What is a Bankruptcy Dismissal?

N. Madison
N. Madison

A bankruptcy dismissal is a situation in which a court dismisses a party's bankruptcy case. This means the court has decided not to grant the debt relief the petitioner has requested. Instead, the court closes the bankruptcy case altogether. Once this occurs, creditors are once again permitted to take steps to collect the money they are owed by the person or company who was seeking bankruptcy.

Mistakes in filing a bankruptcy petition can result in a dismissal of the case.
Mistakes in filing a bankruptcy petition can result in a dismissal of the case.

The most likely reasons for a bankruptcy dismissal include mistakes in filing documents and following court procedures as well as the inclusion of incorrect information on court forms and official statements. A court may also dismiss a bankruptcy case after a petitioner breaks a court rule. For example, a bankruptcy court typically has specific rules regarding filing of documents and meeting deadlines. If a bankruptcy petitioner doesn’t file the required documents, files incomplete documents, or files paperwork late, a bankruptcy judge may dismiss his case.

Sometimes bankruptcy cases are dismissed because the petitioner filed in the wrong jurisdiction. For example, a bankruptcy court may only cover cases involving people who live or do business in a particular area. If a bankruptcy petitioner files a bankruptcy case, but does not reside or have a business inside the designated area, the bankruptcy court may dismiss his case. The petitioner would, however, be able to start a new case in the correct jurisdiction.

A person may also face a bankruptcy dismissal if he fails to attend meetings or court dates the bankruptcy court has set. In some cases, a bankruptcy dismissal occurs because an individual or company fails to keep up with payments he agreed to as part of his bankruptcy case. In fact, a case may even be dismissed if a person makes payments but fails to make them on time.

As part of the bankruptcy process, a person has to disclose information about his assets, income, and debts. If he lies about any of these things or deliberately omits information, he may face a bankruptcy dismissal. The same may hold true if a person files for bankruptcy soon after making luxury purchases or continues to spend irresponsibly during the processing of his case.

Some bankruptcy dismissals allow a petitioner to file for bankruptcy with the same court at a later time, such as after he has corrected any issues that led to the dismissal. He may have to wait a significant amount of time before he can do so, however. In other cases, a court may prohibit a petitioner from ever filing for bankruptcy in the same court again. This may happen after a petitioner knowingly provides fraudulent information, for example.

N. Madison
N. Madison

Nicole’s thirst for knowledge inspired her to become a wiseGEEK writer, and she focuses primarily on topics such as homeschooling, parenting, health, science, and business. When not writing or spending time with her four children, Nicole enjoys reading, camping, and going to the beach.

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