While filing for bankruptcy could help you get out of debt, in some cases, bankruptcy claims end in dismissal. There are different reasons why Chapter 13 bankruptcy could end in dismissal- some accidental, and some unexpected. This article will help you understand different factors that could adversely impact the success of your bankruptcy case and how to avoid dismissal.

What Does it Mean to File Bankruptcy?

When you cannot repay your debts or financial obligations, you may start getting communication from entities you haven’t heard of before. Have you recently gotten a letter from PO box 1120 charlotte NC? It may be a creditor reaching out to let you know they will file a lawsuit if you cannot catch up on your payments. When you get to this point, you can choose to file for bankruptcy.

Filing for bankruptcy is a legal procedure that helps individuals free themselves from debt obligations. Once your legal representative files a bankruptcy petition, all outstanding debts are calculated and some can be dismissed while the rest can be repaid under a new plan.

Unfortunately, most Chapter 13 cases are dismissed. Sometimes the dismissal is due to unexpected circumstances like medical expenses. Other times, the dismissal is linked to poor financial decisions. Still, bankruptcy remains a good option when your debts exceed your income, and you can no longer make debt payments as agreed.

Understanding Chapter 13 Bankruptcy

Are you considering filing bankruptcy? You can either file bankruptcy under Chapter 7 or Chapter 13. The main difference between the two is the form of bankruptcy.

Under Chapter 7, the form of bankruptcy is liquidation. You can liquidate your assets and use the money to repay your creditors. Experienced Chapter 7 Bankruptcy Lawyers Milwaukee or lawyers in your area, will help you to wipe away your debt allowing you to make a fresh start, stress-free.

On the other hand,  in Chapter 13, reorganization is the form of bankruptcy. The aim is to find a repayment plan that works with your available income. So if you have some disposable income, that is, the money you have after paying off necessary monthly expenses, you can file for Chapter 13 bankruptcy.

By creating a new repayment schedule, Chapter 13 bankruptcy can extend the payment duration of your debt. It offers more security since you won’t have to worry about your assets being repossessed or foreclosed.

Filing for bankruptcy under Chapter 13 is an easy, straightforward process. After filing your petition, the court will place all outstanding debts under the automatic stay. The automatic stay means creditors cannot take aggressive measures to demand payment from you.

Next, your appointed bankruptcy trustee will meet with your creditors to create a new repayment schedule. Once both parties agree, you will resume making payments based on the newly developed plan.

After following through, the court will discharge some percentage of your unsecured debt. Most repayment schedules are set to a maximum of three and five years. Thus, you will have ample time to repay the debt. Despite the process being easy, there are some reasons why your Chapter 13 petition may be dismissed.

6 Reasons Why Your Chapter 13 Bankruptcy Case May Be Dismissed

Deciding to file bankruptcy under Chapter 13 is a great decision that could turn your financial life around. However, filing your petition does not make it an apparent success. If your case goes through, you will need to continue making the payments as agreed under the new repayment schedule.

Sadly, things don’t always go as planned. Along the way, you could lose your job and lack a source of income to continue making your repayments. Or, you could get a medical emergency that depletes funds you would have used to commit to your debts. Here are other reasons that could lead to Chapter 13 dismissal;

Committing Bankruptcy Fraud:

When building your bankruptcy case, you must include your financial situation in the petition. Your financial situation information should consist of your debts, income, assets, financial estates, and everything regarding your finances. Omitting any information from the petition puts your case at risk of dismissal. Therefore, you need to be very honest with what you share. Besides a dismissal, submitting false information could attract a fine or even jail time.

Failing to Pay the Court Fees:

Although filing for bankruptcy means you don’t have enough money to offset your debts, the court process could attract fees. Missing court charges or fees could result in the court dismissing your case. Therefore, if you aren’t working with an attorney, it is essential to fully understand any court fees, when they are due and how much you owe.

Not Attending Meetings:

When filing Chapter 13, there are two important meetings you should never miss. The first is a meeting with your creditors to present a repayment plan that works for you. Before moving forward, you and your creditors must agree on the repayment plan.

The second is a confirmation hearing where you will agree to make repayments under the new schedule. Missing either meeting could end in the courts dismissing your case.

Missing Payments:

Chapter 13 bankruptcy offers you a chance to present a repayment schedule that works for you by extending the repayment duration. So, if you miss a payment, your creditors could decide to forego the new payment schedule. Therefore, the court will have to lift the automatic stay, leaving creditors with the ability to take extreme measures to recover the debt. When meeting with your creditors, ensure the new payment schedule sits right with you to avoid the chances of missing any payment.

The cost of bankruptcy may be high in a Chapter 13 bankruptcy. You may consider a Chapter 7 bankruptcy. For example, the Chapter 7 bankruptcy cost is often cheaper when accounting for attorney fees. And, the attorney fee cost to file bankruptcy in North Carolina may be cheaper then the cost to file bankruptcy in Ohio.

Skipping on the Mandatory Classes:

Filing for bankruptcy helps you shape your financial future. So, when you file bankruptcy, the court orders you to attend personal finance and money management classes to help you plan better in the future. Failing to attend these classes as ordered by the court could lead to your Chapter 13 dismissal.

Not Filing Required Forms or Attaching the Wrong Documents :

There is a lot of paperwork involved in filing Chapter 13. Without legal help or legal background, it can be overwhelming. You might forget to file some forms or attach the wrong documents. While it may seem like a minor mistake, the court may dismiss your case.

My Chapter 13 Case was Dismissed; What Next?

If your case gets dismissed, it may come with these two effects;

Liability for debts: dismissal will make you responsible for your outstanding debt. Dismissal withdraws any chance of the court forgiving your debt.

Losing the Automatic Stay Status: once your case gets dismissed, the court lifts the stay they had previously placed on your account. Thus, your creditors can resume pursuing you for debts owed to them. In this case, you may consider using the 11 word phrase to stop debt collectors immediately.

How Long Should I Wait to File Chapter 13 After Dismissal?

We all make mistakes, and sometimes these mistakes cost us. If you made any mistakes that resulted in the dismissal of your case, take comfort in knowing you can try to file again. However, you need to wait for 180 days before filing again for bankruptcy.

Now that you understand why your case may be dismissed, you can avoid these mistakes. If you aren’t sure whether or not bankruptcy is the best option for you, consider taking a “Should I File For Bankruptcy Quiz” to see what would work best for your specific situation.

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