The potential impact of having a bankruptcy case dismissed

By Marrero, Chamizo, Marcer Law, LP,

Florida residents may know that bankruptcy may be used as a way to reorganize or discharge debt. However, one person who had filed for bankruptcy five times since 2002 was not entitled to a discharge of her debt in a future bankruptcy case. This was the ruling issued by a judge from the U.S. Bankruptcy Court for the District of Kansas as he approved a motion to drop her latest Chapter 13 case.

While the judge acknowledged that the ruling was draconian in nature, he felt that it was an appropriate measure to take. The judge found that the woman was an experienced debtor, and he also noted that the woman had improperly received a $25,000 settlement that went against the terms of her latest filing. The terms of a July 2013 order that confirmed her plan forbade her from receiving or disposing of assets without the court’s permission.

After the trustee objected, the woman moved to dismiss the bankruptcy with the intention of filing a new case. While she has the right to seek a dismissal, the court also has the right to order that debts discharged in a case that is ultimately dismissed cannot be discharged in the future. The woman’s mishandling of the $25,000 provided the court with cause to make the order.

Filing for Chapter 13 bankruptcy may be an effective debt relief tactic. It may allow an individual to have some or all debts reorganized and paid over three or five years. An attorney may be able to help an individual take steps necessary to file and talk about the benefits of doing so. For instance, a stay may be granted, which may prevent creditors from proceeding with debt collection activities.