Chapter 13 bankruptcy allows debts to be reorganized into affordable monthly payments that help repay creditors over a period of three to five years. This can be an effective solution if you’re having trouble keeping up with financial obligations such as a mortgage, but want to protect your assets from liquidation, or if you make too much money to be eligible for a Chapter 7 bankruptcy.  Once your payment plan is complete, you’ll receive a discharge that eliminates any remaining eligible balances. However, failure to meet the terms of your repayment plan may result in your case being dismissed without discharge. If this happens, here's what you need to know to save your bankruptcy.

Why Are Chapter 13 Cases Dismissed?

The most common for dismissal is defaulting on the payment plan. This may happen if a debtor’s financial situation has changed since filing for bankruptcy, and they can no longer afford the required plan payments. Unfortunately, under these circumstances, the trustee can file a motion with the court for dismissal. A judge could also dismiss your case if there’s proof you lied under oath, you’ve failed to submit all required documentation, or you neglected to attend the required credit counseling courses. 

How Do Dismissals With & Without Prejudice Differ?

When the court dismisses a bankruptcy case with prejudice, it could prevent the debtor from filing again for a certain length of time or place restrictions on which debts can be discharged in a future filing. Typically, this occurs if someone is caught engaging in intentional misconduct or trying to take advantage of the bankruptcy process in some manner. 

The majority of dismissals are without prejudice. This means the case can immediately be refiled. These types of dismissals are generally due to procedural errors or payment defaults.   If the debtor still needs relief, a new case can be filed seeking a discharge after dismissal.

What can be done after dismissal?

If the Debtor is eligible for a discharge in a new chapter 13 case, a new case should be filed reflecting the new circumstances if the need for relief is still present, such as a mortgage or child support arrearage which needs to be paid. The same requirements apply to the new case filing as in the old case, so many of the pre-filing requirements must again be completed for the new case.  Oftentimes, in the face of dismissal, an experienced bankruptcy attorney can help save the case from dismissal with amendments and modification of the payment plan.  If your case is on the verge of dismissal, contact an experienced bankruptcy attorney to seek help since it is possible the case can be saved.  Plans can be extended due to COVID-19 for longer periods than 5 years, providing additional options for relief.    

Whether you’re preparing to start a new Chapter 13 bankruptcy case or need help addressing a motion to dismiss, trust Zellar & Zellar Attorneys At Law Inc. to provide valuable guidance. Serving the residents of Columbus, Newark, Zanesville, and Lancaster, OH, since 1965, they’ve successfully assisted countless clients in achieving financial freedom. At Zellar & Zellar Attorneys at law Inc., you’ll work with a skilled attorney who is dedicated to protecting your best interests.  Check out their website at www.ZellarLaw.com or call (740) 452-8439 to schedule a free consultation or visit them online to learn more about the debt relief services they offer. 

This article is intended to provide general information and should not be construed as legal advice or in creating an attorney-client relationship.