The dismissal of a chapter 13 or chapter 7 bankruptcy case is bad and a discharge of bankruptcy case is good. If the case is dismissed, this means that there is a problem associated with your case, which was thrown out. A bankruptcy dismissal, puts the debtor in the same position, as if the debtor never filed a bankruptcy case. At the time of dismissal, the debtor, again, is not protected from a creditors’ commencement or continuation of an action against the debtor. Also, at the time of dismissal, the debtor owes any and all debt that would be due to any creditor, as of the time of the dismissal. Therefore, with regard to most debt, the amount due to each creditor at the time of dismissal is more than the amount that was due initially upon the filing, based on additional interest and/or penalties that accrued from the time of the bankruptcy filing.
Chapter 7 Dismissal
As discussed earlier, there may be a situation in which the debtor may be entitled to a bankruptcy discharge; however, due to fraud or the appearance of fraud in connection with incurring debt to a specific creditor, that particular debt may be excepted from the general order of discharge. As explained above, a creditor may contest a discharge regarding their credit only, by filing with the bankruptcy court an “Adversary Complaint”. This type of complaint is a lawsuit within the bankruptcy case. The lawsuit is handled by the same bankruptcy court judge that is assigned to handle the bankruptcy case. The procedure of the lawsuit is the same as if the matter was filed with the federal court. In proving fraud, the creditor will likely present to the court certain facts that were relevant at the time the debt was incurred, such as the debtor’s: lack of disposable income; luxury item purchased with credit; no payments made on the debt; used credit immediately prior to the filing.
A case will be dismissed if the debtor does not meet the general criteria of a Chapter 7 (see our section on Chapter 7 document requirements). In the event that the debtor does meet the general criteria for a discharge, the case may be dismissed due to the debtor’s actions, including but not limited to the following: fraud in connection with the accuracy of the bankruptcy petition; failure to disclose or conceal assets or records; failure to cooperate with the court or trustee; false statements made to the court; and other actions listed in connection with the reasons for exceptions to discharges stated above.
Chapter 13 Dismissal
A Chapter 13 case may be dismissed if the debtor fails to meet all of the criteria of a Chapter 13 debtor, which is stated in another portion of this website. Every debtor in a Chapter 13 case must make a payment to a trustee, in compliance with their bankruptcy plan. The case may be dismissed if the debtor fails to make the required payments under the plan. In addition to the monthly trustee or plan payments, a debtor may be required to make a direct payment to an auto finance company or a mortgage company. A Chapter 13 case may be dismissed if the debtor is substantially in arrears with their direct monthly mortgage and/or auto finance payment. However, if there are substantial arrears regarding the monthly mortgage or auto finance payment, the debtor may be able to prevent a dismissal by modifying their bankruptcy plan. Furthermore, a Chapter 13 case may be dismissed for filing the bankruptcy petition in bad faith and all of the reasons that a Chapter 7 case may be dismissed, which are listed above.
Consulting a Bankrupty Attorney in New Jersey
If you are considering filing, or have filed for bankruptcy in New Jersey, you should consult with an experienced lawyer about your case. The New Jersey Bankruptcy Code is complex and errors during proceedings can result in very poor results. A veteran bankrtuptcy lawyer in NJ can guide you through the bankrtuptcy process and ensure that your case is not needlessly delayed or dismissed. For a free consultation, contact the bankruptcy attorneys at The Law Offices of Robert Manchel at (866) 503-5655 or contact us online.