New York bankruptcy lawyers see lots of people who want to file for bankruptcy a second time. They’ve filed a case in the past and have gotten into some sort of bind again … now they want to take another trip to the bankruptcy court.
Nobody Wants To File For Bankruptcy Again … And Sometimes They Can’t
We’re not talking about something as technical as getting your pre-bankruptcy credit counseling certification. The reality is that most people in New York who are looking to file for bankruptcy already know they need to get this done. And if they don’t, their lawyers know well enough so that such a silly error doesn’t get in the way.
No, we’re talking about someone who walks out of court and then changes his or her mind in short order.
From time to time, my clients have decided after their case was filed that bankruptcy isn’t right for them. They get cold feet, are offered a bailout from a friend or relative, or have a change in their financial circumstances. I guess that’s why they call it a “New York Minute” – everything can change pretty fast in this town.
Each time this happens I need to remind my client that if they simply walk away from their bankruptcy case, they may not be able to come back in – at least, not so fast.
Section 109(g) of the U.S. Bankruptcy Code says that you cannot qualify as a debtor if you had a previous case within the past 180 days (that’s 6 months) that was dismissed “for willful failure of the debtor to abide by ordered of the court, or to appear before the court in proper prosecution of this case.”
What does this mean? If you file a case (Chapter 7 or Chapter 13, doesn’t matter) and decide to just … skip out on it, there’s a pretty fair chance that any New York bankruptcy judge is going to knock you out of the box for that 180 day period.
Your meeting of creditors is set down by the court – that means it’s an order of the court. When you don’t show up, the trustee is going to file a motion to dismiss your case for failure to appear in proper prosecution of the case.
So what should you do if you decide to back out of your case?
If you’ve filed for Chapter 13 then you have the automatic right to withdraw your case at any time. In New York we just file a letter with the court and it’s a done deal.
If you’ve file for Chapter 7, however, there’s no automatic right to withdraw your case. You’ve got to get court approval – and that may or may not come, depending on your situation.
That’s one more reason why you may want to file for Chapter 13 instead of Chapter 7 if you’re on the edge, decision-wise. But either way, you definitely do NOT want to simply walk away from your bankruptcy case.