Much has been written on this blog about the need to think carefully about filing bankruptcy and all of the information you will need to gather when meeting with your lawyer. But what happens if you simply change your mind after you file? Can you cancel your bankruptcy filing and go back to where you were financially and legally the day before you filed?
The short answer to this question is “no,” you cannot cancel your bankruptcy filing and somehow undo the process. You may be able to dismiss your case, or your case may be dismissed by the court, but a dismissal is not the same thing as undoing the process. In other words, you cannot annul your bankruptcy filing like you might annul a marriage.
When you file your bankruptcy petition, a public record is created about your filing. At a minimum, your name and the last 4 digits of your Social Security number will be associated with a bankruptcy case number. This bankruptcy case filing will be picked up by one or more of the credit bureaus and under federal law, your bankruptcy case number will remain on your credit profile for up to 10 years.
If you file bankruptcy and change your mind, it may be possible to dismiss your case or allow your case to be dismissed, but, again, a dismissal does not remove the evidence of your filing from the public record or from your credit report.
Your ability to voluntarily dismiss your bankruptcy case will depend on whether you filed a Chapter 7 or 13. As a general rule, the Bankruptcy Code allows you to voluntarily dismiss your Chapter 13, although you should never do so without the benefit of counsel. You cannot voluntarily dismiss Chapter 7 without specific approval of the judge in your case and if you schedule non-exempt assets (or if the trustee suspects you have non-exempt assets), you may be forced to remain in your bankruptcy case even if you want out.
In a future blog post, I will discuss some of the issues that arise when you voluntarily dismiss your Chapter 13, and what happens if you want to dismiss your Chapter 7 but face opposition, but for now, keep in mind a big picture principle – when you file bankruptcy you start a process over which you do not have full control. Third parties in the form of your bankruptcy trustee, your creditors and even your judge will have a say about your future financial affairs.
If you have concerns or hesitations about whether or not bankruptcy is the right call for you, I urge you to voice those concerns to your lawyer. Your bankruptcy filing constitutes a serious legal action and you should not approach it casually.
Experienced bankruptcy lawyers understand that neither Chapter 7 nor Chapter 13 is a “one size fits all” solution and that filing bankruptcy may be one of many competing options. Thus, when you interview lawyers for your prospective filing, you should be concerned if the lawyer does not discuss non-bankruptcy alternatives and the negative implications of filing.
Bankruptcy can be a very powerful tool and it can solve a lot of problems. However, always remember that when you involve yourself with the bankruptcy court system you do not have the final say.
by Jonathan Ginsberg, Atlanta bankruptcy
Jonathan Ginsberg, Esq.
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Last modified: May 21, 2013