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What Happens If My Chapter 13 Case is Dismissed?

What Happens If My Chapter 13 Case is Dismissed?

Whether you fail to make the monthly payments or meet certain deadlines, there are several ways a Chapter 13 bankruptcy case can be dismissed. Once the court dismisses your case, the automatic stay that prevents creditors from collecting debts from you will no longer be in effect, which makes you liable for all your debts. 

So, what happens if your Chapter 13 bankruptcy case is dismissed? Aside from paying your debts, the only way to stop creditors from collecting debts after case dismissal is to refile a new Chapter 13 bankruptcy case. 

Refiling for Chapter 13 Bankruptcy 

Refiling your Chapter 13 bankruptcy case means you are starting all over again. You need to file a new petition, schedule, and plan according to your current situation, as well as pay a new filing fee. If it has been more than 180 days since you completed the credit counseling course, you must take it again. 

However, whether you file a new case depends on the reason behind your case dismissal. Furthermore, the bankruptcy court could prevent you from filing another case within a certain time period, especially if this wasn't your first case. But if you are still able to refile immediately, there might be a limit to your automatic stay. 

For example, if you refile your case within a year of the dismissal of your first case, the automatic stay will only be valid for 30 days. Yet, if you can convince the court that your second filing is in good faith (i.e., you experienced a substantial change in your finances or personal affairs), you can get the automatic stay extended. 

Filing for Chapter 7 Bankruptcy 

If your Chapter 13 case was dismissed, you might be able to refile under Chapter 7—so long as your income is within a certain range. Since Chapter 13 bankruptcy is different, you may be eligible for certain exemptions under Chapter 7 bankruptcy and eliminate unsecured debts. 

How to Avoid Dismissal 

If you are confident in your original Chapter 13 plan, you can file a motion to reinstate your case before the trustee closes your case, rather than refile your case and start from the beginning. For your case to be reinstated, you must show the court you can recoup any missed payments and stick with your plan. 

If you risk having your Chapter 13 bankruptcy case dismissed in Northbrook, IL, contact Bach Law Offices today at (847) 448-0025 to learn how our firm can help you. Get more than four decades of collective experience on your side! 

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