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Can You Change Your Mind After Filing for Bankruptcy?

If you have filed for bankruptcy, there are various reasons why you may want to pursue the cancellation or dismissal of your case. Financial situations change and what may have been in your best interest at one time may no longer be the optimal route forward. Maybe you have unexpectedly inherited money, secured a new job, or were able to avoid a home foreclosure through alternative means. Dismissal of a bankruptcy is not always possible and eligibility depends heavily on your financial situation as well as the type of bankruptcy that was filed.

Chapter 13 Bankruptcy

An advantage to filing for chapter 13 bankruptcy is the ability to voluntarily dismiss the case with little to no restrictions. This form of bankruptcy can generally take from 3 to 5 years to complete, allowing plenty of time for a situation to change. Once a motion has been filed and the case is dismissed, you will no longer be bound by the terms of the bankruptcy. This means that you will no longer need to make payments under the established repayment plan and the court will not have a say in the allocation of your income.

However, the discharge of your debt does not occur until the completion of the case and a dismissal will remove the “automatic stay” put in place when you filed for bankruptcy. This means that your creditors will once again have the right to seek the debts which they are owed and may use collection methods such as repossession and garnishment. The terms of a debt owed to creditors will typically revert to previous agreements and may be subject to further interest.

Chapter 7 Bankruptcy

Once you have officially filed for Chapter 7 bankruptcy, your options become limited. Unlike with Chapter 13, those who file for Chapter 7 bankruptcy are not automatically given the ability to voluntarily dismiss their case. Even in cases where dismissal is not possible, alternatives such as converting to Chapter 13 may still be available.

Eligibility for Chapter 7 dismissal can depend on factors including:

  • If the debtor owns non-exempt property: Generally, if you own non-exempt property, your case will not be dismissed. Doing so would result in your creditors losing potential payments from the sale of property.
  • The reasons for pursuing dismissal: The reason a debtor is pursuing dismissal must be compelling and a simple change of attitude will not be enough to move a judge to action. Only factors such as a drastic change in a person’s financial situation will qualify.

Personalized Debt Relief Solutions

The decision to pursue the dismissal of a New York bankruptcy case should not be made lightly and can have drastic financial repercussions. Once you’ve made the decision, how do you proceed? The first step is to consult with our New York debt relief attorneys to determine your eligibility. At the Law Office of Simon Goldenberg, PLLC, we know that this can be a stressful time and will work one-on-one with each client to help decide if pursuing a dismissal is right for your situation.

Schedule a free case evaluation to learn about the debt relief options available to you.