If the court dismisses your bankruptcy case, this lifts the automatic stay. Your creditors can begin contacting you for payment again, even suing you or repossessing your property. If you don’t reinstate or refile your case, you can’t discharge your debts. Reinstatement isn’t a sure thing, and you have to act quickly. Considering how much is on the line, you might want to enlist the help of an attorney.
Reasons for Dismissal
Depending on whether you filed for Chapter 7 or Chapter 13 bankruptcy, the court might dismiss your case for any number of reasons. With Chapter 13, it’s typically because you haven’t been able to keep up with your plan payments. This is the form of bankruptcy where you give the trustee your extra income each month, and the trustee uses the money to pay down your debts. Most Chapter 7 bankruptcies are dismissed because you failed to meet some procedural requirement. This sometimes happens to debtors who try to represent themselves -- they’re expected to know the rules and deadlines just as a lawyer does. If the court dismisses your case for this reason, the judge will most likely do it without prejudice. This means you can file for bankruptcy again right away. Having it dismissed with prejudice usually happens if you committed some sort of fraud. You probably won’t be able to refile for a period of time determined by the judge, or you might be barred from ever discharging any of the debts you included in your dismissed petition.
Motion to Reinstate
If you act quickly enough, you won’t have to worry about filing a new bankruptcy petition. You can file a motion to reinstate your original case instead. You must usually do so before the trustee officially closes your case. When you file the motion, you must make sure that the trustee assigned to your bankruptcy receives a copy. If your mistake was innocent, the trustee might not object to reinstating your case and the court can decide your request without a hearing. If the trustee does object, the court will schedule your motion for a hearing. If you filed for Chapter 13, you’ll either have to bring your payments current before the hearing or convince the court that you can do so within a certain period of time. You might have better luck with this if you had a good history of making your payments before you fell behind.
Refiling Your Case
If the judge denies your motion to reinstate your case or the trustee has already closed it, you can still file a new bankruptcy case, but this may be more complicated than it was the first time around. If you want to file again within a year, the automatic stay that normally keeps creditors at bay until you receive a discharge is limited to only 30 days. You’d have to file a motion relatively quickly, asking the court to extend this time. You’d have to demonstrate an ability to fix the mistakes you made or the problems that occurred the first time around.
Other Chapter 13 Options
If your Chapter 13 bankruptcy is in danger of being dismissed because you can’t keep up with payments, you may have another option. Talk to a lawyer as soon as possible about modifying your plan instead. The court might grant your request if your financial circumstances changed due to factors beyond your control, such as job loss or illness. The court might lower your payments or allow you to convert your Chapter 13 case to a Chapter 7.