What happens if your bankruptcy case is dismissed or converted?

What is the difference between dismissal and conversion?

Both mean the case did not run the course you planned, but they leave you in very different places.

Why are Chapter 7 cases dismissed?

A court may dismiss a Chapter 7 case only after notice and a hearing and only for cause. The law names unreasonable delay that harms creditors, nonpayment of required fees, and failure to file the required lists, schedules and statements on time.6

Missing paperwork can also end a case without a hearing. If an individual has not filed all of the required information within 45 days after the petition, the case is automatically dismissed on the 46th day.7

Skipping credit counseling before filing is another ground.8

The other route is abuse. A court may dismiss an individual's consumer case if granting relief would be an abuse of Chapter 7, which is what the means test is designed to flag. With your consent the court may convert the case to Chapter 13 instead.6 9

Why are Chapter 13 cases dismissed or converted?

In Chapter 13, a party in interest or the United States trustee can ask the court to dismiss the case or convert it to Chapter 7 for cause, whichever is better for creditors and the estate. The causes listed in the law include these.10

• Unreasonable delay that harms creditors.10
• Not paying the court fees.10
• Not filing a plan on time, or not starting payments on time.10
• The court refusing to confirm the plan.10
• A material default on a term of a confirmed plan, such as missed plan payments.10 11
• Not paying child support or alimony that comes due after filing, or not making required tax filings during the case.11

You also have rights of your own. A Chapter 13 debtor may convert the case to Chapter 7 at any time, and may ask the court to dismiss it, as long as the case was not itself converted from another chapter.10

How does conversion work?

A case can be converted only if you are eligible for the new chapter.10

Moving from Chapter 13 to Chapter 7 costs $25 under the fee schedule effective December 1, 2023. There is no fee for converting from Chapter 7 to Chapter 13.12 11 3

A Chapter 7 debtor may convert to Chapter 11, 12 or 13 at any time, as long as the case has not already been converted once. The court may not move a Chapter 7 case to Chapter 13 unless the debtor requests or consents to it.13

As a general rule, conversion does not change the date your petition was filed.5

What can you do before a Chapter 13 plan fails?

A Chapter 13 discharge generally comes only after you complete all payments under the plan, so a plan that collapses late can leave you without one. There are tools for a plan in trouble, and each has to be asked for.14 15

1. Modify the plan. After confirmation, the debtor, the trustee or an unsecured creditor may ask the court to raise or lower the payments or to extend or shorten the time for them.11 16
2. Convert to Chapter 7, if you are eligible for it.10
3. Ask for a hardship discharge. It is generally available only if the failure is due to circumstances beyond your control, creditors have received at least what they would have in a Chapter 7 case, and modifying the plan is not possible.11

Tell your lawyer or the trustee as soon as your income changes. These options work best before payments are missed.

What happens after a dismissal?

The stay ends when the case is dismissed, so garnishments, lawsuits and other collection that had been paused can resume.1

If a Chapter 13 case ends before the plan was confirmed, the trustee returns the plan payments it was holding, minus amounts already paid or due to creditors and any unpaid administrative expenses the court allowed.17

Unless the court orders otherwise, a dismissal does not prevent you from filing again, and the debts can still be discharged in a later case.2

Read whether the order says with or without prejudice. A dismissal without prejudice allows a later filing. A dismissal with prejudice prevents the same case from being filed again.9

There are limits on coming straight back. You cannot file under any chapter for 180 days if the earlier case was dismissed because you willfully failed to appear or to obey court orders, or if you dismissed it yourself after a creditor asked for relief from the stay.3 4

And a second case filed within a year of a dismissal generally keeps its automatic stay for only 30 days unless the court extends it.1

Before you refile, read the dismissal order to see exactly why the case ended, and fix that cause first.