What Is the Role of a Bankruptcy Trustee?
Key Takeaways
- Dismissal ends your case with no discharge; the debts come back.
- Liens are reinstated and the automatic stay lifts.
- Most dismissals do not bar you from refiling right away.
- Withdrawing after a creditor moves to lift the stay costs you 180 days.
The United States Bankruptcy Code enforces strict guidelines for how consumer bankruptcy proceedings are supposed to play out. As the debtor in a bankruptcy case, you will want to do everything to comply with these rules and regulations. Or else, the bankruptcy court may abruptly stop or dismiss your proceedings. Continue reading to learn more about bankruptcy dismissal and how an experienced Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C. can help you understand this concept.
What Is a Dismissal of a Bankruptcy Case?
By definition, a dismissal means that the court stops all proceedings in your bankruptcy case and any related adversary proceedings, all while not entering a discharge order. In other words, your bankruptcy case is closed without eliminating or reorganizing your debt. Further, you are still liable for paying off your outstanding debts.
Though a bankruptcy dismissal has a negative connotation, there may be circumstances in which you voluntarily petition the court for it. This may be especially relevant if you embarked on Chapter 13 case proceedings. For example, you may feel a bankruptcy case is no longer necessary if you recently received a raise at work or a higher-paying job. With this, you may have enough income to pay off or negotiate a debt settlement plan with your outstanding creditors without bankruptcy intervention.
On the flip side, though, you may want your bankruptcy case dismissed if you recently lost your job or once-steady income source. This is because you may no longer be able to afford the monthly payments part of your three- to five-year repayment plan. Rather, you may feel more comfortable refiling for bankruptcy and drafting a more affordable repayment schedule.
What Dismissal Actually Undoes
Ultimately, the Code states that the objective is to undo the case as far as practicable, returning everyone to where they began. Unless otherwise ordered by the court, several things will generally happen at once:
- Any lien in your case voided is reinstated
- Property of the estate revests in whoever held it at the time of filing
- The automatic stay ends, so lawsuits, foreclosure, and wage garnishments, among other collection efforts, will resume
The debts will return too, and they carry whatever interest and penalties accrued while the case was pending. As such, a dismissal is not a neutral pause, instead placing you behind where you were.
Can You File Again Afterward?
Usually yes, and sooner than people assume. Dismissal does not by itself bar you from filing again or from discharging the same debts in a later case. A 180-day bar exists, but it reaches only two situations.
- Your case was dismissed for willfully failing to obey a court order or to appear when required
- You asked for and obtained a voluntary dismissal after a creditor had already moved to lift the automatic stay
The second point is the one that catches many people by surprise. In the event a mortgage lender files to lift the stay and you request that the court dismiss your case, you have locked yourself out for six months, which is when you are generally least able to afford it. If a creditor has moved against you and you are considering withdrawing, this sequence requires advice before acting, rather than after.
How Does Dismissal Differ From a Closing or Conversion?
In addition to a bankruptcy dismissal, there are also bankruptcy closings and conversions.
A bankruptcy closing essentially means the case has run its course, and there are no assets left to administer. During Chapter 7, that means the trustee has distributed all eligible assets, which in most consumer cases is nothing. During Chapter 13, it means you have successfully made the final payment of your plan. A closing is the typical outcome of filing for bankruptcy that most people anticipate.
A conversion, on the other hand, occurs when you move your case from one chapter to another. This can be done at the request of you, your bankruptcy trustee, a creditor, or the court. It is critical to note that this does not restart the bankruptcy process. Your case will keep the original filing date, which impacts your exemptions, the lookback period, and when the automatic stay took effect
Contact an Experienced New York Bankruptcy Law Firm Today
In conclusion, don’t hesitate to get in touch with a skilled Rockland County bankruptcy attorney today. We, at The Law Offices of Allen A. Kolber, Esq., P.C. look forward to your phone call. We understand how complicated these matters can be, which is why we are ready to represent you. Contact us today to learn how we can assist you.
