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Bankruptcy protection can have many benefits, including the immediate relief of the automatic stay. Its benefits continue once your case is fully discharged. When filing, you should understand the difference between a bankruptcy dismissal versus discharge. A dismissal removes all the benefits of bankruptcy and puts your debts back on your shoulders. Discharge relieves you of debt and gives you a fresh financial start.
Filing for bankruptcy can help you reset your finances by eliminating debt far exceeding your ability to repay. While bankruptcy is a viable option, it is also a complex legal process that can be challenging to navigate alone. A Rutherfordton bankruptcy lawyer in your area can help. Many law firms will review your case at no cost or obligation—an opportunity for you to learn about your bankruptcy options.
What Is a Bankruptcy Discharge?
While it can vary based on the bankruptcy Chapter you file under, a discharge generally erases your remaining debt and your legal obligation to repay it. Once achieved, a bankruptcy discharge is permanent, and you can never be held responsible for the discharged debts again.
Further, having your debts discharged prohibits the creditor from communicating with you about the debt. They cannot contact you via phone, email, written correspondence, or in any other way. Your designated trustee (appointed by the court) will notify your creditors of the discharge and their obligation to cease communication related to collecting the debt in the future.
What Debts Can You Discharge When Filing Bankruptcy?
Every case is unique, and dischargeable debt can vary based on your bankruptcy Chapter and other circumstances specific to your case. However, debts that are generally discharge-eligible include:
- Medical bills
- Past-due rent
- Past-due utility bills
- Some civil judgments
- Some overdue tax debt
- Unsecured credit card debt
- Unsecured personal loans
Debts that are not generally discharge-eligible can include:
- Child support obligations
- Criminal restitution
- Debts not included in your filing
- Drunk driving accident debts
- Fraud-related debt
- Government fines
- Spousal support obligations
- Student loans (exceptions apply)
The best way to understand dischargeable debt is to let a bankruptcy lawyer guide you through the filing process rather than navigating it alone.
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What Is a Bankruptcy Dismissal?
The U.S. Courts define bankruptcy dismissal as the court’s refusal to allow a case to be discharged. A dismissal will leave all debts intact, and your creditors can resume collection actions. Some reasons a bankruptcy judge might dismiss your bankruptcy case include:
- You failed to make the required payments in a chapter 13 plan
- Your case did not meet the legal requirements.
- Your bankruptcy filing was incomplete.
- You failed to pay the mandatory bankruptcy fees.
- You missed a Meeting of Creditors or court appearance.
- You did not attend debtor education courses.
- You chose the wrong bankruptcy Chapter.
You could also request a voluntary dismissal in some situations. Having your bankruptcy dismissed can have a profound effect on you and your financial situation. Consider hiring a bankruptcy attorney who can provide legal guidance and support from the start.
Can You Refile if Your Bankruptcy Case Is Dismissed?
In some cases, you can refile your bankruptcy application even after dismissal. The circumstances of your case will dictate the specific timing. Refiling can also affect other areas of your bankruptcy. For example, the automatic stay protection in a refiled bankruptcy case could last as little as 30 days.
In addition, typically, you can only refile if your case is dismissed without prejudice. In lieu of dismissal, your case might be converted to a different bankruptcy Chapter.
How Do You Choose the Right Bankruptcy Chapter?
When you declare bankruptcy, you must file under a specific Chapter. Filing an effective case and getting the much-needed discharge starts with choosing the right type of bankruptcy in the first place.
Chapter 7 Bankruptcy
This bankruptcy Chapter offers individual filers, sole proprietors, and small business owners the chance to keep most—if not all—of their assets since most are exempt-eligible.
Chapter 11 Bankruptcy
Business owners who file under this Chapter can restructure and reorganize their debt into a manageable payment plan. Under Chapter 11, they can repay some or all of their debt without losing important assets.
Chapter 12 Bankruptcy
This Chapter is designed to meet the specific needs of family farmers and fishermen. It allows them to avoid potentially devastating losses and repay their debt over time while continuing to run their farm or fishery.
Chapter 13 Bankruptcy
Individuals or small business owners who choose Chapter 13 bankruptcy can effectively restructure their debt, create a workable repayment plan, and avoid losing their home, vehicle, and other property.
Is it Worth Hiring a Lawyer to File for Bankruptcy?
From paperwork to court appearances to meeting with a bankruptcy trustee, the bankruptcy process is complicated, so working with an experienced bankruptcy attorney is advantageous. Your lawyer can:
- Complete and submit forms and paperwork
- Draft a realistic debt repayment plan
- Enforce the automatic stay, where applicable
- Represent you at bankruptcy court hearings
- Help you choose the right bankruptcy Chapter
- Provide ongoing updates on your case
While not mandatory, having a bankruptcy lawyer as your advocate can greatly benefit your case. Even the U.S. Courts do not recommend you file for bankruptcy without an lawyer to help you navigate the complexities of the bankruptcy process.
How Much Do Bankruptcy Attorneys Cost?
The cost of hiring a bankruptcy lawyer can vary based on the duration and complexities of your case. Your initial consultation usually comes with no fees or obligations, and your lawyer will clarify their fee structure upfront.
Legal Support Can Help You Avoid a Bankruptcy Dismissal
Filing for bankruptcy can give you the chance to relieve yourself of insurmountable debt and get a fresh financial start. Having your bankruptcy case dismissed can be frustrating and stressful and leave you with overwhelming debt.
At Farmer & Morris Law, PLLC, our bankruptcy lawyers can clarify the difference between bankruptcy dismissal and discharge. We can also help you avoid dismissal by building an effective case on your behalf. Learn more by getting your free bankruptcy consultation today.
