When you file for bankruptcy, there are two outcomes: discharge and dismissal. Though they sound similar, they’re polar opposites, and you should understand the difference between the two before you file.
Below, Ron Lundquist, one of Minneapolis’s most knowledgeable and experienced bankruptcy attorney explains what you need to know about bankruptcy discharge and dismissal.
What’s Bankruptcy Discharge?
If you file bankruptcy, you’re likely overwhelmed by debt that you’d like to get rid of. When the court relieves you of that debt, that’s referred to as a bankruptcy discharge. When you receive a discharge, it prevents creditors from pursuing further collection actions against you. Your qualifying debts go away and your case concludes without a hitch.
What’s Bankruptcy Dismissal?
If you file for bankruptcy but change your mind before the process is complete, the court can close your case without issuing a discharge. This is known as a dismissal.
If you do not fulfill all of the requirements to file for bankruptcy — because you made a mistake on your forms, your documentation doesn’t match up, or your income is too high (for Chapter 7 filers) — the court may also dismiss your case.
Achieving a Successful Bankruptcy Discharge
If you’re overwhelmed by debt that you cannot afford to pay back, you must make sure you have everything in place to secure a successful bankruptcy discharge. To achieve this, one of the most important things you can do is hire an experienced bankruptcy attorney. Your attorney will guide you through the entire bankruptcy process and make sure you do what’s necessary to get a discharge, including:
● Filing the forms and schedule on time
● Submitting the appropriate documentation
● Attending the meeting of the creditors
● Passing the means test
● Filing certificates for completed debt and credit counseling
● Making required repayment plans (for Chapter 13)
● Paying the court filing fee
One of the most common reasons for bankruptcy dismissal (what you don’t want!) is simple human error. Late forms or errors on your forms, even if they’re unintentional, will get your case dismissed in a hurry.
Requesting Voluntary Bankruptcy Dismissal
You can always request a voluntary dismissal of your bankruptcy case, but there’s no guarantee the court will grant it. If you file for Chapter 7, dismissing the case won’t be easy. That’s especially true if a dismissal isn’t in the best interest of your creditors — in such a case, the court will likely refuse your request.
If you file for Chapter 13 bankruptcy and need to back out, in some jurisdictions you can notify the court that you no longer want to pursue the case. In other jurisdictions, you must file a motion, which the court will need to grant. Generally, the court cannot continue your Chapter 13 case against your will.
Keep in mind, though, that requesting a Chapter 13 dismissal can come with consequences. Your creditors may be able to file a motion requesting the court to lift your automatic stay, in which case they can demand immediate payment. You won’t be able to restore the automatic stay by filing another case.
Considering Filing for Bankruptcy? Contact Ron Lunquist, Attorney at Law
If you’re overwhelmed by debt, filing for Chapter 7 or Chapter 13 bankruptcy can help you start fresh. Ron Lundquist, one of the Twin Cities’ leading bankruptcy attorneys has been serving the Minneapolis metro for over 20 years and can help you file your case successfully. To learn more or get started, feel free to request a free consultation, send a message, or call my office at 651-454-0007.