Appealing the Dismissal of a Chapter 13 Bankruptcy (2024)

FAQs

How to stop dismissal of Chapter 13? ›

Dismissal and Starting Over

You can file again as soon as you qualify for either Chapter 7 or Chapter 13. This will also involve filing a separate motion with the court to ask for an extension of the automatic stay, assuming that you file within a year of the dismissal.

Experiencing a bankruptcy dismissal can be an overwhelming experience, especially when creditors start reaching out to you for payment. One way to handle this is through debt settlement. Debt settlement is negotiating with creditors to reorganize the debt by agreeing on a payment schedule.

Chapter 13 Voluntary Dismissal

An unexpected illness or sudden job loss can result in you not being able to make your monthly payments. Dismissing your Chapter 13 case and refiling can restart your three to five year payment plan and reduce your monthly payments.

It's designed so you'll pay the amount you can afford. Therefore, the court will only let you complete your Chapter 13 bankruptcy early under two conditions: You can pay everything you owe in full other than long-term obligations like mortgages, or you can prove a financial hardship.

When your bankruptcy case is dismissed, you lose benefits and could be left worse off than before you filed your Chapter 13 case. Your debts will not be discharged. Your debts are discharged in Chapter 13 only when you complete your plan, which can last three to five years.

Dismissal of a Bankruptcy Case – Dismissal ordinarily means that the court stopped all proceedings in the main bankruptcy case AND in all adversary proceedings, and a discharge order was not entered. Dismissal can occur because a debtor requested the dismissal and qualifies for voluntary dismissal.

And even when they aren't willing to work with you, you're usually able to refile immediately if your case is dismissed without prejudice. If you want to appeal the dismissal rather than refile, you will have to file a notice that you are appealing with the court within a couple of weeks of the dismissal.

How long does a Chapter 13 bankruptcy stay on your credit report? In most cases, a Chapter 13 bankruptcy stays on a credit report for up to seven years after the bankruptcy filing date. Once the seven years have passed, the bankruptcy should come off credit reports automatically.

In the event that your bankruptcy was dismissed without prejudice, as is the case with most dismissals, you can refile immediately. This is very common for those who accidentally make errors when filing their paperwork or fail to meet certain qualifications.

When a debt is discharged through bankruptcy, your credit reflects that you no longer have to pay the debt. You can begin the process of slowly building up your credit, free from most debt. With a bankruptcy dismissal, however, all of your debts are reopened on your credit.

Can you walk away from a Chapter 13? ›

Chapter 13 – See Bankruptcy Code Section 1307 – A debtor has a right to dismiss its Chapter 13 bankruptcy case if the bankruptcy began as a Chapter 13 case, but the court may place restrictions on a debtor's ability to file a subsequent bankruptcy case.

Trustees do not monitor your income during the course of your repayment. However, a trustee possesses what Ginter terms “broad powers” and responsibilities. They include: Determining if you qualify for Chapter 13 bankruptcy.

Once a bankruptcy case is dismissed, the automatic stay is no longer in effect. That means creditors can take all collection action allowed by law. Collection activities may include collection letters, debt collection lawsuits, wage garnishments, repossessions, and foreclosures.

If you filed for bankruptcy to avoid foreclosure or are behind in house payments, your Chapter 13 plan payment could be more or less $1500 per month. Additionally, high income, high debt Chapter 13 filers would usually be required to make payments between $2000 and $3000, or even more.

This is known as a percentage plan and can vary from 1% - 99%. A 100% plan indicates that the petitioner does not qualify for debt reduction based on their income and ability to pay. This Chapter 13 plan structures 100% of that client's debt to be paid back through the repayment process.

If your Chapter 13 bankruptcy case was dismissed, you could refile. However, you will need to wait 180 days if any of the following apply to your case: You voluntarily dismissed the case after a Motion for Relief was filed. The case was dismissed with prejudice.

The law says that a person who has received a “discharge” in bankruptcy must wait several years before being eligible for discharge in another case. However, if you were in a Chapter 13 case that was dismissed before you received a discharge, then this limitation doesn't apply. You would be free to refile immediately.

Getting a Refund After Dismissal

As you make payments under your repayment plan, the money goes to your bankruptcy trustee, who then distributes it to your creditors. If your case is dismissed, you are entitled to a refund of any money that is still in the trustee's possession.