When you are filing bankruptcy, whether it is Chapter 7 or Chapter 13, you must follow a defined process as defined by the bankruptcy laws of each state. There are specific forms you must fill out accurately and completely, fees that you must pay, and court appearances that you or your attorney must attend. It can be a lot to keep up with. But did you know that it is possible that your bankruptcy filing could be thrown out through a motion to dismiss, and if this happens you do not get to walk away from or reorganize your debts as you hoped to do? Read on to find out how this happens, what it means, and what you can do if it happens to you.
How can your bankruptcy be thrown out?
A bankruptcy is typically thrown out through the filing of what is known as a motion to dismiss. This means that your bankruptcy is dismissed prematurely rather than ending in a discharge of your debts.
Why is a motion to dismiss filed?
Either the person who originally filed for bankruptcy or the trustee assigned to the bankruptcy case can file a motion to dismiss. The person who originally filed for a bankruptcy may file a motion to dismiss simply because the person realizes he no longer needs the discharge of debt offered by the bankruptcy. But most often a motion to dismiss is filed by the bankruptcy trustee.
The bankruptcy trustee may file a motion to dismiss for a number of reasons, but typically it is because of a mistake by the person filing the bankruptcy. The reasons can include but may not be limited to the following:
- Recurring payroll deductions are still occurring and need to be stopped
- All of your assets or creditors are not included in the appropriate schedules
- The required schedules were not all completed and filed timely
- Payments are not made per an agreed-upon Chapter 13 payment plan
What happens if my bankruptcy is dismissed?
If your bankruptcy is dismissed, the protection offered by the bankruptcy proceeding against your creditors no longer exists. This means that foreclosure proceedings and debt collectors seeking repayment of money you owe can restart their processes in an effort to take your assets.
In addition, even though the dismissal of your bankruptcy means that your bankruptcy was not completed, your credit report will still show that you filed for bankruptcy. The bankruptcy will remain on your credit report for at least seven years and will have a negative impact on your credit score.
What can you do about a motion to dismiss?
Generally, when a motion to dismiss is filed by a trustee, it is to get your attention to correct some defect in your bankruptcy plan, such as the instances noted above. Usually if you actively reply to the motion to dismiss and take steps to address the reason, the bankruptcy case will be permitted to continue. For example, if the motion to dismiss notes that a specific schedule was not filed with the bankruptcy court, addressing the motion may be as simple as completing and filing the required schedule.
If you believe the motion to dismiss does not have merit, you may also be able to file a brief in opposition to the motion to dismiss. Any opposition to the motion to dismiss must include the specific reasons why the motion to dismiss should be rejected and the bankruptcy case should be permitted to continue.
The laws governing when and how a brief in opposition can be filed vary by jurisdiction, so you will need to understand the local, state, and federal laws applicable in your location. But in the end, if you do not address the concerns and any opposition you file against the motion to dismiss is rejected, your bankruptcy case may be dismissed. The effect of having your bankruptcy dismissed varies depending on the type of bankruptcy you filed.
If you were in a Chapter 7 bankruptcy, you must wait eight years before you can refile a Chapter 7 bankruptcy. However, you can file for a Chapter 13 bankruptcy after only two years.
If you were in a Chapter 13 bankruptcy, you can refile for Chapter 7 or Chapter 13 bankruptcy without a waiting period, so long as the bankruptcy court did not place a restriction on your ability to refile as a part of the dismissal.
How can I get help from a bankruptcy attorney?
As noted above, filing for bankruptcy can be a tricky process for someone who is not trained and experienced in bankruptcy laws and proceedings, especially if you are seeking to oppose a motion to dismiss your bankruptcy case. That is why it is best to use a bankruptcy attorney when considering filing for a bankruptcy.
If you need help with a bankruptcy, please call the telephone number located at the top of this web site. A bankruptcy attorney will contact you free of charge to answer your initial questions and with no further obligation. So make the call today and get the help you need with your bankruptcy.
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