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Dismissing A Bankruptcy Case: Can It Be Done?

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In life, we tend to change our minds about a lot of things. That’s true also in the law; many times people file lawsuits and then later decide they don’t want to continue pursuing the lawsuit. But can you do that with a bankruptcy? If something changes, or you change your mind can you just dismiss your bankruptcy?

Why Dismissing Isn’t So Easy

Unlike many kinds of lawsuits that do allow you to just dismiss your case or lawsuit whenever you want, doing that is not so easy when you file for bankruptcy.

The problem with dismissing a bankruptcy is that courts are concerned that the bankruptcy system could be easily abused if that were to happen.

For example, a debtor could file a bankruptcy, and accidentally show creditors that the debtor has assets, and then just dismiss the case, keeping the creditors from getting to those assets. A debtor could file a case, realize that an asset was going to be taken, dismiss the case, and then get rid of that asset.

In some cases, a debtor tries to conceal an asset from the bankruptcy court–but then fails, when the asset is discovered. Intentional concealment of property from a bankruptcy court is a crime. The law doesn’t allow someone to evade a potential crime simply by dismissing a bankruptcy case.

Even if you are allowed to dismiss your case—and you are, sometimes allowed to do so—when you refile, you often will not get the benefit of the automatic stay, a huge reason why many people file for bankruptcy.

Avoiding Dismissal

The best strategy to avoid even having to dismiss a bankruptcy is to discuss your entire financial situation with your bankruptcy attorney, and make the strategic decision to file or not to file your bankruptcy case, and to discuss how you will handle any assets that could potentially be taken by a court.

Remember that if something unexpected does happen, and you have concern that property could be taken that you don’t want taken, you also may have the option to convert your case to a Chapter 13, in which case your property is not taken. This is often a much better and viable alternative to dismissing your bankruptcy case.

Dismissing Chapter 13 Cases

If you start off your case as a Chapter 13 bankruptcy, you can opt to dismiss your case, so long as the case did not start off as a Chapter 7 and then convert to a Chapter 13. In Chapter 13, when you are making payments, a court cannot legally compel you to continue making payments if you no longer want to (of course, there may be other negative consequences of dismissing a Chapter 13 case, but it legally can be done).

Contact the Boca Raton bankruptcy attorneys at the Law Offices of Stephen Orchard at 561-455-7961 today for help getting your bankruptcy right the first time around.

Source:

https://www.flsb.uscourts.gov/local-rule/dismissal-case#:~:text=The%20court%20may%20dismiss%20a%20case%20under%20chapter%2013%2C%20without,1(C)(1)

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