Dismissals in Bankruptcy

October 22, 2011 by  Filed under: Bankruptcy 

When filing for bankruptcy there are numerous decisions that are required both before and during the process. One of the biggest decisions people may face once they have already filed for bankruptcy is whether or not to continue. This may sound like an odd decision, but there are instances in which a person may decide they no longer need bankruptcy protection.

Voluntary Dismissals

A voluntary dismissal is when the debtor requests to have their case closed without any debt resolution taking place. People may request to have their case close for numerous reasons such as:

  • Successfully negotiating with creditors directly
  • Obtaining adequate employment to maintain debt repayments
  • Getting a large sum of money that can be used to resolve debts directly
  • Finding out a particular debt does not qualify for discharge in the bankruptcy

In general, a voluntary dismissal can be a good thing. After all, being able to repay debts outside of bankruptcy can be better for a person’s credit and likelihood of obtaining loans in the future. If a person needed to file again in the future, a voluntary dismissal looks much better in the eyes of the court than an involuntary dismissal or even a discharge.

However, voluntary dismissals may prove to be somewhat problematic, as getting the bankruptcy status removed from a credit report can be difficult at times. Once you file for bankruptcy, the credit bureaus reflect your filing status immediately, which means you are noted as having entered bankruptcy before you debts are even discharged. Getting the status removed could take several months with lots of communication between the court and creditors before the approval takes place.

Involuntary Dismissals

An involuntary dismissal occurs when the court closes the case without any debt resolution. Involuntary dismissals are usually the result of:

  • Fraudulent actions or suspicion of fraud in the process
  • Failure to pay the required fees
  • Failure to complete the necessary requirements

Involuntary dismissals can be problematic and cause trouble for a debtor down the road. Not only with their debts not be discharged, but they may be unable to file for bankruptcy again in the future. Depending on why the case was dismissed, a person may be prohibited from filing again for 180 days or indefinitely. They are also extremely difficult to have removed from a credit report. Even worse is that the bankruptcy status will be reflected on the credit report, along with the continued delinquency of their accounts that were not dismissed.

The Lee Law Firms aims to help local residents resolve their debt issues and achieve a financially healthy future. They provide high quality legal representation that helps lower monthly debt payments, stop wage garnishment, prevent foreclosures, and stop calls from creditors. The Lee Law Firm bankruptcy attorneys have many years of experience in all aspects of Chapter 7 and Chapter 13 Bankruptcy in Fort Worth.

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