When debtors enter into a bankruptcy filing, the goal is almost always to obtain permanent relief from their debt struggles. In Chapter 13 bankruptcy, this is achieved through a manageable repayment plan and eventual discharge of remaining eligible debt.
However, are there times when you may be better off to seek dismissal of your case rather than closure and discharge of debt? The answer is yes, and here are a few reasons why it might be a good thing.
1. When Your Finances Change.
While most people need bankruptcy protection to right their financial ship, some might experience a reversal during the process. If you secure a much better job, for example, your monthly income might be so increased that you lose much of the value of the repayment plan. In this case, you and your attorney may choose to pursue other debt negotiation methods instead.
2. When You Should File Differently.
The decision of which chapter of bankruptcy to file is a big one. Chapter 7, or liquidation, bankruptcy often results in losing many assets that could be kept through Chapter 13. What happens if you realize during the process that you should have filed a different way? You may still be able to change your mind and dismiss the current case.
3. When You Get a Lump Sum.
As may happen if you get a better job (or find a job) while your case is open, a windfall may change your hand in bankruptcy. The monthly amount of your repayment plan may not change, but you might be able to bring arrears payments up to date, get rid of a nondischargeable debt, or negotiate with creditors.
4. When the Timing Is Wrong.
Timing is important in bankruptcy filings. You must file at the best time to capture all relevant debt (such as ongoing medical debt), but you also can't wait too long and lose things to foreclosure, for example. Perhaps you have already started bankruptcy but realize that it was not the best timing for your circumstances. You may be able to stop a current case and refile or reopen it later.
Where to Learn More
Although a voluntary dismissal isn't a common bankruptcy move, it's the right call in a few specific situations. Does yours fall into this category? Get help finding out by meeting with a bankruptcy attorney in your state today. No matter what you decide with their help, you'll have confidence that you've explored all your opportunities.
