Bankruptcy comes with many rules. Itís important that you follow them all, otherwise your bankruptcy case could be dismissed. If that happens, youíll have to wait several months before you can file bankruptcy again. Or, you may have to figure out another way to deal with your debt. Here are a few mistakes that could lead to bankruptcy dismissal.
Hiding assets so you wonít have to give them up to creditors. In a Chapter 7 bankruptcy, youíre required to sell certain assets and to use the proceeds to pay off your creditors. However, if the trustee finds out that youíve sold or given away assets to avoid losing the assets in bankruptcy, your bankruptcy case could be dismissed.
Failure to receive the required credit counseling. Youíre required to receive credit counseling from a court-approved credit counseling agency within 180 days before you file bankruptcy. If the court allows you to file bankruptcy paperwork before youíve gotten the counseling, theyíll demand that you receive credit counseling within a certain time period. However, failure to show that youíve completed the credit counseling will result in bankruptcy dismissal.
Failing the bankruptcy means test for a Chapter 7 bankruptcy. To file Chapter 7 bankruptcy, which would discharge most or all of your unsecured debts, you must first pass a means test to prove you arenít abusing bankruptcy. The means test basically shows that you donít have sufficient means to repay your creditors. If the means test does show that you could pay back a portion of your debt, your case will either be dismissed or converted to a Chapter 13 case.
You get divorced in the middle of a joint Chapter 13 bankruptcy case. You can file bankruptcy jointly with your spouse to allow both of you to get rid of debts. However, being married is a requirement for the joint case and if youíre divorced before the Chapter 13 case is complete, the case could be dismissed.
Failure to make required payments. Both Chapter 7 and Chapter 13 bankruptcy have filing fees. You may be able to make the payment in installments with court permission, however, if you fail to pay the fees, your case could be dismissed.
In Chapter 13, youíre required to repay at least some of your debt, possibly all of it, over a three- to five-year time period. If you fail to make any payments in a timely manner, the trustee may file for dismissal of your case. You may be able to prevent the dismissal by catching up on your payments.
Bankruptcy cases might also be dismissed if you fail to pay court-ordered child support or alimony or if you fail you file your taxes while youíre still in bankruptcy.
Failure to comply with a court order from the bankruptcy court. When the bankruptcy court orders you to take an action, show up in court, or provide information, always comply. Otherwise, your bankruptcy could be dismissed.
If your bankruptcy trustee or creditor files a motion to dismiss your bankruptcy case, youíll be notified of a hearing. At that time, you can file an opposition to the motion. In any case, you should show up in court to argue or prove that your case should not be dismissed. You may be able to have the case re-instated, but youíll have to file the paperwork quickly.
You can also file to have your own bankruptcy dismissed, for example, if you find out that one of your debts canít be completely discharged in bankruptcy or you realize you can afford to repay your debts after all. This is known as voluntary dismissal. In a Chapter 13, bankruptcy case, you choose to have your case dismissed. However, the court determines whether to dismiss a Chapter 7 bankruptcy case and sometimes, the judge may not allow you to end your bankruptcy.
Unfortunately, once your bankruptcy case is dismissed, you no longer have court protection from your creditors. They can resume collection activity, the least of which could be calling you for payment. Creditors can also sue you, foreclose on your property, or repossess your vehicle.
Bankruptcy law is complex so itís often better to work with a bankruptcy attorney. That way, you reduce the likelihood of getting your bankruptcy case dismissed.