Home » What Happens if You Voluntarily Dismiss Your Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a form of bankruptcy that allows you to reorganize your debts. After successfully declaring Chapter 13 bankruptcy, a monthly payment plan will be established that allows you to repay your creditors over a specific period of time.
As a debtor, you have the right to dismiss your Chapter 13 bankruptcy case at any time. Afterwards, you will no longer be obligated to make payments under your designated repayment plan. However, you may lose the benefit of being in a bankruptcy case. In other words, your creditors will be allowed to resume collecting on their debts, potentially repossessing your assets or foreclosing on your property. You will owe your creditors whatever was due before initiation of your bankruptcy case, minus the payments that were made while your case was active.
If you need help with your bankruptcy case, get in touch with our experienced bankruptcy attorneys at Young, Marr, Mallis & Associates by dialing (609) 755-3115 today.
Consequences of Dismissing Your Chapter 13 Bankruptcy
While you have the right to voluntarily dismiss your Chapter 13 bankruptcy case, it is important to understand the consequences of doing so. Once the bankruptcy judge presiding over your case signs the order granting dismissal, you will no longer need to make the payments outlined in your repayment plan. Furthermore, neither the Chapter 13 trustee or the court will have any further jurisdiction over your tax refunds, income, or anything else mentioned in your plan.
However, you will lose your “automatic stay” that prevents creditors and collection agencies from contacting you. Accordingly, your creditors may once again seek to repossess your property or foreclose on any collateral that serves to satisfy your debts. You will owe them the same amount that was due before declaring bankruptcy, minus any payments you made before your case’s dismissal. Furthermore, after dismissing your case, you may face accrual of interest on outstanding debts, damage to your credit score, and an extended waiting period before being eligible to file for bankruptcy again.
It is important to understand how your creditors will react before voluntarily dismissing your Chapter 13 bankruptcy. You may consult with our Bensalem bankruptcy lawyers to determine the best course of action in your case.
Why Would You Want to Dismiss Your Chapter 13 Bankruptcy?
There are multiple reasons that you may want to dismiss your Chapter 13 bankruptcy. For instance, if you receive a pay raise while your case is still active, your new income may have to be paid directly to creditors. In this scenario, it may be advantageous to dismiss your case and resolve your debt through negotiation.
Furthermore, you may want to dismiss your Chapter 13 bankruptcy because your scheduled payments have gotten to a level where you can no longer afford them. You may end up owing more money than you originally owed if you fall behind on other payments like your mortgage in order to satisfy your expensive repayment plan.
How to Request a Voluntary Dismissal of Your Chapter 13 Bankruptcy
The process for requesting a voluntary dismissal of your Chapter 13 bankruptcy case is relatively simple. You will need to submit a written notice to your Chapter 13 trustee informing them of your decision. Your notice should include your name, case number, and your signature. The letter must either be mailed or hand-delivered to the office of the trustee.
Your notice of dismissal does not need to go into the specific reasoning behind your request. You have the right to dismiss at any point. You do not need to waste your time explaining your decision.
After submitting notice to your Chapter 13 trustee, they will file a motion to dismiss that formally establishes your dismissal. The trustee will then stop deducting money from your paychecks and your case will be dismissed.
Can You File Again After You Voluntarily Dismiss Your Chapter 13 Bankruptcy?
If you voluntarily dismiss your Chapter 13 bankruptcy, you will likely be able to file again right away. When you attempt to file again within one year of having a previous Chapter 13 case open, you will be granted a 30-day automatic stay that prevents your creditors from contacting you. However, after that 30 days is up, you will have to file a motion with the court seeking to extend the stay. For your motion to succeed, you must prove that your circ*mstances have changed and that you are likely to complete the new case.
If you attempt to file a new Chapter 13 bankruptcy case within a year of having two or more cases open, the process becomes even more difficult. Under this scenario, an automatic stay will not be immediately granted. Furthermore, in order to establish an automatic stay, you have to show by clear and convincing evidence that there is a significant change in circ*mstances that will allow you to complete the new case.
Finally, if creditor obtains relief from an automatic stay in your case, you must wait at least six months before filing a new case if you wish to include the creditor who obtained relief.
What Are Your Other Options After a Voluntary Dismissal of Your Chapter 13 Bankruptcy?
Besides filing for bankruptcy again, there are some alternative options for debt resolution after voluntarily dismissing your Chapter 13 bankruptcy case. First, if your financial situation has substantially improved, you may be able to pay off your debts in full. However, if you are unable to pay off your debts in full, you may be able to reach an agreement with your creditor to pay less than the full amount owed. It is worth attempting to negotiate with creditors to see if your case can be resolved. Doing so may help avoid re-filing for bankruptcy.
If You Need Help with Your Bankruptcy Case, Call Our Law Firm Today
Seek guidance and support from our experienced Abington bankruptcy lawyers by calling Young, Marr, Mallis & Associates at (609) 755-3115 for a free evaluation of your case.
