A bankruptcy proceeding under Chapter 7, 11, or 13 can be converted or dismissed by the bankruptcy court. In a conversion, one chapter is converted to another (such as a Chapter 7 filing is converted to a Chapter 13). A dismissal, to the contrary, will terminate a bankruptcy filing and render the proceeding as if it never occurred. Dismissal of a case has serious consequences, such as the termination of the automatic stay, and the preclusion of another filing for an allotted period of time.
The Bankruptcy Code requires that the bankruptcy proceeding be dismissed if the debtor fails to file all necessary documents by the 46th day of filing. The documents that need to be filed include all Schedules and Statements, Credit Counseling certificates, and copies of all pay-stubs the debtor received within 60 days before the filing of the petition. A proceeding can also be dismissed for failure to file any tax returns that are requested by the court or the trustee on the case. The court may grant an extension if a request is communicated with the court within a reasonable time. The creditors and the trustee also have the power to seek dismissal of a Chapter 7 filing if filing fees are not paid.
A dismissal may also be proper in a Chapter 7 proceeding if the court believes that the dismissal will serve in the best interests of the creditors. For example, if the debtor is ordered to sell any of his assets, and the revenue produced will be sufficient to satisfy all debts of the debtor in full, and provide some income to the debtor, dismissal may be an economical remedy for both parties. So long as the creditor is protected in its right to receive timely payment, the court will order dismissal of the case.
Another way a Chapter 7 proceeding can be dismissed is if the court makes a finding of abuse. In order to qualify for a Chapter 7, a debtor’s income must not be more than the median income for the state in which the debtor resides. There are times when an individual’s income is above the median income and the debtor still qualifies for a Chapter 7. If the monthly expenses of the debtor exceed his income, there is no finding of abuse. If the debtor does not qualify for Chapter7, the case will either be dismissed or converted to a Chapter 13 or a Chapter 11 instead. Unlike dismissal, a case will be converted only upon a motion filed with the court. In the case of abuse, a motion must filed within 60 days of the creditors’ meeting, unless an extension is granted by the court.
In order to ensure your case is not dismissed, make sure you comply with bankruptcy procedures and file all necessary documents with the court. Communicate frequently with the court to confirm that all requisites have been filed and no papers remain outstanding.
Mishiyeva Law- Bankruptcy Lawyer NYC 80 Wall Street New York, NY 10005 (646) 736-6328 kmbankruptcylawyerny.com