Define Bankruptcy Terminated

By Tom Streissguth

If you file for bankruptcy protection from creditors, a federal court gains jurisdiction over your assets, debts and financial affairs. The court has the authority to eliminate dischargeable debts, liquidate your assets or set up a repayment schedule (as in a Chapter 13 bankruptcy filing). However, the court also has the authority to dismiss or terminate the case, either on your motion or on its own initiative.


In bankruptcy law, "termination" is synonymous with "dismissal." The termination of a case means the court closes it, sends out notices to everyone involved, and no longer will consider motions or other litigation on the part of debtor or creditors. The debtor's financial and legal status returns to the "status quo ante"; that is, to the same state it was in before the bankruptcy was filed.

Debtor Status

If the debtor has filed for Chapter 13 bankruptcy, a court dismissing the case also cancels the repayment schedule. Even if the bankruptcy trustee has already made partial payments to creditors, the full debt owed before the filing again becomes current and payable to the creditor (minus any repayments). This most often happens when the debtor is unable to meet the minimum monthly payments set by the trustee. Dismissal of a Chapter 13 case often allows the option of converting it into a Chapter 7 bankruptcy, which discharges (cancels) all dischargeable debts.

Get a free, confidential bankruptcy evaluation. Learn More

Motion to Terminate

A debtor can file a motion to terminate an open bankruptcy case. This motion would ask the court to dismiss the bankruptcy, cancel any hearings, and allow creditors to seize secured property or start collecting the debts. This might be done if the debtor's financial situation has improved and the debtor wants to repay the dischargeable debts. Termination does not, however, erase the bankruptcy, which is reported to the credit bureaus as soon as the case opens with the initial petition. Dismissal or discharge of a bankruptcy is not reported to the credit bureaus — only the initial filing, which stays on a credit report for 10 years, at a minimum.

Court Termination

The bankruptcy court may also terminate a case by finding misconduct by the debtor. This may include the debtor placing false or fraudulent information on the bankruptcy petition; hiding assets to protect them from seizure; placing property in someone else's name for the same purpose; failing to attend a hearing or file a required document; or filing a frivolous petition for the purpose of delaying repayment of a debt. Termination "with prejudice" means the case may never be reopened; in some cases, a court will dismiss without prejudice and allow a debtor to rectify the situation and reopen the case.


"Termination" may also be used to mean "discharge," but there is a major difference between dismissal and discharge. A bankruptcy discharge is the issuance of a permanent order by the bankruptcy court that a debt is cancelled. Effectively, the debtor is relieved from the debt as well as any collection action by the creditor. Some debts can't be discharged, including federal taxes, child support, and federally guaranteed student loans. In a Chapter 13 bankruptcy, discharge means the debtor has satisfied the repayment schedule. In a Chapter 7 bankruptcy, it means the court has completed the bankruptcy procedure and dischargeable debts are no longer valid. After a case is dismissed or discharged, the law allows a debtor to file bankruptcy again. However, the law also bars the discharge of any debts that were subject to a Chapter 7 petition within the last eight years or with a Chapter 13 petition within the last six years.

Get a free, confidential bankruptcy evaluation. Learn More
Can I Be Sued After Chapter 7?


Related articles

Does Every Creditor File a Proof of Claim for Chapter 13?

A Chapter 13 bankruptcy allows a burdened debtor to escape collection actions and lawsuits brought by creditors. A court trustee sets up a repayment plan in which the debtor repays a percentage of his outstanding debts to all creditors who have filed a Proof of Claim form. Important rules in the bankruptcy code govern who needs to file a Proof of Claim to obtain repayment from the debtor.

Can You Go to Jail if You Get Denied a Bankruptcy Discharge?

A bankruptcy court's discharge releases you from the debts included in it. Federal and state laws don't allow you to include some debts, such as federal taxes, on your discharge. While bankruptcy usually doesn't involve jail time, you may face a criminal sentence if your discharge is denied for an illegal action you took in relation to your case.

What Happens When Chapter 13 Is Dismissed?

Chapter 13 bankruptcy allows you to create a three- to five-year repayment plan to catch up on your debts. If your case is dismissed, either by you or the bankruptcy court, prior to completion of the repayment plan, you will not receive a bankruptcy discharge, which erases the debts covered by your bankruptcy case and makes them unenforceable by your creditors.

Related articles

What is a Notice of Dismissal of Bankruptcy?

Bankruptcy is a legal process by which debtors may restructure or obtain relief from overwhelming debts and get a fresh ...

Can Creditors Attempt to Get Money After a Discharge?

When you file a petition for bankruptcy, you are asking a federal court for protection from creditors and time to work ...

Schedule F Bankruptcy Discharge

Bankruptcy means a fresh start – a court order protects you from collections and lawsuits, and eventually, the court ...

What Does a Discharge in a Chapter 13 Bankruptcy Mean to Debtors?

Bankruptcy allows a debtor to obtain relief from his creditors if he meets certain legal requirements. Chapter 7 ...

Browse by category
Ready to Begin? GET STARTED