The practical consequences of dismissal
When your bankruptcy case is dismissed, the case is closed as if it had not been filed. Here is what that means practically.
Your debts come back
Dismissal means no discharge. All debts that existed before filing still exist. Creditors can resume collection activity including lawsuits, garnishment, foreclosure, and repossession.
The automatic stay ends
The automatic stay terminates immediately upon dismissal. Creditors no longer need court permission to pursue collection.
In Chapter 13: payments may not help
If your Chapter 13 case is dismissed after you have been making plan payments, what happens to those payments depends on the circumstances:
- Payments already distributed to creditors reduce those debts
- Undistributed payments held by the trustee are typically returned to you
- The trustee may retain fees for work already performed
Your credit report
A dismissed bankruptcy still appears on your credit report. Chapter 7 filings (dismissed or discharged) can remain for 10 years. Chapter 13 filings can remain for 7 years from the filing date.
Dismissal vs. conversion: Instead of dismissal, a Chapter 13 case can sometimes be converted to Chapter 7 under Section 1307(a). This may still result in a discharge if you qualify. Ask your attorney about this option before accepting dismissal.
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