Chapter 7 Dismissal Vs. Discharge
When initiating bankruptcy proceedings for the first time, it is imperative to grasp the lexicon employed during the procedure. Many individuals often find themselves perplexed by the disparity between “dismissal” and “discharge” within the context of bankruptcy processes.
1. Dismissal Of A Bankruptcy Case
Dismissal typically denotes that the court has halted all proceedings within the primary bankruptcy case and any related adversary proceedings, and a discharge order has not been issued. Dismissal can transpire if a debtor voluntarily requests it and meets the criteria for voluntary dismissal.
Alternatively, dismissal can transpire without the debtor’s consent if the court mandates dismissal on its own accord or if a trustee or creditor files a motion for dismissal, which the court subsequently grants.
Dismissals in Chapter 13 vs. Chapter 7
In different bankruptcy chapters, Chapter 13 bankruptcy typically involves higher costs and a lengthier process than Chapter 7 bankruptcy.
In Chapter 13, individuals must craft a repayment plan outlining how to repay a portion of their debt and adhere to this monthly payment plan for three to five years. Consequently, Chapter 13 bankruptcy cases are more susceptible to being dismissed before receiving a discharge.
If a Chapter 13 filer fails to make a payment as stipulated in their repayment plan, it can lead to the dismissal of their case. The most common reason for dismissal in Chapter 13 cases is missing a payment on the repayment plan.
Voluntary Bankruptcy Dismissal
A debtor can submit a request for voluntary dismissal of their bankruptcy case. However, whether the court grants this request depends on various factors, including the specific chapter of bankruptcy filed and the debtor’s previous bankruptcy history.
Restarting A Bankruptcy After Dismissal
You can restart the bankruptcy process if your case is dismissed. To do so, you’ll need to file a Motion to Reinstate. This is a written request submitted to the Bankruptcy Court, asking them to cancel or set aside the dismissal order.
When filing a Motion to Reinstate, explaining how you’ve rectified the deficiency or error that led to the dismissal is essential. Failure to address this issue within the timeframe stipulated by your local court rules may result in the closure of your case.
If your bankruptcy case is closed, you must file a motion to reopen the claim or initiate an entirely new bankruptcy case to proceed. When initiating a new case within one year of the prior case dismissal, it will require you to file a motion for a stay extension within 30 days of the case filing. This will allow you to keep the bankruptcy in place after the 30 days expire.
What Does ‘Dismissal Without Prejudice’ Mean?
In certain instances, it is feasible to reinstate a bankruptcy shortly after its termination. You can initiate a new bankruptcy filing if a substantial period has elapsed. Generally, courts issue terminations “without prejudice.”
In this context, “without prejudice” signifies that the terminated case does not preclude you from commencing a fresh bankruptcy proceeding. Regrettably, if the termination is “with prejudice,” you may be prohibited from pursuing bankruptcy or compelled to await a prescribed timeframe before resuming bankruptcy proceedings. Cases entailing bankruptcy fraud may not permit debtors to commence a new case.
If you elect not to file bankruptcy again, you must rectify the issues that precipitated the termination before initiating another case. During this interim period, creditors retain the prerogative to communicate with you and institute legal measures to recover the outstanding debt.
Call An Experienced Bankruptcy Attorney
Given the intricacies associated with bankruptcy cases, securing legal representation is paramount. With a proficient legal advocate at your side, you can preemptively evade terminations, as they can deftly navigate each phase of the bankruptcy filing procedure on your behalf, mitigating the common errors individuals often commit while embarking on the bankruptcy journey.
2. Bankruptcy Discharge
Typically, the primary objective of commencing bankruptcy proceedings is to effectuate debt discharge. A discharge transpires when the bankruptcy court issues a decree proclaiming that you are no longer legally obligated to reimburse the discharged debt.
After a discharge, most unsecured creditors are precluded from instigating legal actions to reclaim any remaining debt they owe. They are also forbidden from establishing communication via any means, encompassing written correspondence, personal interaction, and telephonic contact, about the discharged debt. When a creditor violates the discharge by seeking to collect the debt subject to the discharge, you may reopen the bankruptcy case to pursue a motion against the creditor for the discharge violation. If successful in the motion, the Court may grant the Debtor punitive damages and attorney fees to deter future creditors from violating the discharge injunction.
Debts Discharged in Bankruptcy Court
Not all kinds of debt can be erased in bankruptcy. Identifying which debts can be forgiven can help you save time and money. You can request forgiveness by filing bankruptcy for unsecured loans, car accident claims, credit card balances, medical bills, overdue utility payments, lease obligations, and personal loans.
Some debts are usually not forgiven in bankruptcy, except in particular situations. These include student loans, child support, alimony payments, certain taxes, fines imposed by the government, debts from fraud, and fines and restitution from criminal activities.
Chapter 7 and Chapter 13 Bankruptcy Payment Obligations
The timing of debt discharge hinges upon the category of bankruptcy under which you have filed. Chapter 7 bankruptcy typically absolves your debts a few months after issuing your bankruptcy decree. Conversely, Chapter 13 bankruptcy cases adhere to a distinct structure.
Under Chapter 13, you partake in a debt reorganization scheme, necessitating partial repayment of your debt through a predetermined installment plan over an extended duration. Upon fulfilling your payment arrangement, any remaining dischargeable debts are then absolved.
Closing Of A Bankruptcy Case
Closure signifies the conclusion of all activities associated with the main bankruptcy case. This encompasses the resolution of all motions and submitting a statement indicating the fulfillment of all trustee responsibilities if a trustee was appointed.
However, closure does not inherently imply that a discharge has been granted unless all procedures connected to determining eligibility for discharge have been finalized.
If a bankruptcy case is closed without a discharge, typically due to an individual debtor’s failure to timely submit a Certificate of Completion of Instructional Course Concerning Personal Financial Management, the debtor must file a Motion to Reopen the Case.
Additionally, a bankruptcy case may receive a discharge, but the case can remain open for various reasons, such as the Chapter 7 Trustee seeking to liquidate bankruptcy estate assets post-discharge.
Closing Without A Discharge
Cases may be closed without a discharge when the debtor fails to fulfill the necessary debtor education requirements, which are essential conditions for receiving a discharge. Additionally, if you stumble at the final stage of the debt relief process, your case can be closed without a discharge. This may occur if your initial filing needs to be submitted within the required timeframe.
In conclusion, understanding the distinctions between bankruptcy dismissal, discharge, termination, and closure is essential when navigating the complex bankruptcy process. Dismissal typically halts proceedings without a discharge, while discharge relieves you of certain debts.
Terminations and closures can occur for various reasons, often due to errors or missed requirements, and may or may not involve discharge. A bankruptcy attorney can provide crucial guidance in these situations, helping you navigate the process effectively and avoid potential pitfalls.
