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What Happens When a Bankruptcy Case is Dismissed?

Posted on in Bankruptcy
What Happens When a Bankruptcy Case is Dismissed?

Bankruptcy cases are not always straightforward. In fact, they often require a nuanced look at all the elements present in the case to determine that all parties are able to receive their fair share of the money they are owed.

The court is not required to grant all bankruptcy petitions. When it finds that a bankruptcy case does not comply with the applicable laws or would not be an economically viable choice for the indebted party or his or her creditors, it may dismiss the case. One recent example of a high profile bankruptcy case dismissal is the case of BlackAMG's Chapter 11 bankruptcy claim. In November 2015, Illinois judge Elaine E. Bucklo ruled that the court was within its right to dismiss the company's Chapter 11 reorganization plan, despite BlackAMG's creditor, Northbrook Loans, LLC, arguing that it would be better economically to convert the case to a Chapter 7 bankruptcy. The difference between Chapter 7 and Chapter 11 bankruptcy is broad. With Chapter 7, the indebted party's nonexempt assets are sold off and the profits are used to satisfy his or her debts while Chapter 11 allows the indebted party, generally a corporation or a partnership, to continue to operate under a reorganization plan and repay its debts from its profits over a period of time.

What if My Case is Dismissed?

Depending on why your case was dismissed, you might be able to refile right away. If you can not refile right away, work with your attorney to determine what you need to change about your bankruptcy petition to have it accepted by the court.

When a bankruptcy case is dismissed for procedural reasons, meaning that the petitioner did not follow the court's procedures and might have missed a deadline or filed the wrong forms, he or she can refile right away. This is known as dismissal without prejudice.

Dismissal with prejudice refers to cases where a bankruptcy is rejected because of dishonesty or abuse on the part of the petitioner. Examples of cases that may be dismissed with prejudice include those where the individual attempted to hide assets or filed the case in bad faith.

Individuals whose cases are dismissed with prejudice may be barred from filing for bankruptcy again for a specific period of time or even barred from discharging those specific debts forever.

In any case where a bankruptcy petition is dismissed, the individual loses the protection of the automatic stay. This means his or her creditors can resume their collection attempts until he or she gains bankruptcy protection again by successfully filing a case.

Work with a Chicago Bankruptcy Attorney

Bankruptcy is complicated. No two bankruptcy cases are alike – each has to be carefully developed around the bankrupt party's individual needs. If you are considering filing for bankruptcy, work with an experienced Illinois bankruptcy attorney to ensure that your rights are protected and your interests are represented accurately to the court. Contact our team at Newland & Newland, LLP today to schedule your free legal consultation with our firm. We are here to help you get through your bankruptcy as smoothly as possible.

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