How to Dismiss Chapter 13 Bankruptcy

Chapter 13 bankruptcy lasts between three and five years in Sacramento. For many reasons, not everyone wants to stay in Chapter 13. This article will tell you how to dismiss Chapter 13 bankruptcy in Sacramento.

Why Dismiss Chapter 13?

The number one reason why debtors dismiss their Chapter 13 bankruptcy is because of a change in circumstances. A job loss, promotion, divorce, injury, or relocation all are circumstances that could make Chapter 13 infeasible. On the other hand, non-bankruptcy options might be more realistic if a debtor’s financial situation dramatically changes during the course of the Chapter 13.

Whether good or bad, a debtor’s change in circumstances will often result in a request to dismiss their Chapter 13 bankruptcy.

How to Dismiss Chapter 13

There are two options here: the “official” way, and the “non-official” way.

The easiest option way out of Chapter 13 is to simply stop making your Chapter 13 payments. The Chapter 13 Trustee will soon make their own motion to dismiss your Chapter 13 bankruptcy. Some Trustees may try to force you into a Chapter 7 liquidation, depending on your financial circumstances. Because this creates uncertainty, it is better to take the official route.

11 U.S.C. § 1307(b) allows a Chapter 13 debtor to ask the court to dismiss their Chapter 13 case at nearly any time. This privilege is not absolute. The court can deny this request if it believes that the dismissal motion was made in bad faith. But in all other cases, the court quickly dismisses the Chapter 13 case upon request by the Debtor.

What Happens Next

After the Court officially dismisses your Chapter 13 bankruptcy, a few other things will happen. Your Chapter 13 Trustee will wrap up the administration of your bankruptcy case. The “automatic stay” will no longer protect you or your property from your creditors. The Chapter 13 Trustee will also file a final report with the Court. Only once the administrative aspects are complete will the court “close” your bankruptcy case.

My law firm handles Chapter 13 cases in Sacramento from start to finish. Please call us at (916) 333-2222 to discuss Chapter 13 bankruptcy representation.

Attorney Rick Morin