Bank finance articles and tips

When a debtor files a voluntary bankruptcy, a change in circumstances may occur which justifies dismissing the case. While it is rarely recommended that a debtor dismiss their bankruptcy case, there are some issues which can arise that justify a dismissal. Let's take a look at a few:

Job Changes

If a debtor files Chapter 13 bankruptcy they are doing so because they earn enough income to pay some of their unsecured debts and hold onto property attached to loans. Under a Chapter 13 bankruptcy plan, a debtor's income allows them to make monthly payments for three to five years until the terms of the repayment plan is satisfied. However, if a debtor's income decreases significantly or they lose their job, they may want to dismiss their bankruptcy case. A dismissal may be the best course of action if a change in income occurs before plan confirmation or before the debtor has begun making payments. However, if the debtor has already begun making payments on their debts they might prefer a conversion to Chapter 7 bankruptcy instead.

But what happens if a debtor is already in Chapter 7 bankruptcy and they lose their job before they receive their debt discharge? Should they voluntarily dismiss their bankruptcy case or proceed to the discharge stage? It depends on the details of the debtor's bankruptcy case. Some bankruptcy attorneys might recommend a dismissal if the main purpose of the Chapter 7 bankruptcy was to save secured property such as home and the loss of income prevents the debtor from keeping the property. Other bankruptcy attorneys may frown upon a voluntary dismissal because doing so could leave outstanding debts unresolved and a create threat to the debtor's future income.

Debt Settlement With Creditors

If the debtor reached a settlement agreement with their creditors outside of bankruptcy, then a voluntary dismissal of the case may be recommended. However, debtors considering a dismissal should speak with their bankruptcy attorney to make sure that the settlement is in fact a better deal than filing bankruptcy.

Sudden Increase In Assets

If a debtor suddenly becomes financially able to pay their debts outside of bankruptcy because of an inheritance or other reasons, then a voluntary dismissal of their case may make sense. Debtors should speak with their bankruptcy attorney about the advantages and disadvantages of dismissing the case and using newfound assets to pay creditors. Debtors should also make it clear to their creditors that they do intend to pay them outside of bankruptcy with their newfound assets otherwise the voluntary dismissal could be challenged as a move to avoid paying outstanding debts.

Reed Allmand, sponsoring attorney for Bankruptcy.net, is constantly looking for ways to provide the best financial information for his clients. Whether you are considering filing for bankruptcy, or are currently going through a Chapter 7 or Chapter 13, visit http://www.bankruptcy.net for up to date news and information you need to know.

By Reed Allmand
Article Source: http://EzineArticles.com/?expert=Reed_Allmand