Reveal Law

Navigating Bankruptcy: Dismissals Changes and Complete Dismissal Explained

When financial circumstances become overwhelming, individuals and businesses may find themselves considering bankruptcy as a solution. However, it is important to understand that bankruptcy is not a fail-safe option.

There are instances where a bankruptcy case can be dismissed, leaving individuals and businesses vulnerable to their creditors once again. In this article, we will explore the reasons behind bankruptcy dismissals and delve into the specifics of nullifying a Chapter 13 bankruptcy agreement.

Reasons for Bankruptcy Dismissal

Misrepresentation of Income/Assets

One of the primary reasons for the dismissal of a bankruptcy case is the misrepresentation of income. When individuals or businesses file for bankruptcy, they are required to provide accurate information about their income and assets.

Deliberately hiding or misrepresenting these details can lead to a bankruptcy dismissal. It is crucial to be transparent and truthful during the bankruptcy process to ensure a fair outcome.

Incomplete Application/Documentation

In addition to accurately reporting income and assets, it is essential to complete all necessary application forms and provide the required documentation. Failure to do so can result in a bankruptcy dismissal.

It is advisable to seek professional assistance to ensure that all paperwork is correctly filled out and all necessary documents are submitted in a timely manner.

Nullifying Chapter 13 Bankruptcy Agreement

Non-payment of Agreed Plan

When an individual or business files for Chapter 13 bankruptcy, they enter into an agreement with their creditors to repay a portion of their debts over a specific period of time. However, failing to make the agreed-upon payments can nullify the bankruptcy agreement.

It is crucial to stick to the payment plan and fulfill the obligations outlined in the agreement to avoid the potential dismissal of the bankruptcy case.

Creditors Pursuing Remaining Balances

Another factor that can nullify a Chapter 13 bankruptcy agreement is when creditors decide to pursue the remaining balances. While bankruptcy provides protection against immediate legal actions from creditors, it does not erase all debts.

If creditors believe that an individual or business has neglected their responsibilities or shown an inability to follow through with the agreed-upon repayment plan, they may seek legal action to collect the outstanding balances.

Requesting a Payment Moratorium

In certain circumstances, individuals or businesses facing financial difficulties due to unforeseen circumstances may request a payment moratorium during their Chapter 13 bankruptcy agreement. This temporary suspension of payments can provide relief and time to reassess the situation.

However, it is important to approach this request thoughtfully and convincingly, as the bankruptcy court will consider the reasoning behind the moratorium and its impact on the overall repayment plan.


Bankruptcy can provide a lifeline for individuals and businesses drowning in debt, but it is not without risks. It is essential to approach the process with honesty, accuracy, and full commitment to the agreed-upon repayment plan.

Misrepresenting income or assets, failing to complete required paperwork, or neglecting payment obligations can all lead to the dismissal of a bankruptcy case. Understanding the reasons for bankruptcy dismissals and the potential nullification of Chapter 13 bankruptcy agreements empowers individuals and businesses to navigate the process more effectively and make informed decisions about their financial future.

3) Changing the Terms of Bankruptcy

When faced with overwhelming financial difficulties, individuals and businesses may opt for bankruptcy as a means to restructure their debts and regain control over their finances. However, as circumstances evolve, it may become necessary to change the terms of the bankruptcy arrangement.

In this section, we will explore two common scenarios: conversion to Chapter 7 bankruptcy and the devolution of assets to a trustee, as well as how to protect cash and property during bankruptcy proceedings.

Conversion to Chapter 7

During the course of a bankruptcy case, individuals or businesses may realize that their financial situation has not improved as expected or that they are unable to fulfill the conditions of their existing bankruptcy plan. In such cases, it is possible to convert the bankruptcy from Chapter 13 to Chapter 7.

Chapter 7 bankruptcy, also known as liquidation bankruptcy, involves the sale of non-exempt assets to repay creditors. Converting to Chapter 7 can be beneficial if the current payment plan is unmanageable or if there has been a significant change in financial circumstances.

