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

Comments

Post a Comment

Popular posts from this blog

Phantom Debt Collection Scams on the Rise in Illinois

Have you been contacted by a person claiming to be a debt collector who is seeking to recover a debt you allegedly owe? If so, you are not alone. According to a recent report from CBS Chicago , such parties claiming to be debt collectors are on the rise, and they are scamming Chicago-area residents. These alleged debt collectors are part of schemes known as “phantom debt collection scams,” since they involve the attempt to collect on a debt that the consumer does not actually owe. How can you avoid becoming a victim in a debt-collection scam ? What should you do if you have been targeted by a fake debt collector? How Do Phantom Debt Collection Scams Work? Now, you might be thinking to yourself: I would never agree to make payment on a debt that I did not owe. But the scam is not always that simple. Parties at the center of debt-collection scams often target consumers who do actually owe debts (to someone or to some entity), and they prey on the fact that these c...
Read more

Payday Lending and Predatory Lenders in Illinois

If you are in substantial debt in the Chicago area and are living in a paycheck-to-paycheck cycle, you may have taken out a payday loan to make ends meet. While payday lending is illegal in a number of states due to the predatory nature of these loans, it remains legal in Illinois. As a result, many debtors in the state have used payday lenders, and far too many of those borrowers cannot repay what they owe. According to a recent article from Progress Illinois , consumers have filed complaints about payday lenders in the state, illuminating a need for federal rules that address harmful lending practices . Predatory Payday Lenders and Protections for Consumers Due to the perceived predatory nature of payday loans, twelve states in the country have banned these lenders from operating completely, according to a fact sheet from loans.org . The states that currently have laws prohibiting payday lenders from operating include Arkansas, Arizona, Connecticut, Georgia, Mary...
Read more

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti...
Read more