Grounds for dismissal of a bankruptcy case

In certain cases upon the debtor’s request, or if the court finds that it is in the best interests of the creditors, a bankruptcy case may be dismissed. If a case is dismissed, the debtor may file a new case at another time. The debts listed under the dismissed case may be discharged in the new case filed after the dismissal. A dismissal reinstates any lien and vacates any order, judgment or transfer ordered. A dismissal revests the property of the estate back to the debtor.

Dismissal of a Chapter 7 bankruptcy case

After notice and a hearing, the court may dismiss a Chapter 7 bankruptcy case commenced by an individual debtor whose debts are primarily consumer debts if it finds that good cause exists. Good cause includes:

  • Debtor’s unreasonable delay, which is prejudicial to creditors.
  • Debtor’s nonpayment of any fees or charges.
  • Debtor’s failure to file required information (only on trustee’s motion).

The court may dismiss a case on its own motion, or a motion of the U.S. Trustee, or any party in interest if the debtor’s debts are primarily consumer debts, if it finds that granting relief would be an abuse of the bankruptcy process. Abuse is presumed to exist if debtor’s income does not pass the means test or the debtor was convicted of a crime of violence or drug trafficking. A debtor is exempt from the means test if the debtor a disabled veteran or on military active duty.The motion to dismiss must be filed within sixty (60) days of the date set for §341(a) meeting of creditors. However, the time period may be extended. To extend the time period, the Trustee or interested party must file a motion for extension of time before the expiration of the 60-day time period.

Dismissal of a Chapter 12 bankruptcy case

On request of a party in interest, after notice and hearing, the court may dismiss a Chapter 12 bankruptcy case commenced by a Chapter 12 debtor if it finds that cause exists. Cause includes:

  • Unreasonable delay or gross mismanagement that is prejudicial to creditors.
  • Debtor’s nonpayment of any fees or charges.
  • Debtor’s failure to file a plan within the required time period.
  • Debtor’s failure to commence making timely payments.
  • Denial of confirmation of a plan and denial of a request for additional time for filing another plan or modification of a plan.
  • Debtor’s default with respect to a term of a confirmed plan.
  • Revocation of the order of confirmation and denial of confirmation of a modified plan.
  • Termination of a confirmed plan by reason of the occurrence of a condition specified in the plan.
  • The debtor’s failure to pay domestic support obligations.
  • Continued diminution of the estate without likelihood of rehabilitation.

Dismissal of a Chapter 13 bankruptcy case

After notice and a hearing, upon the request of any party in interest, the court may dismiss a Chapter 13 bankruptcy case commenced by an individual debtor if it finds that cause exists. Cause includes:

  • Debtor’s unreasonable delay which is prejudicial to creditors
  • Debtor’s nonpayment of any fees or charges
  • Debtor’s failure to file a plan within the required time period
  • Debtor’s failure to commence making timely payments
  • Denial of confirmation of a plan and denial of a request for additional time for filing another plan or modification of a plan
  • Debtor’s default with respect to a term of a confirmed plan
  • Revocation of the order of confirmation and denial of confirmation of a modified plan or termination of a confirmed plan by reason of the occurrence of a condition specified in the plan other than completion of payments under the plan
  • Failure to file required documents (only on request of the trustee)
  • Debtor’s failure to pay domestic support obligations
  • Failure to file tax returns

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