The court can dismiss your case, upon request of the bankruptcy trustee, for good cause, including things like unreasonable delay by the debtor, failure by the debtor to timely file documents, failure by the debtor to pay fees, and failure to make payments in a chapter 13 plan.
Dismissal is typically granted when the debtor does not fulfil their obligations under the Bankruptcy Code to the harm of creditors. However, is it possible for the debtor to voluntarily dismiss their case on their own?
Examples of Problems and Unforseen Circumstances
Sometimes, unforeseen problems and circumstances can arise during a person’s bankruptcy case. Common issues include things like losing property in a chapter 7, or not being able to make payments in a chapter 13. There are even some instances where the bankruptcy case can adversely affect a family member, such as when large amounts of money or property are given to them by the debtor (the person filing bankruptcy), prior to the bankruptcy case being filed.
It’s always advisable to have an attorney when filing for bankruptcy, but even an experienced attorney cannot avoid or predict all possible complications that may arise in a bankruptcy case. Often times, this will cause the debtor to want to just “pull the plug” and end their case altogether to avoid these problems.
Changing Your Mind About a Chapter 13 Filing in MN
Debtors who file chapter 13 cases have an absolute right to voluntarily dismiss their case, at any time, and for any reason, so long as they are not acting in bad faith. A debtor acts in bad faith when they deliberately abuse the bankruptcy process to wrongfully avoid their obligations to creditors (i.e. filing a chapter 13 merely to delay having their home foreclosed upon when they know that they have no ability to make payments, whatsoever).
It is also notable that this absolute right to dismiss a chapter 13 case only applies to cases originally filed as chapter 13 cases, and not to cases in which the case was converted from a chapter 7 to a chapter 13 bankruptcy.
Changing Your Mind About a Chapter 7 Filing in MN
It’s a bit different in a chapter 7 case, however. A debtor in chapter 7 may dismiss their case only with court approval. To do so, they must establish both good cause for dismissal and show that their creditors will not be prejudiced, or unfairly harmed, by the dismissal of the case. Like with chapter 13 dismissals, the debtor must not be acting in bad faith when asking the court to dismiss the case.
Why Courts Are Hesitant to Dismiss a Chapter 7 in Minnesota
Typically, the court will not allow a chapter 7 case to be dismissed when there is a chance that the creditors will receive a benefit from the case being allowed to continue. A circumstance like this is when the debtor has nonexempt (“unprotected”) property available for the trustee to take to pay to the creditors. If there has been an objection to the debtor’s discharge, an objection to the property the debtor claims is protected from creditors, or any issue which gives the trustee the right to get money or property from 3rd parties (i.e. family members of the debtor).
Likelihood of Being Granted a Dismissal
It is unlikely that the court will grant request for dismissal. Since debtors typically only want “out” of a case when these sort of issues arise, it goes without saying that it is rare for the court to allow chapter 7 cases to be dismissed.
CALL NOW FOR A FREE STRATEGY SESSION FROM A MN BANKRUPTCY LAWYER AT LIFEBACK LAW FIRM
Bankruptcy is a great way to help people fix their financial situation by getting rid of debt. However, before filing for bankruptcy, it is always a good idea to discuss the potential risks of filing a bankruptcy case with an experienced bankruptcy attorney in Minnesota. Visit LifeBackLaw.com for more information and a free consultation on your case.
