The vast majority of people filing for bankruptcy have clear goals in mind. They’re entering this intimidating process because they want to gain some breathing room from their creditors and get serious about discharging or restructuring their debts, so that they can move forward on surer financial footing, regain stability, and reclaim some peace of mind. 

In short, a well-managed bankruptcy filing can be a fresh financial start. The key word there? “Well-managed.” 

It’s important to understand that filing for bankruptcy under Chapter 7 or Chapter 13 does not automatically guarantee a discharge. It is certainly possible for a bankruptcy case to be dismissed, for any number of reasons. 

Understanding Bankruptcy Dismissals

Generally speaking, there are a few different reasons why a bankruptcy case might be dismissed. The debtor may fail to meet certain eligibility requirements, or fail to complete one or more necessary steps during the bankruptcy process. In other events, a case may be dismissed if the debtor fails to make timely payments, or if a trustee or creditor has reason to believe that there has been intentional misconduct (or fraud) on the part of the debtor. 

The dismissal process begins when one party in the bankruptcy — such as the debtor, trustee, or a creditor — files a motion requesting the dismissal. In some events, a debtor may seek a voluntary dismissal, and file the motion themselves. If the motion comes from the trustee or creditor, it is considered an involuntary dismissal. 

A bankruptcy filing may be dismissed with prejudice or without prejudice. Broadly speaking, if the court dismisses a case without prejudice, the debtor may file for bankruptcy again straightaway, without having to wait. Cases are generally dismissed without prejudice in situations where the debtor makes an honest mistake or, say, fails to complete paperwork on time.

Typically, filings may be dismissed with prejudice if the court believes that there has been unethical behavior on the part of the debtor.  A dismissal with prejudice may prevent the debtor from filing another bankruptcy for a specific period of time; in some circumstances, debtors may even be prohibited from discharging any of the debts that existed at the time of their first filing. 

In either event, a bankruptcy dismissal can be incredibly serious. For debtors, the dismissal of a case generally means continuing to be liable for outstanding debts, while also losing the protections of the automatic stay, which prevents creditors from attempting to collect. In other words? It puts debtors right back where they started. What’s more, filing a new bankruptcy case after dismissal may mean facing limits on the extent and duration of the automatic stay in your next case. 

Why Might a Bankruptcy Case Be Dismissed?

While no two bankruptcies are ever going to play out in exactly the same way, there are some common circumstances through which a case may be dismissed. A few of the most common reasons for the dismissal of a bankruptcy case include: 

  • Failing to file the correct paperwork and forms with the court or the bankruptcy trustee
  • Failing to attend the required meeting of creditors
  • Failing to complete mandatory pre- and post-bankruptcy credit counseling classes
  • Failing to file the court filing fee
  • Failing to create a viable Chapter 13 repayment plan that the court can approve
  • Failing to make Chapter 13 payments on time and in full
  • Filing a second bankruptcy case too soon
  • Failing to accurately disclose all required information, including income, assets, liabilities, and so on
  • Hiding property or making false statements about earnings, assets, and debts 

Making the Bankruptcy Process Work

Bankruptcy can be complex and time-consuming. It’s a daunting prospect for many debtors, and there’s no denying that this process comes with many moving parts and elements to consider. Making a mistake or even overlooking one simple variable could mean the difference between successfully discharging your debts — or receiving a dismissal, and ending up right back where you began. 

One of the most effective ways to make the bankruptcy process work for you may be to consult with an experienced local bankruptcy attorney. A legal professional and their team can provide the insight and working knowledge it takes to make it through this complicated process with all of the i’s dotted and t’s crossed. An attorney can help you create schedules and complete paperwork on time, handle negotiations and compliance, and offer guidance and insight every step of the way — whether you’re still exploring all of your debt relief options, or looking to move forward and make the most of your new opportunities after bankruptcy. 

In fact, data suggests that retaining an attorney dramatically increases your likelihood of having a successful bankruptcy. As legal information site NOLO reveals:

“According to reports issued by the U.S. Bankruptcy Court for the Central District of California, fewer than 2% of pro se Chapter 13 filers are able to get a repayment plan confirmed (approved by the court) as compared to 60% of debtors represented by an attorney.”

Have Any More Questions About Bankruptcy?

If you’re looking to continue the conversation with experienced bankruptcy attorneys in the Chicagoland area, don’t hesitate to get in touch with the Gunderson Law Firm. Our staff can help to provide you with actual, straightforward answers specific to your situation. No need to search for all the variables and hope you don’t miss any key details — just get in touch, and we can help set you down the right path to the fresh financial start you truly deserve.

At the Gunderson Law Firm, we take all steps possible to protect our clients and their assets immediately and throughout the bankruptcy process, while also offering counseling on realistic ways to avoid serious debt issues in the future. 

Whether you are a business owner, a wage earner, retired, or otherwise, we can help address your specific situation with strategic plans to help put severe indebtedness behind you so you can enjoy life again. Drop us a line if you’d like to continue the discussion online or in-person.