The Short Answer
A dismissal in bankruptcy means the court has removed you from your case — your bankruptcy is essentially canceled. When this happens, all the protections you had, including the automatic stay, disappear immediately, and your debts and any pending actions like foreclosure snap back to exactly where they were when you filed. The most common reason for dismissal is failing to make your Chapter 13 plan payments. You can avoid dismissal by staying current on payments and following all court requirements throughout your case.
The most common example of a dismissal is due to nonpayment of your Chapter 13 bankruptcy plan payment. When you enter into a Chapter 13 bankruptcy agreement, you state that you will make a payment to the court each month for the duration of the bankruptcy; when you do not make that payment to the court, the bankruptcy Trustee will put you up for a dismissal hearing. At that time, the Trustee will either allow you to resume making payments (which will normally increase to compensate for the missed payments), or they as the courts to kick out your bankruptcy for failure to make payments. The bankruptcy court and the bankruptcy Trustee want your bankruptcy to be successful so if they can find a way to work with you they normally will.
However, if you default on plan payments again, or for whatever reason, he has not received the full amount of the monies from the garnishment (or does not receive the money at all) then he will file a motion to dismiss your case (which the court will find sufficient evidence to do so) and will file an order for dismissal of your case. Once your case is dismissed, your personal financial circumstances revert back to the state that they were at the time that you filed your bankruptcy. Meaning if you were behind on your home and it was in foreclosure status, you will go right back to being behind and in foreclosure status yet again.
Nonpayment is the most common reason for a dismissal, but there are other cases in which it can happen. The bottom line is, making your payments and complying with any bankruptcy rules and regulations means you shouldn’t have any problems.
Key Takeaways
- A bankruptcy dismissal cancels your case and immediately wipes out all legal protections the filing gave you.
- Missing Chapter 13 plan payments is the single most common reason cases get dismissed in North Carolina.
- After a missed payment, the trustee may give you a chance to catch up — but your ongoing monthly payment will typically increase to cover what you missed.
- If your case is dismissed while your home was in foreclosure, you go right back into foreclosure with no buffer time.
- Complying with all court rules and making every payment on time is the most reliable way to avoid dismissal.
- Your attorney should be your first call the moment you think you might miss a payment — early action gives you the most options.
Attorney Insight
The mistake I see most often is clients going silent when they miss a payment — hoping the problem will quietly resolve itself. It never does. In Chapter 13, the trustee (whether that's Anita Jo Kinlaw Troxler in Greensboro or Al Overcash in Charlotte) moves quickly on missed payments, and by the time a dismissal hearing is scheduled, your options are already narrowing. Call us the moment you know a payment is going to be short — that's when we can actually do something about it, not after the motion to dismiss has already been filed.
