One of the potential things that can happen when applying for Chapter 7 and Chapter 13 bankruptcy is that the court dismisses your request. This can happen by not filing the paperwork properly when filing for bankruptcy, missing important meetings or deadlines that were necessary to file, failing to make payments towards a repayment plan, or some other reason. While it can be a bad setback, you'll need to know about what will happen afterward.
The Bankruptcy Shows Up On Your Credit Report
Many people assume that a dismissed bankruptcy simply goes away like it never happened. Unfortunately, that is not true at all. A dismissed bankruptcy will show up on your credit report for a long period of time. For those that file for Chapter 7 or Chapter 13 bankruptcy, you're looking at anywhere between 7 and 10 years. This means that any time you go to apply for something where a credit check is necessary, they'll be able to see that you attempted to file for bankruptcy and were not successful.
The Automatic Stay Is Lifted
You're given an automatic stay when you start the process of filing for bankruptcy, which prevents creditors from contacting you about debts and essentially puts everything on hold. That automatic stay is going to go away as soon as the bankruptcy filing is dismissed. Creditors are now going to start contacting you about your debts right where they left off when the automatic stay was put in place.
If you were going through a foreclosure process that was put on hold, the lender can now proceed once again with continuing the process. Interest will also start to be charged again on loans and credit card balances. Vehicles can be repossessed for missing payments as well.
Be aware that if you file for bankruptcy again in the future, you may not be given the automatic stay again right away. You'll have to file a motion with the court to prove that the new bankruptcy filing is in good faith, and you are not just starting the bankruptcy process to get that automatic stay again and buy you more time.
It's crucial that you take the necessary steps when filing for bankruptcy to ensure that it is not dismissed. That's why it is worth working with a bankruptcy lawyer that can guide you through the entire process and give you the best shot at having your debts discharged.
For more information, contact a bankruptcy attorney near you.