The Dismissed Bankruptcy Case
The bankruptcy laws are organized to function like a high speed "bullet" train. With one new bankruptcy case filed every 15 seconds, the courts must process these cases quickly and efficiently – there is no extra time to waste. Therefore, it is not surprising that bankruptcy courts have no tolerance for debtors who fail to follow the rules and will not hesitate to dismiss a bankruptcy case for non-cooperation or dishonesty.
A dismissal terminates your bankruptcy case and you do not receive the benefit of the bankruptcy discharge. The federal bankruptcy code also penalizes a debtor with a recently dismissed case. If you voluntarily dismiss your case while a creditor’s motion to lift stay is pending, or if the court dismisses your case for “willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution of the case,” you are prohibited from filing bankruptcy for 180 days after the dismissal.
Even if you are not restricted from filing a new case after dismissal, other restrictions apply. If your bankruptcy case is re-filed within one year of the dismissal, the automatic stay is in effect only for 30 days. Within 30 days of the new filing, you and your attorney must ask the bankruptcy court to extend the automatic stay. If the motion is not made, or granted by the bankruptcy court, creditors can resume collection activity during the bankruptcy case.
A bankruptcy case can be dismissed for a number of reasons. Sometimes a debtor will experience an unexpected change that makes continuing the bankruptcy case a bad idea. Other times the debtor’s bad conduct will cause the dismissal. For instance: providing false information to the court; failing to provide information to the court or to the bankruptcy trustee; failing to complete credit counseling or personal financial management courses; or failing to make Chapter 13 payments.
The bankruptcy bullet train is easy to get on and will get you to your discharge destination quickly. However, your cooperation is required or the train will derail. Working with your bankruptcy attorney and quickly responding to any requests will ensure that the process goes smoothly.