Can I Refile If My Chapter 13 is Dismissed for Non-Payment?

If the court dismisses your Chapter 13 case for nonpayment, you can ask it to set aside the dismissal and reinstate your case, or you can file a new Chapter 13 case, but reinstating is often the better choice. If you don’t make your Chapter 13 payments and must refile a dismissed case, expect new legal fees and costs, shorter automatic stay protection, and difficulty proving you can maintain a plan.

If the reinstatement period has passed and your financial situation has changed, you might want to consider whether Chapter 7 bankruptcy is a good fit. If an error occurred, consider appealing the Chapter 13 dismissal.

Reinstating or Refiling a Chapter 13 Case Dismissed for Nonpayment

You can ask the court to reinstate your original case or start over with a new one. Reinstating is usually easier and cheaper, but it works only if you act quickly and can bring your payments up to date.

The deadline for a motion to vacate depends on the legal ground. Ask a lawyer right away. You can’t “refile” your old, dismissed case, so a new case means starting over. (Fed. R. Bankr. P. 9023 and 9024.) 

A few things to consider if you do.

Losing Automatic Stay Protection in Chapter 13

If you file a new case within a year of a dismissed case, your automatic stay will be limited. Bankruptcy courts frown on serial bankruptcy filings because they can abuse the automatic stay, which is the order that stops most creditor collection actions. If you had one earlier case pending in the year before you file, the stay lasts only 30 days unless you ask the court to extend it by filing a motion. If you had two or more, you generally get no stay unless the court orders one. (11 U.S.C. § 362(c)(3), (c)(4).)

Because the motion can be costly and could fail, consider proposing a well-thought-out repayment plan that’s unlikely to draw an objection from the trustee and creditors. Once the court confirms the plan, it binds your creditors to its terms and prevents them from taking action against you as long as you comply. After confirmation, you won’t need the automatic stay any longer.

Preparing New Chapter 13 Bankruptcy Paperwork

Plan to pay a bankruptcy attorney to prepare a new petition, schedules, and plan based on your current situation. You’ll also pay a new filing fee and take another credit counseling course if it’s been more than 180 days since you completed the first course. (11 U.S.C. § 109(h).)

Depending on the reason for the dismissal, you might also need to retain new counsel. Some bankruptcy lawyers avoid clients who struggle with Chapter 13 payments because it requires extra work.

What to Expect After the Bankruptcy Court Dismisses Your Chapter 13 Case

Once the court dismisses your case, your creditors can start collecting again because you lose the automatic stay when your Chapter 13 plan is no longer in place. You might or might not owe as much as you did before filing Chapter 13. You’ll get credit for all of your Chapter 13 payments. However, interest that creditors couldn’t charge during bankruptcy might be added back to what you owe. So balances on credit cards, medical bills, personal loans, and other unsecured debt could be higher than before you filed if the court dismissed your case before the plan paid on those debts.

Also, prepare yourself to handle unresolved mortgage, car loan, and judgment lien problems. Your creditors can resume wage garnishments, foreclosures, and repossessions if your Chapter 13 plan hadn’t yet brought the balances current (and there’s a good chance it hadn’t).

Other Factors to Consider When Refiling a Dismissed Chapter 13 Case

If you file soon after the court dismisses your previous case, expect the trustee to ask why you’d be successful in the new case. If your income hasn’t increased and your expenses haven’t decreased, it might be hard to convince the trustee that a meaningful financial or personal change has occurred.

Each Chapter 13 case is typically reported for seven years from its own filing date, so a second case adds a new notation that stays on your report longer.

What Does Being Dismissed for Nonpayment in Chapter 13 Bankruptcy Mean?

A dismissal for nonpayment means the court ended your Chapter 13 case because you fell behind on plan payments. If you don’t make your payments or work with the Chapter 13 trustee to catch up, the trustee can file a motion asking the bankruptcy court to “dismiss” your case. At the hearing, you’ll have an opportunity to ask the judge for time to catch up, and if the judge agrees, your case will remain open. If the court grants the trustee’s request, your Chapter 13 case will end.

Why the Court Might Dismiss Your Case for Nonpayment in Chapter 13

The court can dismiss your case because you’re expected to make your Chapter 13 payment promptly each month. If you don’t pay on time, the Chapter 13 trustee won’t have enough money to pay creditors the amounts owed under the plan. Usually, the Chapter 13 trustee will work with you if you have an unexpected expense. But you must inform the trustee immediately and follow the trustee’s payment instructions to get your plan back on track. (11 U.S.C. § 1307(c).)

Next Steps if You’re Behind on Plan Payments

Contact your trustee and a bankruptcy lawyer as soon as you know you’ll miss a payment, or right after a dismissal. Reinstating or refiling a Chapter 13 case can be complex, so you’ll typically want a bankruptcy attorney to guide you. Many offer a free first consultation. In the meantime, these articles might help:

• Can I Get My Chapter 13 Payments Lowered?
• Converting Chapter 13 to Chapter 7 Bankruptcy
• How to Modify Your Chapter 13 Repayment Plan
• Emergency Bankruptcy Filings

If you need the official Chapter 7 and 13 bankruptcy forms, you’ll find them on the U.S. Courts Bankruptcy Forms webpage.