What if I change my mind after I file for bankruptcy and do not want to proceed with the case?

Sometimes a person may file for bankruptcy and shortly thereafter decide that bankruptcy is really not a good fit for them. If you change your mind, then you should file a motion to voluntarily dismiss your case. Probably the most common reason for wanting to dismiss a case is that the debtor could lose a significant amount of assets. Normally, a debtor exempts all of his or her assets and they are fully protected, but there could be times when an exemption that was claimed gets denied or simply new assets are discovered. For instance, circumstances could arise where the debtor comes into certain monies that had not been expected. Also, a debtor may decide that they would like to dismiss their case, so that they could re-file and add on some additional debts that did not exist at the time of their first filing. The rules regarding the voluntary dismissal of your case are somewhat different depending on whether it is a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy. 

VOLUNTARY DISMISSAL UNDER A CHAPTER 7 BANKRUPTCY MUST BE "FOR CAUSE"

In a Chapter 7 Bankruptcy, the Court can only dismiss a case after a notice and hearing. That means that it is necessary for the debtor to file a motion and serve it upon all the creditors listed on the bankruptcy schedules. This being the case, the debtor still has no absolute right to dismissal in a Chapter 7 Bankruptcy. A dismissal can only be ordered by the Court upon a showing of cause. In otherwords, the debtor must give a reason for the dismissal. Just what constitutes cause is in the sound discretion of the Court. A number of factors are looked at  in determining whether to voluntarily dismiss a case. However, probably the main factor that the Courts consider is whether there are any assets available to distribute to unsecured creditors. The Courts perform somewhat of a balancing act: whether dismissal would be in the best interest of the debtor compared to the prejudicial effect on the creditor. Prejudice is considered to exist where the distribution of assets would be lost by the dismissal of the case. Even in that particular case, should the debtor be able to provide an assurance or guarantee that the creditors would be paid outside of the bankruptcy, then the Court may very well agree to dismiss the case. Generally though, it is almost impossible to have your bankruptcy dismissed if there are assets to be sold. If you have been able to exempt all of your assets meaning that it a no-asset case and no creditors have objected, then the Court will most likley allow your case to be dismissed. 

DEBTOR HAS ABSOLUTE RIGHT TO DISMISSAL UNDER A CHAPTER 13 BANKRUPTCY

In a Chapter 13 Bankruptcy, a debtor has an absolute right to dismissal of their case, as long as it has not been converted from another chapter. The debor must file with the Court a notice indicating their intention to voluntarily dismiss their case. Even though notice and a hearing are not specifically provided for in the Bankruptcy Code, as with a Chapter 7 Bankruptcy, the Courts generally require that the notice be served on all creditors that are listed on your bankruptcy schedules. The Courts still must dismiss the bankruptcy case and are not permitted to convert the case to a Chapter 7 since the debtor has moved to dismiss the case. The Court should allow the case to be dismissed, even if a creditor has objected to the dismissal or seeks to have the case converted to a Chapter 7. Sometimes a debtor may face the choice of having the case dismissed or converted to a Chapter 7 Bankruptcy. Dismissal may be preferred if the debtor would lose significant assets in the conversion to a Chapter 7 Bankruptcy. Therefore, it is important to note that the right to dismissal in your Chapter 13 Bankruptcy is lost upon conversion. If the Chapter 13 case was orignially filed under another chapter, the debtor may still seek to have the case dismissed, but must seek the permission of the Court through the motion's process. The Court then weighs the various factors similar to those in a Chapter 7 Bankruptcy, as to whether dismissal is in the best interest of the debtor and does not prejudice the creditor.

One matter that needs to be considered when moving to voluntarily dismiss a case is that if debtor has the case dismissed and a Motion for Relief From Stay was previously filed, then the debtor is unable to file a new case for six months.

Once a case is dismissed the debtor is placed in the situation that he or she was in prior to filing the bankruptcy. Otherwords, creditors are free to commence collection activities as if no bankruptcy case had previously been filed. Any late fees or interest that accrued during your bankruptcy filing can now be added to the amount that you owe. However, you are free to again file another case under either a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy.   

If you are uncertain about your situation and have many questions about bankruptcy that would help you in making your decision, then call Pittsburgh Bankruptcy Attorney Rodney Shepherd at 412 471-9670 or fill out our content information form. An appointment for a free consultation will be scheduled today.