Chapter 13 Dismissal

[sparkle1908]

Has anyone had their Chapter 13 dismissed on their own? If you had an opportunity to get additional income, pad your savings, etc. would you consider dismissing? I know that your creditors would be free to come after you but you would be in a better financial situation to pay off, make settlements, etc....

[Horseshoez]

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@sparkle1908 wrote:
Has anyone had their Chapter 13 dismissed on their own? If you had an opportunity to get additional income, pad your savings, etc. would you consider dismissing? I know that your creditors would be free to come after you but you would be in a better financial situation to pay off, make settlements, etc....

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Unless you're talking about a LOT of money, I would strongly recommend against moving for dismissal.  Staying in the Chapter 13 for the full term or getting out early really won't help you from a credit perspective as you'll still have the bankruptcy on your record for at least 7 years (and I've seen unconfirmed reports elsewhere if a Chapter 13 is dismissed, then it stays on for 10 years; like I wrote, "unconfirmed" so don't quote me on that).  The beauty of staying in the Chapter 13 for the duration is there is no interest accruing on your outstanding debt; the instant a dismissal is granted, not only does that interest start accruing again, but it is retroactive to when you filed for bankruptcy, so it could be a LOT of money.

[jmw1]

@sparkle1908 

You have to tell us more. It's almost always a terrible idea to dismiss.  In a 13, if you increase income or pad savings and the trustee asks for it, you need to give it to the creditors via the trustee which is the same as giving it to the creditors outside of bankruptcy. The other thing is the budget. You have to live within the court budget. It's not optional or suggested. It's designed for a minimal existence. You can't ignore it and live higher like pre-BK. In fact, you need to learn to somehow learn to save money within this budget to survive the 13 from calamities such as car breakdowns since you have no easy access to credit. For example, if you're eating out once a week at a place that expects tips for the whole family and buying new clothing instead of used clothing, you are doing it very wrong. 

Under our legal system, creditors have lots of options including bank levy, wage garnishment,  liens, and debtor's exam. The only tool debtors have in our legal system is bankruptcy. Did you get an inheirtance/lawsuit settlement that is not enough to pay the creditors 100% Don't forget all of the interest and fees put on hold will make your debt grow very fast the instant you dismiss so debt settlement is a poor strategy. If you got an inheirtance/lawsuit, it's a pay to play system for discharge and you should probably just give it to the trustee as much as it hurts to hear that. 

[sparkle1908]

It's basically an opportunity to work a 2nd job...so a second stream of income...it hasn't come into fruition so it was just a "what-if" scenario...any moves would be discussed with my bankruptcy attorney...I was just curious if anyone had done it before and didn't "regret" it...I know my credit will still take a "hit" either way so that's why I mentioned doing settlements, payoff plans, etc...

[Horseshoez]

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@sparkle1908 wrote:
It's basically an opportunity to work a 2nd job...so a second stream of income...it hasn't come into fruition so it was just a "what-if" scenario...any moves would be discussed with my bankruptcy attorney...I was just curious if anyone had done it before and didn't "regret" it...I know my credit will still take a "hit" either way so that's why I mentioned doing settlements, payoff plans, etc...

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Under the heading of YMMV, you never know, however...

I've known two folks who've been dismissed mid-Chapter 13; unlike before they filed, their creditors, or the collection agencies who bought the debt after the filing, were not only not keen on settlements, they were getting in each other's way trying to rush to the courthouse to get judgements.

So, maybe a question from a different perspective; what it is you think you're going to gain from a dismissal?

[sparkle1908]

I would gain "control" of my life...
The main reason I filed was because I lost my job and wanted to keep my home...my car was current, I had a few credit cards...it just frustrating to look at the trustee site and seeing that 2014 car, which could have been been paid off by now, getting $130 payments and me still owing on it for the next 4 years....I know they split the balance over 5 yrs...but still frustrating 😑

Ok...I'll get out of my "feelings" now🤣

[jmw1]

@sparkle1908 

Do you have a 100% plan after the 2nd job's net income after taxes is factored in?  If yes, you might be able to finish the 13 earlier if the math works out.  One of my friends is in a 100% plan already and a 2nd job would enable him to finish earlier. I would not accept a second job if the plan pays unsecured creditors less than 100%.

[sparkle1908]

Thank you...I will delve back into my paperwork over the weekend when I have some time to review it again....I THINK I am in a 100% plan but need to verify...at this point, this is all just a big "what if"....

[FireMedic1]

If your in the 100% plan. You can pay it off early and get DC'ed. Dismissed? Dont do it. All protecton is gone.