Basic Things You Must Know About Bankruptcy Dismissal

When you file a petition for bankruptcy and the court rejects your petition on certain grounds, it is legally termed as bankruptcy dismissal. Dismissal means your case is officially closed and that the court will make no further rulings on your case. Some of the most common reasons why a petition is dismissed include violation of court rules, misstatements, and errors in the petition. Following is a brief rundown on some of the different aspects associated with, which you must be well aware of.

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Effects Of Dismissal

When you submit your petition, an automatic stay is imposed, which means none of your creditors can make efforts to collect debts from you as long as the case is pending with the court. Even if a creditor has filed a lawsuit against you, the petition submission stops that lawsuit. Likewise, if your home is already scheduled for a foreclosure, the sale will be stopped as soon as you file the petition. In case of bankruptcy dismissal, when your petition is rejected, the automatic stay is lifted, which means you will start facing the debt collection calls again. The foreclosure sale will take place and the court proceedings regarding the lawsuits will also begin. Besides that, you will also lose the opportunity to get your debts discharged. You will still be obligated to pay off all your debts as before. In fact, you will not even be able to recover your filing fees.

Violation Of Court Rules

Violation of certain court rules is one of the most common reasons why a bankruptcy petition is rejected. Compliance with the jurisdiction’s bankruptcy rules is very important. Violation of any of those rules will result in bankruptcy dismissal. For example, as per the laws, the petitioner must reside in the court’s jurisdiction where he or she is filing the petition for a specific period of time. If you fail to meet the residency requirements, your petition will be dismissed and the court will not hear the case. There can be several other types of violations also, such as failure to file tax returns, bank statements, and other such pertinent documents in a timely manner. Sometimes, when a debtor is granted bankruptcy under chapter 13 but he or she fails to make the payments as per the court-ordered repayment plan, the court is again very much likely to dismiss the bankruptcy proceedings.

Providing False Or Inaccurate Information In The Petition

Bankruptcy dismissal may also happen when you provide false or inaccurate information in your petition. For example, if you have included certain debts, such as cash advances or debs arising from luxury purchases made within three months of bankruptcy filing, it will be considered as a fraudulent attempt and the court will dismiss the proceedings. Besides that, the laws also require you to disclose all your assets and properties in the petition; if you fail to do so, your petition may again be dismissed on this ground. Likewise, dismissal of the proceedings is also very much likely in cases where you fail to provide sufficient documentation regarding your financial situation.

Dismissal Of Petition With Prejudice

Sometimes, bankruptcy dismissal may occur with prejudice if the judge finds that you have willfully violated a court order or that you did not act in good faith, such as when you misstated your income on the petition or on any other document attached with the same (such as, credit card applications). When your bankruptcy petition is dismissed with prejudice, you will no longer be able to file your petition in that court again.

Dismissal Of Petition Without Prejudice

Sometimes, the court may dismiss the case without prejudice based on certain grounds. However, if you manage to solve those issues that caused the dismissal initially, you can again file your fresh petition with that court. Depending upon the reasons of dismissal, the court may ask you to wait for a certain number of months before you can file your petition again.

As you can see, there can be several factors that may lead to bankruptcy dismissal. You can avoid the possibilities of your petition for bankruptcy getting rejected by having an expert lawyer to handle your case. An experienced bankruptcy attorney will prepare your petition with great care.

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