You file Chapter 13 bankruptcy and it is confirmed. If possible, you want to complete your Chapter 13 to ensure you receive a discharge at the end of your plan. With Chapter 13, dismissal is when the case gets terminated without the entry of a discharge of debt. However, when the courts enter a discharge in Chapter 13, that means you have completed all the payments or you get a hardship discharge. As you can see, the only thing “discharge” and “dismissal” have in common is they both begin with “d” and they both pertain to Chapter 13. But, they are two important parts of Chapter 13 that you need to know.
Getting a Successful Discharge in Chapter 13 Bankruptcy
- Make sure your payments get to the bankruptcy trustee. One of the best ways to do this is with a Wage Order which will deduct the payments by payroll deductions. If you change employment during the term of your Chapter 13, you need to contact the Chapter 13 office or your attorney to put a new Wage Order in place. Payments can be mailed to the trustee, but it is important to be responsible for making sure your payments get to the Chapter 13 office. Also, be sure to include your Case Number if you mail a check. Failure to make payments on time results in your case dismissal for Failure to Pay.
- Provide required documents to the trustee. Usually, trustees require you to submit a budget, a copy of your tax return, and remit any tax refund you receive. Do not spend your tax return as this a reason for dismissing Chapter 13. When in doubt, call your attorney for guidance.
- While you are in bankruptcy, you must keep the court in the loop. That’s because your money is controlled by the bankruptcy court. Contact your attorney if there are changes in your personal situation that impact your Chapter 13 bankruptcy. If you lose your job, become disabled, get married, get divorced, have a baby, need a new car, or need to borrow money, call your attorney. Remember, change is inevitable. This is especially true if you are in Chapter 13 for 3-5 years. Your attorney will work with you to make sure your plan is successful BUT you must keep him informed.
- As you near the end of your plan. Check with your attorney in order to take the required Debtor Education Class and fill out and sign any additional documents which are required in order to get your Discharge.
⎆ The Difference Between a Discharge and a Dismissal of Chapter 13
• Chapter 13 Discharge
In Chapter 13 bankruptcy, a discharge means that the debtor is released from liability for debts addressed in his repayment plan and no longer has responsibility to pay those debts. —Via: LegalBeagle
• Chapter 13 Dismissal
Chapter 13 dismissal is not so simple. For instance, if you change your mind altogether, you can dismiss your Chapter 13. However, the court can also dismiss Chapter 13 if you fail to complete credit counseling or pay the court filing fee. Or, perhaps you fail to provide income tax returns.
Unfortunately, if a judge dismisses your case, you no longer have protection from the stay. Then, all your finances revert back to the previous condition before filing. It’s especially hard on your credit rating as well because you did not complete Chapter 13.
Additionally, you still owe your debts and are subject to harassing calls from creditors. Then, they can foreclose on your home, repossess your car, and garnish your wages.
However, after a dismissal, it might be possible to reinstate or re-file Chapter 13. For instance, if your dismissal is because of not providing tax returns, you might be able to reinstate your case by providing the tax returns. But, if you wait too long or it’s not possible to reinstate your case, then, you must wait 180 days to refile. And, yes, you’ll go through the entire procedure all over again.
In Closing
Nationwide, the success rate for completion of a Chapter 13 bankruptcy is low but many are successful. Work closely with the bankruptcy trustee and your attorney to ensure completion of your Chapter 13 and a discharge of your debts so you get a fresh start!
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If you are thinking about filing bankruptcy, don’t delay because timing is crucial. I am here to help you. So, contact my office right away to start the conversation. Nick C. Thompson, Bankruptcy Lawyer: 502-625-0905.