Filing a Chapter 7 or Chapter 13 bankruptcy case does not always mean you'll make it to the finish. Along the way, the court could dismiss your case for various reasons. Find out when and why a court might dismiss your bankruptcy case, and what happens if your case is dismissed.
Dismissal Due to Fraud
In order to file for bankruptcy, you must disclose all of your income, assets, debts, and recent financial transactions to the court. You sign your paperwork under penalty of perjury. If you hide something from the court, lie on your petition or in a bankruptcy hearing, or otherwise commit fraud, the court will dismiss your case. If you commit bankruptcy fraud, you may also face fines, a ban on future bankruptcy filings, and even jail time.
Dismissal Because You Did Not Comply With Bankruptcy Requirements
Far more often, courts dismiss bankruptcy cases because the filer did not comply with bankruptcy requirements for filing, producing documents, or other administrative matters. Some of the most common reasons for dismissal are:
Not completing the pre-bankruptcy credit counseling class. You must complete an approved credit counseling class within the 180 days before your bankruptcy filing. While there are a few exceptions to this requirement, they rarely apply. If you don’t file a certificate with the court stating that you took this class, the court will dismiss your case.
Failing to file all of the required bankruptcy forms. You must complete and file a packet of forms with the bankruptcy court. While you can file a “skeleton” bankruptcy petition to get the ball rolling, if you don’t file the remaining forms within 14 days, the court will dismiss your case.
Failing to pay the court filing fee. You must pay a filing fee in order to start a bankruptcy case. If you cannot afford the fee, you may qualify for a fee waiver or for an installment plan to pay the fee over time (both of those options require court approval). If you don’t get a fee waiver or pay the fee, your case will be dismissed.
Not providing requested documents after filing the bankruptcy forms. Once your case is underway, you’ll have to provide the bankruptcy trustee with various documents. For example, you must supply the trustee with your most recent tax return one week before your meeting of creditors. The trustee may ask for other documents as well, such as pay stubs and mortgage statements, that would help verify the information in your bankruptcy petition. If the trustee’s request is reasonable, and you don’t cooperate, you risk case dismissal.
Failing to appear at the meeting of creditors. In both Chapter 7 and Chapter 13 bankruptcy, you must attend a hearing in front of the bankruptcy trustee called the meeting of creditors. If you don’t show up, you’ll likely get one more chance, and then after that your case will be dismissed.
Not making your Chapter 13 plan payments. If you are in Chapter 13 bankruptcy, you’ll have to make payments to the bankruptcy trustee for three to five years. If you get behind in payments, and don’t make alternative arrangements with the bankruptcy trustee to catch up, the court will dismiss your case.
Dismissal Because You Don’t Meet Eligibility Requirements
If your case does not fit within the legal parameters of the particular type of bankruptcy for which you are filing, the court will have no choice but to dismiss your case or allow you to convert to a different type of bankruptcy.
This most commonly occurs when someone files for Chapter 7 bankruptcy, but makes too much money to pass the “means test.” The bankruptcy means test looks at your income and household expenses and determines if there is enough money left over to repay your creditors in part. If you cannot pass the means test, the court will dismiss your case, although you may be able to convert your case to Chapter 13.
What Happens After the Court Dismisses Your Case?
If the court dismisses your case because you failed to comply with the various bankruptcy requirements, usually you may file for bankruptcy again right away. However, if your dismissal was based on fraud, the court will likely bar you from getting a bankruptcy discharge again for a certain period of time.
For questions regarding bankruptcy eligibility and dismissal issues, consult an experienced bankrupty lawyer.
Questions for Your Attorney
- What happens if I make an innocent mistake, such as forgetting to list a debt, when filing for bankruptcy? Is there a way to fix it without having my case dismissed?
- Where can I find an approved credit counseling class in my area?
- If I decide not to continue with my bankruptcy, can I dismiss the case myself?