My Case Was Dismissed – Now What?
My Case Was Dismissed, Now What?
Your bankruptcy case was dismissed and now you want to know what options you have. It first depends on what chapter of bankruptcy you filed and then on why the case was dismissed.
It is not so common that a Chapter 7 is dismissed. The only obligations that a Debtor has after the filing of a Chapter 7 is to attend the Trustee’s 341 Meeting of creditors, complete the Financial Management Course, also known as the 2ndcertificate or FMC, and providing any requested information to the trustee. Given there are so few obligations, most Chapter 7’s see completion without dismissal or other issues.
However, cases can dismissed for failing to comply with the obligations mentioned above. If the Debtor or Debtors do not appear at the Trustee’s 341 Meeting of creditors the trustee will continue it to another date for Debtor or Debtors to appear. However, if Debtor or Debtors do not appear at the continued Trustee’s 341 Meeting of creditors, the trustee can move for dismissal of the case.
Failure to complete the Financial Management Course, also known as the 2ndcertificate or FMC will not end in dismissal of the case but it will result in closing of the case without discharge. Receiving a discharge of your debt is the reason a bankruptcy is filed so closing of your case without discharge means that all of your debt is still owed and defeats the whole purpose of you filing for bankruptcy. To avoid this, complete your Financial Management Course right after the case is filed so that after your Trustee’s 341 Meeting of creditors, there is nothing for you to do unless your attorney or the trustee requests additional information.
Failure to comply with trustee’s requests is an unfortunate way to have your case dismissed without discharge. If the trustee requests any information from you directly or through your attorney and you fail to comply with the request, the case will likely be dismissed. If your case is dismissed you do not receive a discharge even if documents of discharge were previously received. Discharge can be revoked for failure to comply. Here is a common example: You attend your Trustee’s 341 Meeting of creditors and the trustee asks that you forward him a copy of your upcoming year’s taxes once they are filed. You say okay, and go on about life. You receive notice of your discharge, wiping all of your dischargeable debts away. Now you do not have to send anything to the trustee right? Wrong, and unfortunately an all too common wrong.
One uncommon but certainly possible way to have your Chapter 7 bankruptcy dismissed is for ineligibility to receive a Chapter 7 discharge. In order for you to be eligible for receive a discharge in a Chapter 7 bankruptcy, you must not have previously received a Chapter 7 through a case that was filed within 8 years of the filing of the new bankruptcy case.
A chapter 13 has numerous ways and reasons for being dismissed. Most can be prevented and even more can be remedied. All of the reasons listed above for ways that a Chapter 7 can be dismissed apply to a Chapter 13 as well. If the Debtor or Debtors do not appear at the Trustee’s 341 Meeting of creditors the trustee will continue it to another date for Debtor or Debtors to appear. However, if Debtor or Debtors do not appear at the continued Trustee’s 341 Meeting of creditors, the trustee can move for dismissal of the case.
However, there is many more way that a Chapter 13 can be dismissed. Given the multitude of reasons for dismissal, only about 25% of Chapter 13 cases see completion. Given the frequency of some of the dismissal reasons, attorneys have begun to safe guard against these issues by requiring the clients to comply with certain guidelines and provide certain documents prior to a case being filed. The reasons for dismissal and ways to avoid them are discussed below.
A Chapter 13 requires monthly payments to be made to the trustee as a condition of the bankruptcy. If payments are not made by the due dates or if you get more than 1 month behind on plan payments the trustee can file a motion to dismiss with the court. The motion will state a response date. If you are current by the response date then upon your attorney responding to the motion, the trustee will withdraw the motion. However, if you need more time to get current on plan payments you should contact your attorney and ask that they respond to the motion to dismiss stating that you intend to get current on plan payments or that you are in the process of getting current on plan payments. To prevent this from happening at all we ask that a wage order be filed. A wage order is where the payments are taking from your paycheck and forwarded to the trustee directly. No hassle and no temptation to spend the money that otherwise would go to the trustee.
Another reason a Chapter 13 bankruptcy can be dismissed is for failure to provide documents. Required documents in every case include showing the trustee your Identification and proof of social security number. This can be in the form of a social security card, w-2, 1099, military ID, Medicare card, etc. However things that are not except as proof of social are tax forms that you or someone else prepared. The social security proof must be something that was given to your with your full social security number already on it. Other required documents include the most recent 60 days of paystubs or other proof of income such as an affidavit, etc. These are not only required to give to the trustee but are needed by your attorney to accurately complete your entire petition before filing. In addition, the most recently filed tax returns are required to be turned over to the trustee. If you do not have a copy, you can call the State Department of Revenue and the Internal Revenue Service and ask that they mail or fax a copy to you. If you most recently filed taxes over 10 years ago and are not required now required to file taxes, it is unlikely that you will need to provide a copy of the taxes however you should speak with your attorney to be sure that the tax returns are not needed. In certain cases, trustee may request bank statements, proof of sale, etc. Any documents requested must be turned over to the trustee. Failure to do so will result in dismissal of your bankruptcy. To avoid the pressure of coming up with documents after the trustee request them, your attorney will request and you should provide and documents relevant to the bankruptcy including but not limited to copy of identification, copy of social security card, w-2, 1099, military ID or Medicare card, 6 months of income history showing all sources of income covering the 6 months prior to the filing of the bankruptcy, copy of the most recently filed tax returns. If you own a business or owned a business within the 6 months prior to filing, provide a copy of the business tax returns or Schedule C of your individual returns. While some of the trustees request may seem somewhat unexpected it is crucial that you gather the requested documents and provide them to the trustee immediately upon request. While the trustee typically provides 10 days to comply with requests, it is best that you supply the trustee with information within a few days.
A Chapter 13 bankruptcy can also be dismissed for prior filings. While you do not have to be eligible for a discharge to be a Chapter 13 debtor, frequent filings can lead to trustee or creditor request for dismissal. The most common occurrence of this is a Debtor who is filing to stop a foreclosure. The first case or even second case is usually not a problem but if you have created a pattern of filing a Chapter 13 right before a foreclosure sale is scheduled to occur and then you let the case be dismissed until refilling right before the foreclosure sale is scheduled to occur again. In these cases the trustee and more often the creditor for the mortgage company will file a motion to dismiss or an objection to confirmation stating that the case was filed in bad faith only to delay the inevitable foreclosure. Sometimes depending on the change in circumstances and reason for refilling, the Judge may overrule their objection and allow you stay in the Chapter 13 but that usually requires a wage order and some substantial change in income.
A less common, but certain possible way of having a Chapter 13 case dismissed is for Debtors failure to cure trustee’s objection within a reasonable time such that it results in undue delay impacting creditors. Objections can range from things as simple as clarification on something listed on the petition, to turnover of tax returns to more complex things such as inaccurate exemptions or non-disclosure of assets, debts or transfers. To avoid objections disclose everything to your attorney prior to filing. However, if you still receive notice of an objection through the mail, contact your attorney to verify that they do not need any information from you in order to cure the objection. If amended plans are required in order to cure an objection that must be filed 21 days prior to any possible confirmation date so it is imperative not to deal in providing requested information.