What Happens If Your Chapter 13 Is Dismissed?

Many Chapter 13 cases end in dismissal rather than discharge. Knowing why and what comes next helps you act fast.

Common reasons for dismissal

• Missed plan payments
• Failure to file required documents or tax returns
• Failure to attend the 341 meeting
• Not keeping up with ongoing mortgage payments
• A plan that cannot be confirmed

The court can dismiss or convert a case for cause, including failure to make payments (11 U.S.C. 1307).

What happens immediately

• The automatic stay ends. Creditors can call, sue, garnish wages, and continue foreclosure or repossession.
• No discharge. Remaining debts are owed again, reduced by what the plan paid.
• Funds held by the trustee may be returned to you or paid to creditors depending on the plan and local rules.

Options

1. Motion to reinstate or vacate the dismissal: if you can quickly cure the problem, such as catching up payments, ask the court to reinstate the case. Deadlines are short.
2. Convert to Chapter 7: if you qualify, you may convert rather than dismiss (11 U.S.C. 1307).
3. Refile: you can usually file again, but: - If you had one case dismissed within the past year, the new automatic stay generally ends after 30 days unless the court extends it for good cause (11 U.S.C. 362(c)(3)). - With two or more dismissals in the past year, no stay arises automatically (11 U.S.C. 362(c)(4)). - Some dismissals carry a 180-day bar on refiling, such as dismissal for willful failure to obey court orders or after voluntary dismissal following a motion for relief from stay (11 U.S.C. 109(g)).
4. Negotiate with creditors: loan modification, repayment plans or settlements. See loan modification.

Protecting your home

If you are in foreclosure, act immediately. Ask your lawyer about reinstatement or a new filing with a motion to extend the stay, and contact the servicer about loss mitigation. See foreclosure.

Credit effects

The dismissed case remains on your credit report, though without a discharge.

Preventing dismissal

Pay the trustee by wage order if possible, tell your lawyer immediately about income changes, and ask about modifying the plan before payments fall behind.

A bankruptcy lawyer can tell you the fastest path after a dismissal.

Sources

1. Cornell Law School LII: 11 U.S.C. 1307, Conversion or dismissal
2. Cornell Law School LII: 11 U.S.C. 362(c)(3) and (c)(4), Automatic stay in repeat filings
3. Cornell Law School LII: 11 U.S.C. 109(g), 180-day bar
4. United States Courts: Chapter 13 bankruptcy basics