24 Oct Automatic Dismissal in Asset Chapter 7 Cases
When a Chapter 7 trustee determines that there are non-exempt assets in a case to administer, the last the thing the trustee wants is for the case to be dismissed. Courts tend to agree with this and prefer to keep debtors in the bankruptcy case involuntarily if necessary so that the assets can be distributed to creditors.
However, section 521(i), enacted as part of BAPCPA states that if certain documents are not filed in a case it will be dismissed on the 46th day after the filing of the petition. In the recent case of Rivera v. Miranda, 2007 WL 2993611 (D.Puerto Rico 2007) a debtor filed a motion to dismiss his Chapter 7 case based on his own failure to file required documents. The trustee objected because there was an asset to administer. The Bankruptcy Court agreed with the trustee, but the District Court reversed stating that the automatic dismissal provisions of section 521 were absolute.
However, it is worth noting that a vigilant trustee can avoid this result by filing a motion to excuse the debtor from his duties before the passage of the 45th day after the petition date.
Nicholas Ortiz, Boston Bankruptcy Attorney
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