What happens if I voluntarily dismiss my Chapter 13? Chapter 13 bankruptcy is a way to reorganize your debts. When you declare Chapter 13, a payment plan is set up, and you make monthly payments to repay your creditors over time.
As a debtor, you can choose to end your Chapter 13 bankruptcy case at any time. Once you do that, you won’t have to make payments according to your repayment plan anymore. But, there’s a catch – you might lose the protection that bankruptcy provides. This means your creditors can start trying to collect what you owe them, which could include taking back your belongings or seizing your property. You’ll still owe your creditors the amount you owed before starting your bankruptcy, minus the payments you made while your case was active.
If you need assistance with your bankruptcy case, you can reach out to our experienced bankruptcy attorneys at Bruner Wright P.A. Call 904.432.1200 today.
Consequences of Dismissing Your Chapter 13 Bankruptcy
When you decide to voluntarily dismiss your Chapter 13 bankruptcy case, it’s crucial to be aware of the consequences. Once the judge signs the dismissal order, you’re off the hook for the payments outlined in your repayment plan. The court and the Chapter 13 trustee won’t have control over your tax refunds, income, or anything else mentioned in your plan anymore.
However, there’s a downside: you lose the “automatic stay,” which protects you from creditors and collection agencies contacting you. This means creditors can try to take back your property or foreclose on collateral that was securing your debts. You still owe them the same amount you owed before filing for bankruptcy, minus any payments you made before your case was dismissed. Additionally, after dismissal, you might face interest accruing on your outstanding debts, damage to your credit score, and a longer wait before you can file for bankruptcy again.
Before you make a decision, it’s crucial to understand how your creditors will respond. You can talk to our Bensalem bankruptcy lawyers to figure out the best way forward in your situation.
Why Would You Want to Dismiss Your Chapter 13 Bankruptcy?
There are a few reasons you might consider dismissing your Chapter 13 bankruptcy. For example, if you get a raise while your case is ongoing, you might have to use that extra income to pay your creditors. In such a situation, it could be better to dismiss your case and work out a deal with your creditors through negotiation.
Additionally, you might want to dismiss your Chapter 13 bankruptcy if your scheduled payments become too high for you to afford. If you can’t keep up with these payments and end up falling behind on other important bills like your mortgage, you might actually end up owing more money than you did originally.
How to Request a Voluntary Dismissal of Your Chapter 13 Bankruptcy
Requesting a voluntary dismissal of your Chapter 13 bankruptcy case is a straightforward process. All you need to do is send a written notice to your Chapter 13 trustee, stating your decision to dismiss. Include your name, case number, and your signature in the letter. You can either mail it or deliver it in person to the trustee’s office.
It’s important to know that your notice doesn’t have to explain why you want to dismiss your case. You have the right to dismiss it without giving a detailed reason.
Once your trustee receives the notice, they will file a motion to dismiss your case officially. After that, the trustee will stop taking money from your paychecks, and your case will be officially dismissed.
Can You File Again After You Voluntarily Dismiss Your Chapter 13 Bankruptcy?
If you choose to dismiss your Chapter 13 bankruptcy voluntarily, you can usually file for bankruptcy again right away. If you attempt to file a new case within one year of your previous Chapter 13 case, you’ll get a 30-day period where creditors can’t contact you due to an automatic stay. However, after these 30 days, you need to file a motion with the court to extend the stay. To succeed, you have to prove that your situation has changed and that you’re likely to complete the new case.
If you try to file a new Chapter 13 case within a year of having two or more cases open, it’s more challenging. In this situation, an automatic stay won’t be granted immediately. To establish the stay, you must clearly and convincingly show that there’s a significant change in circumstances allowing you to complete the new case.
Lastly, if a creditor gets relief from an automatic stay in your case, you have to wait at least six months before filing a new case if you want to include that creditor again.
What Are Your Other Options After a Voluntary Dismissal of Your Chapter 13 Bankruptcy?
After voluntarily dismissing your Chapter 13 bankruptcy case, there are alternatives to consider for dealing with your debts. If your financial situation improves significantly, you might be able to pay off all your debts completely.
However, if paying in full isn’t possible, you could try negotiating with your creditors to reach an agreement to pay a reduced amount. It’s worth attempting these negotiations to see if you can resolve your debts without having to file for bankruptcy again. This approach might help you avoid the need for another bankruptcy filing.
If You Need Help with Your Bankruptcy Case, Call Our Law Firm Today
If you require assistance with your bankruptcy case, don’t hesitate to reach out to our law firm. Our team of experienced Jacksonville bankruptcy lawyers at Bruner Wright P.A. is here to help. Call us at 904.432.1200 for a free evaluation of your case. We can provide the guidance and support you need during this challenging time.
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