Can I Dismiss My Chapter 7 Bankruptcy?
Jul 31, 2024
Process
Once your Chapter 7 Bankruptcy is filed, you can’t just cancel it. You will need to ask the bankruptcy court for permission by filing a Motion to Dismiss. In your motion you will need to outline your reasons for requesting a dismissal. The motion needs to be sent to all your creditors and the trustee in your case, which allows them to object to the dismissal if they feel it will negatively impact them. A Motion to Dismiss hearing will be scheduled to explain your reasons for requesting a dismissal and to hear any objections. At the hearing the Judge will either approve or deny your request for dismissal. The Judge’s decision will be based on whether you own non-exempt assets, impact on creditors, and if your reasons are valid. If your request is approved, you can withdraw from the bankruptcy process, but it does not erase the bankruptcy from your record.
Non-Exempt Assets
Discovering that you could lose an asset you wanted to keep is the most common reason for wanting to dismiss a Chapter 7 Bankruptcy. Unfortunately, you cannot dismiss your bankruptcy because you have non-exempt assets. When you file for Chapter 7 Bankruptcy, your assets become the property of a bankruptcy estate which is controlled by the trustee. In a Chapter 7 Bankruptcy, you can keep all your exempt property, but the trustee has the authority to sell any non-exempt assets to pay your creditors. If you own non-exempt assets, your creditors will be negatively affected by the dismissal of your Chapter 7 Bankruptcy. Therefore, the court will not allow you to dismiss your case.
Your Chapter 7 Bankruptcy can get dismissed if you don’t submit all the required documents, fail to appear at the 341 Meeting of Creditors hearing or don’t complete the credit counseling. However, if the trustee suspects you are intentionally trying to get your case dismissed, they can file a motion asking the bankruptcy court to stop the dismissal so they can pursue your non-exempt assets to pay creditors.
Payment to Creditors
It is the trustee’s responsibility to act in the best interest of the creditors in your bankruptcy. If you have non-exempt assets, the trustee will file a Notice of Asset Recovery and Opportunity to File Proof of Claim. A Proof of Claim is a court document wherein the creditor indicates the details of the debt as of the date your bankruptcy was filed. Creditors who file a proof of claim before the deadline are eligible to receive a portion of any funds recovered. If a creditor fails to file a proof of claim, the debt will still be discharged even though they did not receive any payment.
Bankruptcy Attorney
Meeting with an experienced bankruptcy attorney can help you determine if you have any unexempt assets before deciding to file for Chapter 7 Bankruptcy. If an unexpected non-exempt asset arises after filing, your attorney can explore amendment or conversion options that could benefit your unique circumstances. An experienced bankruptcy attorney is essential in guiding you through the entire bankruptcy process, regardless of your situation.
FREE CONSULTIONS
Struggling financially is overwhelming; figuring out the best debt relief option for your situation doesn’t have to be. At Pedersen Law Office, LLC we understand how stressful being in debt can be; that is why we offer free consultations. We will discuss your circumstances and goals to help figure out what debt relief option is best for you and help you through the entire process. Our law office serves the communities of Appleton, Neenah, Menasha, Oshkosh, Green Bay and their surrounding areas.