Individuals considering this option should consult with a bankruptcy attorney to fully understand the consequences and requirements of converting to Chapter 7.

Devolution of Assets to Trustee

In a Chapter 7 bankruptcy, assets are liquidated to repay creditors. Under certain circumstances, when converting from Chapter 13 to Chapter 7 or when initially filing for Chapter 7, individuals or businesses may proceed with the devolution of assets to a trustee.

Devolution occurs when an individual or business voluntarily surrenders their assets to the bankruptcy estate. The devolution of assets can be a strategic move to protect valuable assets from liquidation or to expedite the bankruptcy process.

By transferring assets to the trustee, individuals or businesses can demonstrate their commitment to resolving their debts and provide a clear picture of their financial situation. However, it is crucial to consult with legal professionals before opting for the devolution of assets to ensure compliance with bankruptcy laws and accurately assess the potential impact on the overall bankruptcy case.

Protection of Cash and Property

When filing for bankruptcy, individuals and businesses may have concerns about the protection of their cash and property. It is essential to understand that bankruptcy laws provide certain exemptions that safeguard specific assets from being sold or used to repay debts.

These exemptions vary by jurisdiction, so it is crucial to consult with a bankruptcy attorney who can provide guidance on the applicable exemptions in your area. In general, some common assets that are typically protected during bankruptcy include primary residences, vehicles, retirement accounts, and necessary personal belongings.

These exemptions allow individuals and businesses to maintain a certain level of stability while navigating through the bankruptcy process. However, it is crucial to adhere to the guidelines and legal requirements associated with these exemptions to safeguard them successfully.

4) Complete Dismissal of Bankruptcy

While bankruptcy provides a path to financial relief, it is not an infallible solution. In some cases, individuals or businesses may realize that they are unable to meet their obligations outlined in the bankruptcy plan, leading to a complete dismissal of the bankruptcy case.

When this occurs, it is essential to understand the potential consequences and explore alternative options for managing debt.

Inability to Make Payments

One of the main reasons for the complete dismissal of a bankruptcy case is the inability to make the required payments. Whether due to unforeseen circumstances, changes in financial circumstances, or lack of proper planning, the inability to keep up with the agreed-upon payment plan can result in the court dismissing the bankruptcy case.

It is crucial to be realistic about one’s financial capabilities when entering into a bankruptcy agreement and to seek professional assistance when creating a manageable repayment plan.

Recovery and Creditor Collection

When a bankruptcy case is dismissed, individuals or businesses must face the consequences of unpaid debts. The process of recovery and creditor collection resumes, and creditors can once again pursue legal actions to collect the outstanding balances.

This can include wage garnishment, asset seizure, or the initiation of legal proceedings to obtain a judgment against the debtor. To avoid the complete dismissal of a bankruptcy case and the resumption of creditor collection efforts, it is important to approach bankruptcy with careful consideration.

Seeking professional advice, creating a realistic repayment plan, and committing to fulfilling the obligations outlined in the bankruptcy agreement can help individuals and businesses navigate the process more effectively and minimize the risk of complete dismissal.


In the realm of bankruptcy, changing the terms of the arrangement may become necessary to adapt to evolving circumstances.

Conversion to Chapter 7 bankruptcy allows individuals or businesses to switch from a repayment plan to a liquidation process.

The devolution of assets to a trustee can help expedite the bankruptcy process or protect valuable assets from being sold. When facing financial challenges, individuals and businesses should consult with legal professionals to understand the applicable exemptions for protecting cash and property.

However, for those unable to meet the obligations outlined in the bankruptcy plan, the complete dismissal of the case can lead to the resumption of creditor collection efforts. It is crucial to approach bankruptcy with caution and seek professional guidance to navigate the complexities and make informed decisions about managing debt.

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