Filing for bankruptcy is a stressful experience that requires multiple court hearings, meetings with an attorney, and a thorough review of your finances. While these things are unpleasant they are usually viewed as a reasonable inconvenience by those drowning in debt. Unfortunately, in some situations the bankruptcy case is abruptly dismissed before the filer is able to receive any benefit from the choice. Understanding why bankruptcy cases are dismissed will help you avoid making a mistake that places your own bankruptcy filing at risk.
Lying to a Trustee
One of the primary reasons bankruptcy petitioners have their cases dismissed is that they were not honest when disclosing their finances to the bankruptcy court. Prior to discharging a case, the bankruptcy court will review all of a filer’s finances, including property owned and debt accumulated. Failing to tell your trustee about any income such as an inheritance, settlement, etc. could negatively affect the outcome of your case. Lies about your income or assets could also result in your case being dismissed.
Certain chapters of bankruptcy such as Chapter 13 require that the petitioner make on-time monthly payments to their trustee. These payments are then disbursed to eligible creditors such as car loan financers, the petitioner’s attorney, and the trustee themselves. If you do not make these payments, the trustee will seek to have your case dismissed or converted into a Chapter 7 bankruptcy. Depending on your situation, your attorney may be able to have your case reinstated, but at that point strict compliance is required, with any other failures to pay being a reason for immediate dismissal without a court hearing.
Bankruptcy is meant to be a way for debtors to gain financial freedom by discharging debt that they are unable to pay. During the time between filing for bankruptcy and receiving a discharge a petitioner should not be acquiring new debts. If the bankruptcy court discovers that you have opened new credit cards, gotten loans, or done anything to increase the amount of debt you owe, then your case might be dismissed. In some situations you might be barred from filing for bankruptcy relief in the future.
Change in Finances
A sudden change in your financial situation could lead to you no longer needing bankruptcy protection. Significant changes in status such as marriage to a person with a high income or coming into possession of a large windfall could increase the amount of disposable income that you have. Since all of your financial changes must be reported, once your trustee learns about your increased income or new assets, your case may be dismissed since you have the ability to pay your creditors or converted to a new chapter that requires repayment.
If your bankruptcy case was recently dismissed, or you are afraid it might be dismissed in the future, the bankruptcy attorneys at Adam Law Group can help. We will work with you to determine the best course of action based on your unique situation. Our team is dedicated to providing you with the quality legal representation that you deserve, so contact us at our conveniently located Jacksonville, Florida office today to schedule an initial consultation.