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In July 2012, Henry W. Jarusik and Kathleen M. Brady filed for bankruptcy in the United States Bankruptcy Court for the Eastern District of Pennsylvania, which has courthouse locations in Philadelphia and Reading. Approximately two years later, in September 2014, their case was dismissed by the bankruptcy court after a motion was filed by the bankruptcy trustee. In 2015, Brady and Jarusik appealed, or challenged, the dismissal order. While their “untimely” appeal was ultimately dismissed, it nonetheless brings up an important question for bankruptcy filers in Pennsylvania: what are your legal options if your bankruptcy case is dismissed? Our Philadelphia bankruptcy attorneys explain what a case dismissal means, and discuss some of the debtor’s next steps after a case dismissal in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania.

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What Does it Mean When a Chapter 13 is Dismissed?

A bankruptcy case can have two outcomes: discharge, or dismissal. No matter which chapter you file under, whether you file individually or jointly, or which debts you are hoping to eliminate your liability for, your goal as a filer is to obtain a discharge. Conversely, a case dismissal is an outcome you want to avoid. But why? What is the difference between discharge and dismissal in a bankruptcy case, and why is the latter undesirable?

When your case is discharged, it means you are relieved of personal liability for the debts included in the discharge – for instance, debt arising from hospital bills after a series of major surgeries. Because you are no longer personally liable, creditors and debt collectors can no longer pursue you for payment of that particular debt. Though certain debts, such as alimony and child support, are not discharged in bankruptcy, a discharge gives the debtor a fresh start by wiping clean much of his or her financial slate.

A dismissal, on the other hand, does not provide financial relief to the debtor. When a bankruptcy case is dismissed, it means that the bankruptcy is void, the automatic stay is over, and creditors can begin or proceed with foreclosure, wage garnishment, and other actions. Here is how the U.S. Bankruptcy Court for the Eastern District of Pennsylvania explains a dismissal’s effects or meaning:

A dismissal order ends the bankruptcy case before a discharge order is entered. When the Court dismisses the case, creditors may start to collect debts again. An order of dismissal does not free the debtor from any debt.

In short, a properly conducted personal bankruptcy case eventually leads to discharge, whereas a dismissal indicates that the bankruptcy court has found a problem major enough to justify ending the case.

What Can You Do if Your Bankruptcy Case is Dismissed?

A bankruptcy dismissal is never ideal, and such a setback can understandably cause deep anxiety and concern in the debtor. However, a dismissal is not necessarily the end of the story. There are several courses of action the filer may take following a case dismissal, depending on his or her unique circumstances.

For example, the debtor may be able to file another case, depending on why the original case was dismissed. However, as the U.S. Bankruptcy Court for the Eastern District of Pennsylvania points out, “The court’s dismissal order may impose restrictions on a debtor’s right to file another case.” The court references, for instance, time restrictions established by 11 U.S. Code § 109(g), which, critically, provides that no debtor may file for bankruptcy if he or she “has been a debtor in a [bankruptcy] case… at any time in the preceding 180 days.” However, the 180-day rule applies only if “the case was dismissed by the court for willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution of the case.”

Depending on certain factors – for instance, whether or not the case was dismissed with prejudice –  it may be more pragmatic to appeal as opposed to refiling. However, if you intend to appeal a bankruptcy dismissal, it is imperative that you act quickly. You must file a document called a “notice of appeal,” which your attorney will assist you with, within a mere 14 days of the case dismissal. You may be able to obtain a time extension, but should not depend on this to occur.

If your case is dismissed, the bankruptcy court will take care of notifying your creditors. Under Local Rule 1017-2(c), “If a case is dismissed, the clerk shall provide timely notice of the dismissal of the case to those on the Matrix List of Creditors and the Clerk’s Service List, the United States trustee, and the trustee.”

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Contact Our Philadelphia Chapter 13 Bankruptcy Attorneys

Bankruptcy laws can be challenging to navigate, particularly if you are concerned that your case could run into obstacles or unusual circumstances. If you or your spouse is thinking about filing for bankruptcy in Pennsylvania, contact the experienced Philadelphia Chapter 7 bankruptcy attorneys of Sadek & Cooper Law Offices for personalized legal help.

With a track record assisting thousands of debtors from diverse financial backgrounds with Chapter 7 and Chapter 13 petitions, our accomplished Pennsylvania Chapter 13 lawyers possess the knowledge and skill to handle your case efficiently while answering your questions, managing your bankruptcy paperwork, and vigilantly protecting your best interests.

Our law firm handles personal bankruptcy cases throughout Southeastern Pennsylvania, proudly representing residents of Philadelphia, Montgomery County, Bucks County, and Delaware County. For a free and absolutely confidential legal consultation, call Sadek & Cooper Law Offices at (215) 995-2543 today.