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Filing Chapter 13 bankruptcy allows individuals and families in tough financial situations to reorganize their debt and create a plan to pay while maintaining their assets. This involves a three to five-year repayment plan. However, not all Chapter 13 cases go as planned.
Sometimes, the court may dismiss a Chapter 13 bankruptcy before the debtor completes their repayment plan. When this happens, it can have serious consequences. This includes reinstating their previous financial obligations and causing other potential legal issues.
If this happens to you, a North Carolina bankruptcy lawyer from our team can help. You will want to speak with an attorney as soon as possible. An attorney will be your best possible resource during this process.
Possible Reasons for a Chapter 13 Bankruptcy Case Dismissal
There are several reasons why a bankruptcy court might dismiss a Chapter 13 case. Some of the most common include:
- Failure to Follow the Repayment Plan: The court could dismiss your case early when you fail to make the agreed-on payments.
- Ineligibility for Chapter 13 Relief: You must have regular income to qualify for Chapter 13. If you lose your job or otherwise no longer meet the eligibility requirements, the judge could dismiss your case.
- Failure to File Required Documents: You must submit the required financial documents to qualify for bankruptcy. This includes tax returns, financial statements, and a repayment plan. Without them, they could dismiss your case.
- Inability to Modify the Plan: If you need to alter your plan and cannot come to an agreement with creditors or the court will not approve your new repayment plan, they could dismiss your case.
- Non-Compliance with Court Orders: If you do not comply with court orders, such as appearing in court when required, the court could dismiss your case.
- Fraud or Misrepresentation: If there is evidence you committed fraud or misrepresented your financial situation, the court could dismiss your Chapter 13 bankruptcy and impose additional penalties.
Consequences of a Dismissed Chapter 13 Bankruptcy Case
If the bankruptcy court dismisses your Chapter 13 case early, you will likely face several significant consequences. This includes:
- Return of Previous Debt: Filing bankruptcy automatically halts your creditors’ collection activities. This ends when the court dismisses your bankruptcy. Creditors can immediately resume collections, and this could include aggressive actions, such as repossession, foreclosure, and wage garnishment.
- Possible Effects on Future Bankruptcy Filings: Depending on the cause, a Chapter 13 dismissal could prevent you from getting approved for bankruptcy again in the future. This is especially true if you failed to comply, failed to appear before the court, or committed fraud, and the court dismissed the case “with prejudice.”
- No Discharge of Debts: Chapter 13 discharge releases you from qualifying debts. When the case is dismissed before you complete the repayment plan, you are liable for the full amount originally owed.
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Can You Refile After a Chapter 13 Bankruptcy Case Dismissal?
In certain situations, a debtor may be able to refile for Chapter 13 bankruptcy after a dismissal. This will depend greatly on the circumstances of the dismissal. There are a few considerations that you will likely want to discuss with a bankruptcy attorney to better understand your options. These include:
When Can You Refile?
Most people can refile Chapter 13 bankruptcy after a relatively short waiting period. This may be your best option. However, if the case was dismissed with prejudice, it could disqualify you from filing bankruptcy for a much longer period. This depends greatly on the circumstances of the dismissal.
Have You Addressed the Issues?
You will need to resolve the issues that caused your Chapter 13 dismissal before you refile. For example, if you missed payments, you will need to demonstrate that you have solved the issues that prevented you from paying and can now make the promised payments.
If you lost a job, you must show you now have steady employment and income. This can be much more difficult if you failed to comply with court orders.
Learn About Your Options
Your best option is to discuss what you should do with a bankruptcy attorney. If you are in North Carolina or South Carolina, our team can help you understand your rights and options for moving forward.
This could include refiling Chapter 13, considering Chapter 7, or exploring other debt relief options.
When Should I Talk to a Bankruptcy Lawyer About My Chapter 13 Dismissal?
When Chapter 13 bankruptcy goes smoothly, it can greatly reduce your financial stress. However, an early dismissal can cause serious financial and legal problems. Losing bankruptcy protections and the return of old debts could make financial matters worse than they were before filing Chapter 13.
Our attorneys can provide legal guidance so you can understand your options and the steps you should take if you are facing a dismissal. We represent individuals and families in North Carolina or South Carolina who are dealing with a dismissal or considering filing bankruptcy.
Discuss Your Chapter 13 Case with Our Team
At Farmer & Morris Law, PLLC, we provide confidential consultations for those who are considering filing for bankruptcy or need help with an ongoing bankruptcy.
We can help if you face a Chapter 13 dismissal, too. We serve clients in North and South Carolina from our offices in Rutherfordton, Morganton, Shelby, and Hendersonville, NC, and Spartanburg, SC.
Contact us today to speak with our team about your options or next steps. A bankruptcy lawyer from our team can help you determine your best options and what that entails and take the necessary steps to address your financial stress. We have someone available to help you today.
