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What does it mean if the court dismisses your bankruptcy without prejudice?

A New York bankruptcy case can be dismissed without prejudice just like any other court case. When you originally filed, you had to satisfy certain requirements to finish the case and receive a discharge. If you failed to complete all necessary steps, then the bankruptcy court might dismiss your case with or without prejudice.

Dismissal without prejudice means that although the court has dismissed your case in this instance, you are allowed for file for bankruptcy again as soon as you meet certain eligibility standards. Dismissal with prejudice, on the other hand, usually means that you either cannot file again until a certain amount of time has passed, or certain debts are no longer eligible for discharge in any future bankruptcy.

Common reasons why a bankruptcy might be dismissed without prejudice

In the majority of cases, dismissal of bankruptcy cases without prejudice occur if you make a mistake in your paperwork or there is a procedural error. Abuse of the system is not usually a factor, although it can be. Examples include but are not limited to:

  • Failure to provide your pay stubs, tax returns, and all other necessary documentation to the bankruptcy trustee.
  • Failure to file a necessary form with the bankruptcy court.
  • Failure to complete the required credit counseling course before you filed your case.
  • You did not pay the court filing fees for your case.
  • You did not attend your meeting of creditors or another important (and required) court hearing.
  • You failed to make your agreed-upon Chapter 13 payments.

If your case is dismissed and you file another one within one year, then the automatic stay that normally goes into effect and protects you from creditor collection actions will only remain active for 30 days after your filing date. There is no automatic stay if you had at least two bankruptcies dismissed within the previous year, so creditors remain free to sue you, garnish your wages, and take other steps to recoup their money.

U.S. bankruptcy laws impose these restrictions to deter debtors from filing for bankruptcy solely to frustrate their creditors. If you want to impose or extend the automatic stay when you refile, then you must take the extra steps of filing a motion with the court and proving that this new case is being filed in good faith.

Dismissed bankruptcy cases pose future challenges that are best addressed with assistance from a New York bankruptcy attorney. If you are truly sincere about completing your court-required duties and following correct procedure this time around, then your attorney can advise you on what steps you need to take to get the financial fresh start that bankruptcy represents. Jayson Lutzky is an attorney with more than 34 years of legal experience who represents clients in personal bankruptcy cases. If you are in debt and are looking for a fresh start, then call Mr. Lutzky’s office to set up a free in-person initial consultation. Visit www.MyNewYorkCityLawyer.com/Bankruptcy to learn more.

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