Chapter 13 bankruptcy dismissed
Chapter 13 Bankruptcy is available to the people living in United States and is used for the repaying the creditors by means of a reorganization plan. This plan is formed for a minimum period of 3 years and maximum year of 5 years. All those people that have regular income, whether salaried or self employed, can apply for the Chapter 13 Bankruptcy for repaying his creditors.
The procedure get started when a person suffering from outstanding debts files petition for the Chapter 13 Bankruptcy in the bankruptcy courts located in his state. The attorney prepares a reorganization plan by taking income and expenses, both present and future, into consideration and the debtor is required to make a single monthly installment to the Trustee appointed by the Bankruptcy court. Over a period of time, creditors are repaid and the person becomes debt free. Basic purpose of filing petition under Chapter 13 Bankruptcy is to get protection for all the non-exempted assets in which a person has substantial equity like home etc. Many people in United States have resorted to this type of bankruptcy for preventing home foreclosures. When a Chapter 13 Bankruptcy petition is filed, it automatically stays all the actions that can be taken by the creditors to get their money, like foreclosures, repossessions, garnishments, and lawsuits. If a debtor is employed, it is his duty to get the amount of installment payable to the Trustee deducted from his salary and cashiers check or postal order of same amount is sent to the Trustee.
Dismissal of chapter 13 bankruptcies:
If a person is not able to make the repayment installments in time to the Trustee appointed by the Bankruptcy court, it can result in the dismissal of the Chapter 13 Bankruptcy. When the first installment is missed by a person, he is given a fixed time frame, generally 21 days, to repay the missed installment as well as next due installment to save his assets and continue reorganization plan. However, if a person is not able to do that, his reorganization plan formed under the Chapter 13 Bankruptcy becomes liable for the dismissal and if it happens, there are many types of restrictions imposed. Timely and proper repayment, on the other hand, helps a person in getting out of the debts successfully.
Various aspects of chapter 13 bankruptcy dissmissals:
There are some aspects related to Chapter 13 Bankruptcy Dismissal that have to be understood here. Many people are curious to know if they can sell their home and other assets before the Chapter 7, after their Chapter 13 Bankruptcy has been dismissed due to non-repayment. In such circumstances, the legal impact of the dismissal of Chapter 13 Bankruptcy are the same as if there had been no petition filed by debtor. The stay provided to the debtor on his various types of assets gets dissolved and all the rights of the creditors are fully restored. Thus, they can proceed for the lawsuits, foreclosures, garnishments etc for recovering their amounts. It has been seen in many cases that people having outstanding debts sell their properties after the Chapter 13 Bankruptcy dismissal and they file for the Chapter 7 Bankruptcy. This act has been termed as Voidable Preference or Preferential Transfer and is carried out within 4 months of filing the bankruptcy petition by a person. This act of course deprives the creditors of concerned recovery. This type of transaction can easily be set aside by the bankruptcy court and the property is returned.
In many situations, after filing the Chapter 13 Bankruptcy in one state, the debtor moves to other state and due to non-repayment of the monthly installment, first bankruptcy filing is dismissed. In such cases, it is advised that a person must file for the Chapter 13 Bankruptcy after the stipulated time period. For example, if a person has moved to Washington, he can file for the Chapter 13 Bankruptcy if he has lived in Washington for 91 days. This type of move enables the debtor to get the 30 day protection from his creditors against various types of acts like foreclosures, repossessions etc. During this period of 30 days, the attorney of the debtor has to file a new bankruptcy protection under the Chapter 13. However, it is better if a person can salvage his old Chapter 13 Bankruptcy filing and get along with it so as to provide the dismissal.
Chapter 13 Bankruptcy has effect on all the assets that are non-exempt. In case of exempt assets, the dismissal of the Chapter 13 Bankruptcy does not have any affect and a person can easily enjoy benefits attached to it. Other aspects that needs to be discussed here is whether a person can go for refinancing of loans after the dismissal of Chapter 13 Bankruptcy The answer is yes, it can be done. In such cases, the refinance ability of a person is dependent upon many factors. Credit score plays the most important role. Second factor is the value of the new loan-to-value. It includes the cost of refinance as well as pay off for the present mortgage.
Most of the people going through the Chapter 13 Bankruptcy reorganization plan face a common problem. After paying the regular payments for a certain period of time, even for years together, they are served with dismissal summon by the Trustee on lapse of one or two payments. Even people go to court in such cases. It is advised here that such a gesture is not appreciated. This is because when a person goes to court, the trustee appointed by the bankruptcy court would definitely argue that the reorganization plan being followed by a person is no longer feasible. This is true also as the person has not been able to make payments for his creditors and thus, he does not stand protected against various types of assets. In such circumstances, best step is to show to the court that a person can easily get back on the reorganization plan easily or even can propose an amended plan, payments of which are feasible for a person.
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