What Happens If My Bankruptcy Case Is Dismissed?

It’s a very rare situation that a Chapter 7 bankruptcy will get dismissed.  On the other hand, in a Chapter 13 bankruptcy case, getting dismissed (or “kicked out”) from bankruptcy unfortunately occurs more often than many people would think.  The most common reason is due to a default in plan payments, but there are numerous situations which can occur that would result in your case being dismissed.  Since everyone knows the reason(s) that they were dismissed, the most common question that occurs is, “What happens now?”

Your financial situation goes right back to where it was before you started the bankruptcy. Literally.  When you file a bankruptcy, the second that you have a case number you have an automatic stay or protective bankruptcy “stay” against you.  This means that any pending foreclosure, repossession, lawsuit, or debt collection attempts cease immediately.  When you are dismissed from a bankruptcy, your status reverts right back to where it was at the time that you filed the bankruptcy.  If your home was in foreclosure at the time that you filed the bankruptcy, the mortgage company has the right to start procedures right back up again. (And in most cases, they do.) If you were behind in your vehicle, your finance company has the right to resume where they left off and repossess the vehicle.

Not that it’s bad enough that your situation goes to what it was, don’t forget that you filed the bankruptcy in the first place; it will show on your credit, and stay there for the next 7 to 10 years.  Whether you complete your case or not, you still filed a bankruptcy and your credit will reflect doing so.  The good thing about being dismissed (and the only good thing) is that in most cases you can re-file the bankruptcy if needed.  Of course, there are certain provisions and criteria to re-filing which you will need to discuss with your attorney.  The bottom line in it all is to make sure that you take the steps necessary to comply with the bankruptcy provisions to ensure that your bankruptcy is smooth sailing.