What Happens When a Chapter 13 Case Is Dismissed?

What Happens When a Chapter 13 Case Is Dismissed?

When a Chapter 13 bankruptcy is dismissed, your case ends and your debts aren’t eliminated. You lose the protection of the automatic stay, which means creditors can start collecting again through wage garnishments, debt collection lawsuits, or even foreclosure. Any payments you made during the repayment plan won’t be refunded, but your remaining debt goes back to what it was before you filed, minus what you’ve already paid. The dismissal will also show up on your credit report and can lower your credit score. You can usually file for bankruptcy again, but there may be some limits depending on why the case was dismissed.

Why Do Chapter 13 Cases Get Dismissed?

Chapter 13 cases get dismissed for several reasons, including:

• Failing to pay the required court filing fee

• Failing to attend the required 341 meeting of creditors

• Failing to file all the required bankruptcy forms

• Failing to pay the Chapter 13 payments

• Failing to meet certain deadlines

• Failing to propose a Chapter 13 plan that complies with bankruptcy law

• Failing to submit the required documentation to the Chapter 13 trustee

• Failing to file tax returns every year or not submitting a copy to the trustee

As you can see, the reasons for a dismissed Chapter 13 usually involve the debtor failing to do something the debtor is required to do under the bankruptcy rules. However, sometimes, a dismissed Chapter 13 case is due to something beyond the debtor’s control.

For instance, if a debtor loses his or her job or becomes ill, the debtor may not have enough money to pay the Chapter 13 plan payments. If changing the plan payment or converting the case to a Chapter 7 case is not an option, there may be no choice but to let the Chapter 13 case be dismissed.

Can I Refile Chapter 13 After My Case Is Dismissed?

Whether you can file another Chapter 13 case immediately after a dismissed Chapter 13 depends on the reason why the Chapter 13 case was dismissed. If this wasn’t your first bankruptcy case in a short period of time, the bankruptcy court could prevent you from filing another Chapter 13 case for a specific period of time. Even if you’re able to refile right away, your automatic stay may be limited. 

Especially if you’ve had a prior Chapter 13 bankruptcy case dismissed by the court, it’s best to talk to a bankruptcy attorney in your area. The Chapter 13 bankruptcy process is much more complex than a Chapter 7 case and more than 97% of all Chapter 13 cases filed without an attorney (“pro se”) are dismissed by the court.^[1] Having a bankruptcy lawyer by your side as you navigate a Chapter 13 case is usually worth the investment. Upsolve can connect you with a bankruptcy attorney near you for a free consultation.

Can I Convert to Chapter 7 To Avoid a Dismissed Chapter 13 Case?

Depending on why you’re at risk of having your Chapter 13 case dismissed, you may be able to convert it to a Chapter 7 case. Most bankruptcy courts allow you to do so by filing a simple “notice” and paying a small conversion fee. 

Whether conversion is an option depends on your situation. For example, if you’re unable to stay in the Chapter 13 payment plan because you’ve lost your job and it’s not looking like you’ll be able to get anything comparable anytime soon, you likely qualify for Chapter 7 relief even if you didn’t when the case was first filed. 

Of course, you want to make sure that you will not have any other problems when converting to a case under Chapter 7 to avoid a dismissed Chapter 13 case. If you’re behind on your mortgage payments or have property with non-exempt equity, you could face losing this property in a Chapter 7 case.

Filing a Chapter 7 Case After a Dismissed Chapter 13 Case

If you have a dismissed Chapter 13 case, you might be able to re-file under Chapter 7 as long as you’re under the income limits. You’ll also want to make sure that available bankruptcy exemptions protect all of your property since that’s not typically an issue in Chapter 13. Barring any problems, you might be able to file a Chapter 7 case to get rid of unsecured debts even though you have a dismissed Chapter 13 case.

Because you are filing under Chapter 7, you might be able to file without an attorney since you will not need to file a Chapter 13 repayment plan. You do need to make sure that the automatic stay will go into effect (and stay in effect) and that you’re not barred from filing another bankruptcy case because of the reason for your dismissed Chapter 13 case.

Filing a Chapter 7 Case Without an Attorney

If you’re struggling to pay your debts, you might want to consider a Chapter 7 case before you file a Chapter 13 case. Depending on your financial situation, you might pass the Means Test for a Chapter 7 case. In a typical no-asset Chapter 7 case, you can eliminate your debts within four to six months after filing your bankruptcy petition with the bankruptcy court. For many filers, they’re able to get rid of thousands of dollars in debt quickly without losing any of their property.^[2]

If this sounds like the debt solution you have been searching for, consider using Upsolve’s free filing tool. If you have questions or you are skeptical, watch video testimonials from our past users. You can hear from actual individuals who used our services to file a Chapter 7 case without an attorney to receive the debt relief they need.

If you need a fresh start but you can’t afford to pay an attorney to help you file a Chapter 7 bankruptcy case, take our screener to see if you're a fit for Upsolve’s free bankruptcy app. Upsolve gives individuals who cannot afford to hire a bankruptcy attorney the assistance they need to get out of debt. You can do this! 

What Is Chapter 13 Bankruptcy?

When an individual doesn’t qualify for debt relief under Chapter 7 because they make too much money or had a prior Chapter filing, that person can file Chapter 13 instead. A Chapter 13 bankruptcy case is a debt reorganization.

When you file under Chapter 13, you propose a repayment plan for your debts. You make a  payment each month to a Chapter 13 trustee who pays your creditors according to the terms in the Chapter 13 plan. The amount of your Chapter 13 plan payment depends on several factors. Only certain debts - like mortgages - may be paid directly while the case is open.  In some cases, you may pay some creditors outside of the plan, such as your mortgage payment.

A Chapter 13 bankruptcy lasts anywhere from 3 - 5 years. At the end of the payment plan, any remaining unpaid debt is eliminated by a Chapter 13 bankruptcy discharge. To get the discharge, the filer has to complete the plan, which can sometimes be complicated by changing circumstances. 

Check out the video below ⬇️ for more on what happens when a Chapter 13 case is dismissed!