Procedures for Dismissal of Bankruptcy
- Preparing a motion to dismiss is the first phase of pursuing a dismissal of bankruptcy. According to both the U.S. Bankruptcy Code and the local rules of all of the bankruptcy courts in the United States, the motion must set forth specifically the reasons why you want to obtain a dismissal of your case.
Once drafted, the motion is filed with the clerk of the bankruptcy court. Every creditor as well as the bankruptcy trustee assigned to your case must be provided with a copy of your motion. The creditors and the trustee have the right to lodge an objection to your proposed dismissal if they so desire.
The bankruptcy court will set a date and time for a hearing on your motion. The clerk of the court will notify all creditors and trustee of the scheduled hearing. - Resolving any objections that are lodged to your proposed dismissal is a fundamental task in the process, particularly if the trustee objects to the dismissal. If tthat occurs, there is little chance that the judge will agree to dismiss.
A common concern of the trustee will center on the amount of time his office has spent dealing with your case only to have it dismissed. Therefore, in many cases the approval of the trustee can be obtained if you agree to reimburse his office for the expenses incurred in your case. The judge will have to approve this payment during the hearing on your motion to dismiss.
If a creditor objects to your dismissal you are best served by trying to pin down the nature of the concern in advance of the hearing. There may be an issue that can be addressed more immediately.
A bankruptcy court is unlikely to deny a requested dismissal based solely on a creditor's objection. The creditor has other remedies available outside the bankruptcy court proceedings. Absent an allegation by a creditor that your motion to dismiss is meant to serve a fraudulent purpose, you likely will overcome that objection. - Be prepared to address the court and present any evidence that you have to support your desire to dismiss your case. An example of evidence to support your motion is that associated with an improvement in your financial position. You want to convey to the court a present ability to manage and deal with your debts outside of bankruptcy.
Creditors do have the ability to present objections to the court. Having worked to identify these objections before the hearing date, you will be in the best position to respond to these issues.
Assuming that the court approves your motion it will issue an order dismissing your case. Keep in mind that a common practice in such a situation is for the court to include in its order a prohibition preventing you from filing a new bankruptcy. Typically this limitation on your ability to file a new bankruptcy following the dismissal will be for a period of from 120 days to as much as 12 to 24 months.