts about whether to go forward with the bankruptcy. But, if you ultimately do not have sufficient income for repayment of all your bills, as soon as you drop the bankruptcy proceeding, the creditors may institute legal proceedings. They will likely attempt to take from you the same assets you are attempting to protect by dropping the bankruptcy. So, again, seek professional advice.
If you file bankruptcy under Chapter 13, you establish a repayment schedule for all your debts over the next several years. According to Loan Safe, you can back out of a Chapter 13 bankruptcy by not submitting a repayment plan. Your bankruptcy case will then get dismissed, and you will no longer have bankruptcy protection from your creditors. If, during the process of your bankruptcy, you receive a substantial sum of money, the bankruptcy court can dismiss your case once the court sees you have the ability to repay all your debts. In this case, the bankruptcy court has the right to cancel your bankruptcy regardless of your preferences.