When you file for bankruptcy, you usually want to have your obligations to creditors discharged, or extinguished, so that you can have a fresh financial start in life. However, your case can be dismissed before the discharge is entered, or your discharge can be denied by the court. In most cases, you can file for bankruptcy again, but you might have to sit out a waiting period and, sometimes, the relief you may receive in any subsequent bankruptcy is limited.
If you fail to appear at the creditors meeting or file the required schedules, your case will likely be dismissed before you receive a discharge. If you file too soon after receiving a discharge in another case, fail to turn over financial documents, refuse to cooperate with the trustee, fail to obey a court order, conceal assets or are otherwise found to be dishonest, your discharge can be denied in a Chapter 7. In a Chapter 13, confirmation of your plan can be denied.
Dismissals can result from motions to dismiss or entered by the court without a motion. Denial of discharge, other than for filing too soon after a previous discharge, generally requires a lawsuit called an adversary proceeding in the bankruptcy court. The procedure for objections to confirmation differs by district. Any party can object to confirmation, request a dismissal or request a denial of discharge.
Refiling after Dismissal
Most courts dismiss cases with prejudice for a period of time. This means you cannot file again until that time has passed. Six months is common, but it can be longer or shorter. It is also possible for a court to bar, or prohibit, future filings entirely if you are found to have abused the bankruptcy laws. Multiple bankruptcy filings within a year can also change the relief you receive upon filing. The automatic stay that prohibits creditors from pursuing collection while the bankruptcy is pending may be limited or eliminated.
The penalties for fraud are harsh. In many instances, the case is not dismissed. In a Chapter 7, after your discharge is denied, the trustee can continue to administer the case by selling your nonexempt assets -- including any that had been concealed -- and paying creditors. If you filed a Chapter 13 bankruptcy, confirmation of the plan could be denied or, if the fraud is discovered after your plan is completed, your discharge could be revoked. In any event, you will remain responsible for any amounts that are not paid and, in most cases, will not be allowed to discharge those debts in a later bankruptcy filing. You might also face criminal charges.
Chapter 13 Dismissal
Chapter 13 cases can be dismissed for various reasons. Most commonly, cases are dismissed for failure to file complete schedules, turn over tax returns, make plan payments or file a repayment plan that can be confirmed, or approved. If the case is dismissed after your plan has been confirmed, the payments you made will be disbursed to creditors. If the case is dismissed before confirmation, the money you paid in might be returned to you if the court has not entered a vesting order. Different districts have different procedures. It is best to check with the bankruptcy court in your district or local bankruptcy attorney.