Can I Back Out of a Bankruptcy Case if I Change My Mind?
Deciding to file for bankruptcy is certainly a major decision, and it is one you should make with assistance from an experienced Oak Park bankruptcy attorney. In nearly all consumer bankruptcy cases, the debtor has filed for bankruptcy because they need the kind of debt relief that can be offered through a bankruptcy case, or other benefits of bankruptcy, such as the way in which a Chapter 13 bankruptcy case can stop a foreclosure and allow the debtor to remain in their home. But what happens when a debtor files for bankruptcy without thinking the decision through? Or what happens if a person files for bankruptcy and then their financial situation changes suddenly and unexpectedly? In such scenarios, is it possible to withdraw a bankruptcy filing or to back out of the bankruptcy case? The answer depends on a number of factors.
You Will Likely Need to Complete a Chapter 7 Bankruptcy Unless You Have Good Cause
If you have filed for Chapter 7 bankruptcy—as opposed to Chapter 13 bankruptcy—you will likely need to complete the process. In other words, you cannot simply change your mind and back out after you have filed. However, it may be possible to dismiss a Chapter 7 bankruptcy case if you have good cause.
A bankruptcy court will not agree that you have good cause to dismiss your bankruptcy case if you simply misunderstood some aspect of your case. For most debtors who file for bankruptcy on their own without assistance from a lawyer, the particularities of consumer bankruptcy cases are not always clear. As such, a debtor might believe that a certain asset was exempt when it will actually need to be liquidated in a bankruptcy case. Such a reason for seeking to dismiss the case will not be considered “good cause.” In addition, bankruptcy courts are unlikely to allow a debtor to dismiss a Chapter 7 case in which a creditor will be negatively impacted unless there is a clear need to dismiss the case and the debtor can otherwise repay the creditors.
Chapter 13 Bankruptcy Cases are More Likely to be Dismissed
If you have filed for Chapter 13 bankruptcy and you want to back out of the case, a court is more likely to agree in a Chapter 13 proceeding than in a Chapter 7 proceeding. You will still need to obtain permission from the court to have the case dismissed, but you can seek permission from the court to do so.
You May be Able to Convert Your Bankruptcy Case
You should know that, even if you cannot have a Chapter 7 bankruptcy case dismissed, you may be able to ask the court to convert the case to a Chapter 13 bankruptcy. For debtors who are concerned about having particular assets liquidated in a Chapter 7 case, or for debtors who wrongly believed that a Chapter 7 case would prevent a foreclosure and allow the debtor to stay in their home, you should work with an attorney to find out about converting the case.
You will still need to show that you are eligible for Chapter 13 bankruptcy if you do want to move forward in converting from Chapter 7 to Chapter 13. To be sure, you cannot automatically convert without proving that you have the capacity to make payments on a three-to-five-year Chapter 13 bankruptcy repayment plan.
Contact a Bankruptcy Attorney in Oak Park
Do you have questions about filing for consumer bankruptcy? Our Oak Park bankruptcy attorneys can assist you. Contact the Emerson Law Firm today.
See Related Blog Posts:
How Does Chapter 13 Bankruptcy Result in a Debt Discharge?
Federal Court Says Student Loans Can be Discharged in Bankruptcy
You Will Likely Need to Complete a Chapter 7 Bankruptcy Unless You Have Good Cause
If you have filed for Chapter 7 bankruptcy—as opposed to Chapter 13 bankruptcy—you will likely need to complete the process. In other words, you cannot simply change your mind and back out after you have filed. However, it may be possible to dismiss a Chapter 7 bankruptcy case if you have good cause.
A bankruptcy court will not agree that you have good cause to dismiss your bankruptcy case if you simply misunderstood some aspect of your case. For most debtors who file for bankruptcy on their own without assistance from a lawyer, the particularities of consumer bankruptcy cases are not always clear. As such, a debtor might believe that a certain asset was exempt when it will actually need to be liquidated in a bankruptcy case. Such a reason for seeking to dismiss the case will not be considered “good cause.” In addition, bankruptcy courts are unlikely to allow a debtor to dismiss a Chapter 7 case in which a creditor will be negatively impacted unless there is a clear need to dismiss the case and the debtor can otherwise repay the creditors.
Chapter 13 Bankruptcy Cases are More Likely to be Dismissed
If you have filed for Chapter 13 bankruptcy and you want to back out of the case, a court is more likely to agree in a Chapter 13 proceeding than in a Chapter 7 proceeding. You will still need to obtain permission from the court to have the case dismissed, but you can seek permission from the court to do so.
You May be Able to Convert Your Bankruptcy Case
You should know that, even if you cannot have a Chapter 7 bankruptcy case dismissed, you may be able to ask the court to convert the case to a Chapter 13 bankruptcy. For debtors who are concerned about having particular assets liquidated in a Chapter 7 case, or for debtors who wrongly believed that a Chapter 7 case would prevent a foreclosure and allow the debtor to stay in their home, you should work with an attorney to find out about converting the case.
You will still need to show that you are eligible for Chapter 13 bankruptcy if you do want to move forward in converting from Chapter 7 to Chapter 13. To be sure, you cannot automatically convert without proving that you have the capacity to make payments on a three-to-five-year Chapter 13 bankruptcy repayment plan.
Contact a Bankruptcy Attorney in Oak Park
Do you have questions about filing for consumer bankruptcy? Our Oak Park bankruptcy attorneys can assist you. Contact the Emerson Law Firm today.
See Related Blog Posts:
How Does Chapter 13 Bankruptcy Result in a Debt Discharge?
Federal Court Says Student Loans Can be Discharged in Bankruptcy
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