Chapter 13 payments can be difficult to maintain, yet failure to do so can result in the dismissal of your Bankruptcy in Orlando case. You are free to re-file. Nonetheless, you might be able to prevent the following issues by requesting the judge to reinstate your original Chapter 13 lawsuit before it is closed:
- Updated legal expenses
- Reduced length of automated stay protection
- having a hard time proving you can stick to a plan, and
- extended effect on credit scores.
If your financial situation has worsened since the court dropped your Chapter 13 case, you may find that filing for bankruptcy under Chapter 7 is a more suitable alternative than filing for bankruptcy under Chapter 13.
What To Do If Your Chapter 13 Bankruptcy Case Is Dismissed
Creditors should be your top priority. When the automatic stay is lifted, and your bankruptcy protection is no longer in effect, they will be able to begin collection efforts against you.
It’s possible but not guaranteed that your debts will remain at the same level they were when you filed for Chapter 13. All payments made during Chapter 13 will be credited to you. But any interest that was suspended during the bankruptcy process will be applied to the total amount owed. Suppose the judge dismissed your lawsuit before the program paid on your credit card balances, medical bills, consumer lending, and other unsecured debts. In that case, the sums on those debts could be larger than before you filed for bankruptcy.
Likewise, be ready to deal with mortgage, auto loan, and judgment lien issues that haven’t been settled. If your Chapter 13 plan did not bring the sums current, your creditors might resume wage garnish wages, foreclosures, and repossessions. There is a good possibility that this did not happen.
Refiling Chapter 13 After Nonpayment Dismissal
Your dismissed Chapter 13 case cannot be “refiled”; thus, you will need to start from over with a new petition. Things to think about going forward:
Documentation For A Fresh Chapter 13 Bankruptcy Filing
Consider how much it will cost to have a lawyer revise your bankruptcy petition, schedule, and repayment plan to reflect your current circumstances. If it’s been longer than three months since you took credit counseling, you’ll have to do it again and pay a new filing fee.
Depending on the circumstances surrounding your dismissal, you may also need to hire new legal representation. Due to the extra effort required, some bankruptcy attorneys refuse to represent clients with Chapter 13 bankruptcy payment problems.
Loss Of Chapter 13 Automatic Stay Protection
The courts frown upon repeated bankruptcies due to the possibility of abuse of the automatic stay (the order that halts most creditor collection operations). Unless you successfully petition the judge for an extension, the alarm system will only last 30 days if you file a legal dispute within a year of the last case being dismissed.
Instead of filing a motion to dismiss, which may be time-consuming and expensive, you may consider offering a more reasonable repayment plan that is less likely to be met with resistance from the trustee or the creditors. As long as you continue to abide by the conditions of the plan after the court has confirmed it, your creditors will be bound by the plan and cannot take any action against you. The automatic stay is no longer necessary.
Resubmitting A Previously Dismissed Chapter 13 Petition: Additional Considerations
The trustee will likely question your chances of success in a new filing if you do so shortly after the court has dismissed a previous one. It may be difficult to persuade the trustees that a significant enough change has occurred in your financial situation or your circumstances if your income has not increased & your expenses have not dropped.
In addition, a Chapter 13 bankruptcy will negatively affect your credit for seven years after filing. As the clock starts ticking once the new case is filed, doing so will almost certainly result in a significantly longer reporting period. Find out what to expect after filing for bankruptcy.