How Soon After a Chapter 13 Bankruptcy Is Dismissed Will Creditors Begin Calling?

Some attempts to file bankruptcy end unsuccessfully. In fact, bankruptcy judges routinely dismiss Chapter 13 bankruptcy petitions for several common reasons. To avoid a costly and time-consuming mistake, familiarize yourself with these reasons for dismissal before you commit to hiring a bankruptcy attorney.

If you've misrepresented your income or the value of your assets, the judge assigned to your case may dismiss your bankruptcy petition outright. In addition, you likely won't be allowed to file until you've completed your application and sent in all required documentation with it.

Once your petition has been accepted and you've begun making payments under a Chapter 13 bankruptcy plan, your presiding judge may nullify the existing agreement between you and your creditors after several months of non-payment. Once this happens, your creditors will be able to pursue you for the remaining balances on your outstanding debts. Unless your lawyer can convince the judge overseeing your case to freeze this collection activity by granting you a moratorium on your payment plan, your creditors may begin calling or e-mailing right away.

To preserve your Chapter 13 bankruptcy plan with a payment moratorium, your lawyer will need to prove that you're truly unable to make your payments for a prolonged period of time. Whether your hardship is caused by a sudden job loss, unforeseen medical bills, or other big unavoidable expenses, you'll need to show that you're not misleading or deceiving the court about your financial health.

Alternatively, you may be able to change the terms of your bankruptcy. Under certain circumstances, your presiding judge may nullify your Chapter 13 payment plan and initiate new bankruptcy proceedings under Chapter 7 of the United States Bankruptcy Code. Once this conversion has taken place, the bulk of your remaining assets will devolve to a court-appointed trustee charged with dividing them up among your creditors. While you'll lose a significant amount of your wealth to the Chapter 7 bankruptcy process, your state's laws may permit you to shield some of your cash and property from seizure.

Unfortunately, even the best-laid plans can go awry. If you're unable to continue making your bankruptcy payments and can't secure a payment moratorium or Chapter 7 conversion, your case may be completely dismissed. Once this happens, you'll need to recover from your initial shock and prepare yourself for an immediate onslaught of calls, e-mails and visits from your creditors and their collection-agency henchmen.

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