Chapter 13 bankruptcy is a long process; during the course of a Chapter 13 case, your financial circumstances may change, and you might decide that you no longer want your case to continue. A Chapter 13 bankruptcy case can end in one of three ways: first, you can complete the case and obtain a discharge; second, you can voluntarily dismiss your case; and third, the court can dismiss your case if you don't do everything you're supposed to do.
Successfully Completing Your Case
Make all of your plan payments. Your Chapter 13 plan requires you to make a specific payment for a specific period of years. If you make every single payment on time and in the correct amount, you're on your way to completing your case successfully.
Keep in contact with your attorney. Your Chapter 13 plan payment might change during the case for various reasons, such as an increase in your trustee's fees or your mortgage payment. You might discover that you can no longer afford your current plan payment, and you can try to get it reduced. By staying in contact with your lawyer, you can make sure that you follow the appropriate channels to make changes to your case. If you keep your case manageable, you can stay on track.
Submit all tax returns and tax refunds. When you file your tax return every year, make sure to send a copy to your attorney so she can send it to the trustee. If you get a tax refund, the IRS should send the refund to the trustee directly, but if the IRS doesn't do so, you have to send it yourself. If you need to keep your tax refund for something unexpected, contact your attorney to see if you can have the refund excused.
Finish your second credit counseling course. You participated in a pre-bankruptcy credit counseling course before you filed your bankruptcy case; you must complete a second course before your case is over in order to obtain your discharge. Once you complete all your payments, submit all your tax returns and tax refunds and complete your credit counseling course, the court will enter a discharge order and close your case, as long as you did everything the court required you to do.
Contact your attorney. Discuss your options carefully. Your attorney may have other suggestions for you that are less drastic than dismissing your case.
Sign a voluntary dismissal. Your bankruptcy court might have its own rules about how the voluntary dismissal document should look and what it should say. Your attorney will prepare it and file it for you. Once your lawyer files the dismissal, the court will dismiss your case and your case will stop immediately. If you file your own dismissal document, the court might require you to come to a hearing to explain why you want to dismiss your case without talking to your lawyer first.
Keep in touch with your attorney after the dismissal to make sure your plan payments stop coming out of your paycheck.
Stop making your payments. If you stop making your payments, the trustee or a creditor will eventually move to dismiss your case. If you have a wage deduction, however, you will not be able to stop the deductions.
Do not submit tax returns or tax refunds. If you fail to submit your tax returns and tax refunds, the trustee will eventually file a motion to dismiss your case.
Do not respond to any motions to dismiss that the trustee or a creditor files. If your trustee or a creditor files a motion to dismiss your case and you want the court to dismiss your case, the court will dismiss it if you do not respond to the motion.
Discuss your situation with your attorney very carefully before deciding to dismiss your case. If you do decide to dismiss your case, a voluntary dismissal is better than letting your case fall apart and waiting for the trustee or a creditor to ask the court to dismiss it because a voluntary dismissal will work immediately and because you will maintain control over your case.
Once you dismiss your bankruptcy, you no longer have protection from your creditors. If you were paying on a car or a house in your Chapter 13 and you dismiss your case, you risk repossession and foreclosure.
- Discuss your situation with your attorney very carefully before deciding to dismiss your case. If you do decide to dismiss your case, a voluntary dismissal is better than letting your case fall apart and waiting for the trustee or a creditor to ask the court to dismiss it because a voluntary dismissal will work immediately and because you will maintain control over your case.
- Once you dismiss your bankruptcy, you no longer have protection from your creditors. If you were paying on a car or a house in your Chapter 13 and you dismiss your case, you risk repossession and foreclosure.
Rebecca K. McDowell is an attorney focused on debts and finance. She has a B.A. in English and a J.D. She has written finance and tax articles for Zacks and eHow.