When a bankruptcy case is dismissed without prejudice, the debtor can refile it immediately.
When a bankruptcy case is dismissed, it will most likely be dismissed with prejudice.
Dismissal without prejudice is a legal term that can have important implications in bankruptcy proceedings. If a bankruptcy case is dismissed “without prejudice,” the debtor can file for bankruptcy again at any time. In order to succeed on the second attempt, they will need to correct certain errors or omissions in the original filing. If they file again, they may need to file a motion for an automatic stay or an extension of the automatic stay to prevent collection efforts.
If a debtor fails to comply with all the requirements for completing the bankruptcy case and getting a discharge of qualifying debts, the court may dismiss the case without prejudice. The court may also dismiss a case with prejudice, which means that you cannot seek relief within the timeframe provided in the dismissal order, but this is uncommon if the debtor does not commit fraud or fail to comply with the court’s orders.
A dismissal without prejudice is usually the result of a procedural error.
If your bankruptcy case is dismissed without prejudice, you can file another bankruptcy case right away. It is usually necessary to correct your original mistakes before you can win your second case.
Your new case should also include a motion to extend or impose the automatic stay if you want to keep creditors at bay.
What Does “Without Prejudice” Mean?
In dismissing a case without prejudice, the previous hearings will not be used against you, and you can refile the case to have it heard again. However, when a case is dismissed, there are also often errors. Thus, most people will use this opportunity to correct any errors they made during their original bankruptcy filing.
In order to obtain a discharge in bankruptcy, you must meet certain requirements. The court may dismiss your case with or without prejudice if you don’t complete all the necessary steps.
A dismissal without prejudice is preferable to a dismissal with prejudice, although it can be frustrating to have your bankruptcy case dismissed. You can immediately file another bankruptcy case if the court dismisses your bankruptcy without prejudice. Most bankruptcy dismissals are without prejudice unless you abuse the bankruptcy process or willfully disobey court orders.
Dismissals With and Without Prejudice
If a bankruptcy case is dismissed without prejudice, you are not required to wait before filing another bankruptcy matter. It is also possible to discharge all qualifying debts in the next case.
Dismissals of this type are usually caused by a procedural error, such as failure to file the correct forms, not unethical behavior.
Dismissal with prejudice, on the other hand, prevents you from filing another bankruptcy for a specific period or prohibits you from discharging any debts that existed at the time of your bankruptcy filing.
A case will be dismissed with prejudice if you:
- Hide assets during bankruptcy
- Use the automatic stay to buy time without intending to declare bankruptcy, or
- Abuse the bankruptcy system in another way.
Cases of Dismissal Without Prejudice
If a debtor fails to provide the bankruptcy trustee with required documents, does not pay filing fees (and does not have a fee waiver), or fails to file a required form, a bankruptcy judge might dismiss their case without prejudice. In addition, a case may be dismissed without prejudice if the debtor fails to appear at a Section 341 meeting of creditors or a Chapter 13 confirmation hearing.
A dismissal without prejudice may also result from failing to comply with the required payments under a Chapter 13 repayment plan or failing to complete the required credit counseling and debtor education courses. The court may dismiss a petition without prejudice if a debtor files under a chapter in which they are not eligible for bankruptcy.
Is There a Reason Why My Case Was Dismissed Without Prejudice?
Bankruptcy will usually be dismissed without prejudice if you make a procedural mistake (and aren’t abusing the bankruptcy system).
It is most likely that your case will be dismissed without prejudice if the debtor:
- Failed to file a form with the court
- Failed to pay court fees
- Failed to supply all required paperwork
- Missed a hearing
- Failed to observe any of the procedures
Refiling May Limit Your Automatic Stay
An automatic stay is one of the main benefits of filing for bankruptcy. In most cases, this prevents creditors from pursuing collection efforts against you. However, the automatic stay might encourage some debtors to file for bankruptcy repeatedly to delay collection efforts indefinitely. Multiple bankruptcy filings are subject to limits to prevent this situation.
You will get an automatic stay when you file for bankruptcy to prevent your creditors from collecting their loans or garnishing your wages. When you file for a second bankruptcy within a period of time, the automatic stay is limited to 30 days. Unless you petition the court to continue the automatic stay, creditors may begin collecting after 30 days.
A limited automatic stay prevents bad faith filings for bankruptcy.
The automatic stay in bankruptcy prohibits most creditor collection activities. They are stopped in their tracks by it.
Most of the time, the stay remains in place throughout the bankruptcy proceedings. Your creditors, however, can come after you again if the court dismisses your case. Most of the time, you are in the same position as before you filed.
Furthermore, immediately filing another bankruptcy will limit your automatic stay in the new case.
The steps are as follows:
- If you refile your case within one year of dismissal, the automatic stay will be limited to 30 days.
- An automatic stay would not apply to you if you had two or more bankruptcies dismissed within a year before filing your most recent case.
Either way, you can file a motion to extend or impose the automatic stay. It will be necessary for you to explain the need for multiple cases to the court.
If You Refile, You Won’t Have the Same Protection From Creditors
An automatic stay prevents most creditors from starting or continuing collection activities after you file for bankruptcy. The automatic stay is limited if you file multiple bankruptcy cases.
Debtors are discouraged from filing bankruptcy simply to delay or hinder their creditors.
The process is as follows:
If the court dismisses your bankruptcy case and you file another within one year, the automatic stay in your new bankruptcy will expire 30 days after your new bankruptcy filing date. You would not receive any automatic stay benefit if you refiled bankruptcy after having two or more pending bankruptcies dismissed within the past year.
The court can, however, impose a stay. A motion for an automatic stay can be filed with the court if you have a good reason for the new filing or why the previous filings occurred. The court will grant your motion if you prove that you filed the case in good faith.
Do I Need a Lawyer?
A great deal of importance and complexity is involved in filing a bankruptcy case correctly. Hence, it is imperative to use an experienced bankruptcy lawyer to help you file. Your bankruptcy case will be dismissed or delayed if you do not comply.
