Dismissal
Dismissal summary:
A bankruptcy dismissal terminates a bankruptcy case without discharging (forgiving) any debts.
Common reasons for a bankruptcy case to be dismissed include fraud, failure to complete the required education, or missing required payments.
Depending on the reason for the dismissal, you might be allowed to refile again in the future.
Dismissal definition and meaning
A dismissal is the termination of a bankruptcy case without discharging or forgiving any debt. Dismissal can happen if the debtor fails to complete bankruptcy requirements (like participating in bankruptcy counseling, filing forms correctly, or making Chapter 13 plan payments). A bankruptcy may also be dismissed if the debtor commits fraud. Sometimes, the debtor asks the court to stop the bankruptcy and dismiss the case instead.
Key concept: Bankruptcy cases can end in dismissal when a filer doesn't complete parts of the process, commits fraud, or asks the court to stop the case.
More about dismissal
Not all bankruptcies end in a discharge with debts wiped away. Sometimes, the judge stops the bankruptcy process because the debtor (the person who owes the debts) has missed a step in the process or provided untruthful statements. Other times, the debtor asks to terminate the bankruptcy because their personal finances have changed.
Here are examples of reasons for bankruptcy dismissal.
Bankruptcy fraud. Joe W. tried to sign his classic Mustang over to his brother to avoid turning it over to the court. Lying about your income, assets, and debts on your bankruptcy papers could lead to your case being dismissed and possible criminal charges.
Incomplete required education. Jenny H. forgot to take the mandatory debt management course. If you don't file the completion certificates on time, your case could be dismissed.
Unpaid bankruptcy fees. Paul N. asked to pay his Chapter 7 filing fees in installments, and then he missed one. In a Chapter 7 case, you can ask to pay in four installments, but if you miss a payment, your case could be dismissed.
Lack of required forms and documents. Joni C. never provided her pay stubs, bank statements, or account balances. It’s important to submit all required bankruptcy forms and supporting documents, like tax returns and pay stubs. If you don't, your case could be dismissed.
Absence at meeting of creditors. Rafael T. never showed up at the meeting of creditors. It’s a mandatory hearing where the trustee asks questions about your financial situation. If you don't show up, your case could be dismissed.
Voluntary dismissal. Jeff P. filed for Chapter 13 and then got a new job that paid much more. He wanted to pay his creditors in full instead of filing for bankruptcy protection, so he withdrew his case.
Not every dismissal has the same effect. If you made a mistake on your paperwork or missed a deadline, your case will be dismissed without prejudice, which means you have the option to file again to reopen your case. But if the court thinks you tried to take advantage of your creditors, you might have to wait five years before you can file again.
The information provided in this article is intended for general informational purposes only and should not be taken as legal advice. For personalized legal advice, consult with a qualified attorney licensed to practice law in your state.
Dismissal FAQs
Can you include marital debt in bankruptcy?
Is bankruptcy a viable option for dealing with medical debt?
Medical debt is unsecured debt, and you can usually include it in a bankruptcy. However, bankruptcy is public, it can be expensive, and you have to turn control over to a judge. It’s smart to consider other, less drastic solutions before pulling the trigger on a bankruptcy. Debt resolution, for example, is designed to help people who have suffered a financial hardship to reduce their debt.
What's the most common reason people file for bankruptcy?
In a broad sense, the most common reason people file for bankruptcy is because they have debt they can no longer manage. The source of the debt is different for different people.
For some, the issue is medical debt. You get hurt or sick and can't work, the bills pile up, and without any income, you can't pay your obligations. Bankruptcy can offer a way out in that scenario.
For others, a major life event may be the culprit. Divorce, the death of a spouse, the loss of a business you've spent a lifetime building—all of those scenarios could lead to financial fallout that's best remedied with a bankruptcy filing.
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