You’ve passed the requirements to file for Chapter 7 bankruptcy, filed your petition, and been appointed a trustee. However, there is still the possibility that your Chapter 7 bankruptcy could be dismissed or “thrown out” by the court. There are three ways in which this could happen:
- Voluntary Dismissal: If you choose not to proceed with your bankruptcy for any reason, you can ask the U.S. Bankruptcy Court to dismiss your case. In such situations, the Court will attempt to give you what you want and will probably grant your dismissal, even if the trustee or your creditors object. However, if dismissing your case will negatively impact a creditor’s ability to recover on a debt you owe, the Court may refuse to dismiss your case.
- Dismissal for Failure to Comply: The Court may dismiss your case over your objection if you do not follow the rules for a Chapter 7 bankruptcy. Federal law states that the Court may dismiss your bankruptcy case for any of the following reasons:
- Dismissal for Abusing Chapter 7 Bankruptcy: Though you’ve met all the requirements to file for a Chapter 7 bankruptcy, the Court may still dismiss your case if it finds that you are abusing federal law. The following may be considered “abuse” by the Court:
- Your Chapter 7 bankruptcy was filed in bad faith;
- You have the ability to repay a significant portion of your debt and should be filing bankruptcy under Chapter 13; or
- You lived an extravagant lifestyle and continue to live well beyond your means.
In the event that anyone asks to dismiss your Chapter 7 bankruptcy case, the Court must give you proper notice and must hold a hearing in which all sides have the chance to object. If you find the Court or trustee is holding a hearing on the dismissal of your case, you may wish to consult an attorney. An experienced bankruptcy attorney can advise you how to best protect yourself and your bankruptcy case.
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