Is your bankruptcy dismissal a bad or good thing? It depends
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When you file Greensboro bankruptcy, there are two possible outcomes – discharge and dismissal. When you get a discharge in your bankruptcy, that means you met the requirements established by bankruptcy law and the court. With a dismissal, it means you have not met the requirements for some reason, or you are otherwise disqualified. Each of these possible outcomes can bring you a different result. Here’s what you need to know about the outcomes of your Greensboro bankruptcy.
What Is a Bankruptcy Discharge?
When you choose Chapter 13 for your Greensboro bankruptcy, discharge means that you made all of your planned payments. In most cases, that’s a five-year plan, but sometimes it’s a three-year plan. You must make all of these payments such that your secured debt and other priority debts are completely current. When you choose Chapter 7, discharge comes much faster, within just a few months.
With Chapter 13, your delinquent debts are caught up, and some or much of your unsecured debts are discharged. By the time you earn your Chapter 13 discharge, you’ll be current on debt and have much less debt outstanding than when you began. With Chapter 7 discharge, your qualified unsecured debt is discharged, and you should have much less debt than when you began the bankruptcy process.
What Is a Bankruptcy Dismissal?
With either Chapter 7 or Chapter 13, your Greensboro bankruptcy can be dismissed if you fail to submit a document or fail to show up to required court hearings like the 341 Meeting of Creditors. Dismissals are rarer with a Chapter 7 because it starts and wraps up so fast. It’s hard to stop a Chapter 7 discharge between filing and discharge, so there’s less opportunity for dismissal.
With Chapter 13, the court can dismiss your Greensboro bankruptcy if your repayment plan isn’t feasible or you miss payments. Either type of bankruptcy can be dismissed if you don’t complete the required credit counseling courses or if you don’t provide requested documents to the court. Fraud can also trigger dismissal in either type of Greensboro bankruptcy case.
Dismissal means the bankruptcy court has dropped your case and you can’t get a discharge. Once your case is dismissed, there may be a window where you are time-barred from filing another bankruptcy case. Whether you must wait to file a subsequent Greensboro bankruptcy depends on the reason(s) why your bankruptcy case was dismissed.
Is Bankruptcy Dismissal Always a Bad Thing?
In a nutshell, no, a dismissal isn’t always a bad thing. Sometimes, filing bankruptcy can be strategic in intent and filed without a discharge as a goal, particularly for Chapter 13 bankruptcy. For instance, if you’re behind on your mortgage and your lender has filed a foreclosure notice, and you need to buy time and stall the auction sale of your home, bankruptcy will stop the process.
Once the foreclosure is halted because of your Chapter 13 bankruptcy filing, you’ll have a bit of breathing room even if you can’t don’t ever pay an installment on your repayment plan. Chapter 13 can buy a few months to save up money, pack your home, and find a new place to live. Then, once your bankruptcy is dismissed and you’ve moved, you can consider another alternative to debt.
In a case like this, you might want to use Chapter 13 to stall foreclosure while you make other arrangements and then if you qualify, file Chapter 7 bankruptcy after you get moved, and the property is foreclosed to shed any residual debt and get a fresh financial start. Bankruptcy dismissal can come as a result of an action, inaction, or deliberate intent and isn’t always a bad thing.
To find out more about the benefits of North Carolina bankruptcy, contact the Law Offices of John T. Orcutt. Call +1-919-646-2654 now for a free Greensboro bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.