My Bankruptcy Was Dismissed. Now What?

by Susanne Robicsek, North Carolina Bankruptcy Attorney

July 13, 2011

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You file for bankruptcy for a reason, usually due to overwhelming debts.  But what if  your bankruptcy was dismissed, and you want to keep your bankruptcy case going?  There may be things you can do to save your bankruptcy case – if you act quickly.

Acting quickly and doing what you were supposed to have done can be the basis for reconsidering the bankruptcy dismissal.

It will be up to the bankruptcy judge whether or not your case can be reinstated, and that decision will depend on your circumstances.

  • Failure to make Chapter 13 bankruptcy plan payments

Chapter 13 bankruptcy is set up to make payments on all or some of your debts over a period of time – normally 3 to  5 years.  Chapter 13 protects your home by catching up missed house payments, protects assets, and writes down general unsecured debts to an affordable repayment amount.

The most common reason for a Chapter 13 dismissal is failure to make the required payments.

If you fall behind on your bankruptcy payments, the Trustee will likely file a Motion/Notice to Dismiss your bankruptcy.  The best thing to do is talk to your lawyer before your case is dismissed, and maybe your plan can be adjusted to make up for the missed payments.

  • Changed circumstances

What if  you couldn’t pay your plan payments because you just didn’t have the money, but after the hearing you got a new job or a family member told you that they could give you the money to help?

These changed circumstances might be enough to convince a judge that you deserve another chance.    The judge is going to need to believe that the change in circumstances will  get you back on track, even though it came just a bit later than your dismissal hearing did.

Many bankruptcy judges understand that missed payments are not always because a debtor wasn’t doing their best.  Sometimes financial problems happen to the best people, and there just isn’t enough income to cover the basics.

It certainly helps if you had a good payment history during your Chapter 13, or otherwise followed the rules before you got behind.  It also is good if  you haven’t had multiple motions before the court.

In other words, it helps if you did everything you could, but the situation leading to your dismissal was beyond your control, such as a job loss or a true emergency.

  • Not following Court orders or doing what you are supposed to do

Chapter 7 cases are dismissed for a number of reasons, but the most common one is that you didn’t do something you were supposed to do, like turn in all your documents or show up in court.   (Also holds true in Chapter 13).

You should call your attorney immediately to discuss if anything can be done in your case to fix the underlying reason behind the dismissal, and to help you file the appropriate legal documents to try to get it reinstated.  Your bankruptcy petition requires the disclosure of a lot of information, and if you left anything off or don’t get backup information to your trustee when asked, your bankruptcy case may be dismissed and you won’t get your discharge.

There are a few reasons that your attorney might advise you to ask the court to reconsider the dismissal and reinstate your case.  If you have a really good excuse for not doing what you were supposed to do, a judge might forgive you and let you resume with your case.

Another reason would be that your circumstances changed since your dismissal hearing, and with the new circumstances the judge might not have dismissed the case.

If a Chapter 7 is dismissed it may be a bit harder to get it reinstated, because Chapter 7 dismissals are usually based upon a failure to file documents, show up in court, or otherwise follow the rules.  These are often seen as having been in the control of the debtor, and a judge may find that if you don’t play by the rules, you can’t play in that game.

I often see  Chapter 7 cases dismissed in cases where the debtor filed Pro Se, or on their own without an attorney.

Not knowing the rules isn’t an excuse not to follow them and you must be prepared to get all your ducks in a row to comply with the rules.  It will help to have an attorney take over your case. It still will depend on the judge, local practice, how quickly you acted, the reason for the failure to act, and whether it would harm others to reinstate your case.

An attorney will probably charge you to file the Motion to Reinstate (depending on your fee contract and what your court allows), any work required to ’fix’ your issue, not to mention the cost of notifying all of your creditors of the motion and hearing.

If you get a Motion to Dismiss or any other motion in your case, you should always contact your lawyer as soon as you get it.  Dealing with the problem before your case is dismissed is always easier than trying to back track and get a judge to change his or her mind, not to mention a lot less trouble and cost.

If your case is dismissed, you should ask your attorney about filing a new case.  Not all judges will do reinstate, and the circumstances and timing have to be right.  It may be better to start over or you might have no other choice.  As with any decision to file for bankruptcy, this will be determined on a case by case basis depending on your particular circumstances.  Talk to s lawyer to find out what you should do.

  • What if you want to dismiss your case and get out of bankruptcy?

In some cases, someone wants to dismiss their case.   If they are in Chapter 13, this may be easier than if it is a Chapter 7 you want to dismiss.  There are sometimes  alternatives to bankruptcy that might help you.

But if you want to save your bankruptcy filing, ultimately, the decision will be up to the judge.  If you are considering asking for dismissal of your case, talk to your lawyer first.

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Concentrating in Consumer Bankruptcy Law since 1988; Wake Forest Law School JD 1987 Law Office of Susanne M. Robicsek since 1993, Law Clerk to Judge Rufus Reynolds, US Bankruptcy Judge for Middle District of NC; Burns Price & Arneke, PA, David Badger and Associates, PA.

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Last modified: August 20, 2013