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Wednesday, March 21, 2018

What is a Bankruptcy Dismissal?

Although seeking bankruptcy protection can allow you to organize your finances and make a fresh start, you must adhere to the certain rules and procedures under the bankruptcy laws. By failing to do so, the case will be dismissed and creditors will be able to pursue legal claims against you. This is why it is crucial to have the advice and guidance of an adept bankruptcy attorney. Let’s take a look at how a bankruptcy case can be dismissed. 

Qualifying for Bankruptcy

In order to be eligible for a Chapter 7 Bankruptcy, you must be able to show that your income for the 6-month period prior to filing is lower than the median income in Ohio. If your income is higher than the median, you must pass a means test and show that you don’t have the disposable income to pay your debts. The means test, which we have previously written about (here), is based on local and national expense data as well as your actual expenses. If you do not pass the test, the bankruptcy will either be dismissed or converted to a Chapter 13 case.

Reasons for Bankruptcy Dismissals

There are numerous reasons why a bankruptcy can be dismissed, including:
  • Credit Counseling -- Prior to filing for bankruptcy, it is necessary to attend credit counseling with an approved agency. After completing the course, you receive a certificate and are permitted to submit a petition with the bankruptcy court. If you don’t complete the credit counseling course, the case will be dismissed.
  • Bankruptcy Fraud -- If you defraud the court by submitting false or inaccurate information about your income, assets, and liabilities, the case will be dismissed by the bankruptcy trustee or the court. In addition to losing your discharge, you may also face criminal prosecution.
  • Filing Fees -- There are fees for filing bankruptcy to cover the court costs for administering your case. In some cases, the court may grant you a waiver -- if you don’t earn enough money to pay the fees, for instance. If the waiver application is denied, however, and you don’t pay the fees, the court will dismiss the case.
  • Filing Forms - There are numerous forms disclosing your financial affairs that must be submitted to the bankruptcy court. You must also provide the trustee with tax returns, pay stubs and other supporting documents. If you fail to do so, the bankruptcy will be dismissed.
  • Creditor Meeting -- After you file, the trustee will schedule a 341 meeting of creditors. If you fail to provide the trustee with the required financial information at least one week before the meeting or fail to appear, the trustee will dismiss the case.
  • Failing to Make Chapter 13 Payments -- In a Chapter 13 bankruptcy, or reorganization bankruptcy, you must adhere to the terms of a repayment plan. The court approved plan requires you to pay back a portion of your debts over a 3-to-5 year period. If you fail to adhere to the terms of your repayment plan, the bankruptcy will be dismissed.

The Takeaway

In the end, navigating the bankruptcy process can be complicated. By failing to follow the law and procedures, your case will be dismissed. The surest way to avoid this situation is by working with an experienced bankruptcy attorney.

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Miami Valley Bankruptcy, Brian Lusardi, Esq., assists clients with Bankruptcy matters including but not limited to: Common Myths, Cost of Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, The New Bankruptcy Law and Personal Bankruptcy in Xenia, Ohio, and the cities of: Wilberforce, Alpha, Spring Valley, Dayton, Bellbrook, Yellow Springs, Cedarville, Fairborn and Clifton; and the counties of Greene and Montgomery.



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