Bankruptcies Not Created Equal: Chapters 7 vs. 13
When you file a Chapter 13 or Chapter 7 bankruptcy petition, the court issues an automatic stay. This stay prohibits your creditors from attempting to collect any debt owed to them. A Chapter 7 bankruptcy causes your assets to be liquidated, with the proceeds going to pay your creditors. Once this is done, you are discharged from any further obligation to those creditors. Filing a Chapter 13 bankruptcy gives you time to work out a reasonable repayment plan with your creditors. You only get a discharge in a Chapter 13 bankruptcy after you complete the repayment plan.
A Dismissal Is Not a Discharge
In a Chapter 7 case, a bankruptcy discharge releases you from having to pay anything to your creditors. A Chapter 13 discharge shows that you complied with the terms of your payment plan. Dismissals are covered by the Federal Rules of Bankruptcy Procedure. A bankruptcy case may be administratively dismissed if a credit counseling course certificate is not filed, the filing fee is not paid, or the required schedules and financial information are not filed. A Chapter 13 bankruptcy may also be dismissed if agreed payments to creditors are not made.
Reinstating Your Chapter 7 Case
To reinstate a dismissed Chapter 7 case, you must know the reason for the dismissal. Ordinarily, this information will be in the dismissal order received from the court. You may also go to the Bankruptcy Court Clerk's Office and look at your bankruptcy file. A Motion to Reconsider is the only way for your case to be reinstated. Many dismissals are entered when required documents or schedules are not filed or fees are not paid. The Motion to Reconsider should include the documents that were not filed or the fee that was not paid.
Filing a Chapter 13 Bankruptcy
A second bankruptcy under Chapter 13 cannot be filed until 180 days after your Chapter 7 petition was dismissed. Even though your Chapter 7 bankruptcy is dismissed, it still stays on your credit report for 10 years. Before you can file a Chapter 13 bankruptcy, you will again need to obtain a certificate that you completed credit counseling within 180 days of the Chapter 13 filing. Because of this time limit, you may not use the credit counseling certificate from your Chapter 7 bankruptcy.