Dismissal of Chapter 13 Bankruptcy

After filing for Chapter 13 protection, an automatic stay gets activated on the assets of the debtor preventing the initiation of any recovery action from the part of the creditors. When a petition is filed by the debtor, he is to submit a proposal of repayment for any debts and obligations outstanding to the federal bankruptcy court. The court will review the document so provided and if approved, will appoint a trustee to collect monthly payments from the debtor as stipulated by the proposal and distribute the same to the creditors as agreed upon.

But, there may arise circumstances wherein the court may issue a decree for the dismissal of the Chapter 13 bankruptcy. Some of the circumstances that can result in the dismissal of the bankruptcy are cited below:

The debtor is expected to pay the court $235 as the filing fee and $39 as the miscellaneous administrative cost while requesting for Chapter 13. Irrespective of the fact whether the petition is a single one or a joint petition, the fees amount to the same that is to be submitted. These costs have to be met by the debtor within the stipulated time frame. The Court may grant an extension for the payment of the cost of filing and administrative costs offering the option to meet them in four installments. But, every situation has to fall within the defined time frame; the failure of which will result in the dismissal of the Chapter 13.

The law demands the debtor to submit the proposal of repayment to the Court within a definite period, the failure of which results in dismissal.

On the submission of the plan that has been met with the approval of the court, the debtor has to commence making the payment. The defeat of this agreement causes dismissal of bankruptcy.

If the debtor causes an unreasonable delay in making the payment or makes any material default to the agreed plan, it causes termination of the contract.

The debtor has to attend the hearing date set by the trustee in person and any denial to perform this conduct can result in dismissal.

With the reasons being numerous, understand them before initiating the Chapter 13 proceedings. Failure to do so, crops to foreclosure, garnishment or similar proceedings.