How to Cancel a Bankruptcy After It's Been Filed

by Tom Streissguth

If your debts are running out of control, you can petition for bankruptcy protection in federal court. The court will "stay" (halt) any collection actions against you while you sort out your financial affairs. If you wish to stop the bankruptcy, you must formally request that the court dismiss the case. This will have important implications for your debts so it may be helpful to obtain the advice of an experienced bankruptcy attorney when taking this step.

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Step 1

File (or have your attorney file) a Motion for Voluntary Dismissal with the court clerk. A voluntary dismissal means that you are asking the court to close the case and restore your debts to their status before the bankruptcy petition. The court will lift the automatic stay created by the original petition and suspend all actions by the court-appointed trustee handling your bankruptcy estate. As a result, your creditors may again pursue collection of your debts. Section 707 of the Bankruptcy Code lists proper grounds for dismissal.

Step 2

Have the motion served on the creditors listed with your initial bankruptcy petition. In most cases, your attorney will send the motion by certified mail to the creditors or their representatives. According to Rule 9014 of the Federal Rules of Bankruptcy Procedure, the court provides for a hearing on all such motions, at which a party to the case may state objections to the dismissal.

Step 3

Attend the scheduled hearing with your attorney. The judge will ask the reason for your request for a voluntary dismissal of the case. In most cases, a debtor's financial situation has improved to the point where a bankruptcy is no longer necessary. Other dismissals are combined with a request for change of venue (if you move to another state). Your creditors have a chance to appear at the hearing, although their attendance is not required. The court may refuse to dismiss the case if it finds that the grounds are improper, that you are abusing the system, or that you are trying to evade obligations to your creditors.