If you are filing for Chapter 13 bankruptcy, you may be concerned about why your case can be dismissed and what you will do afterward. Here are a few things to know about this unique situation.

Why A Chapter 13 Bankruptcy Can Be Dismissed

There are several reasons why your bankruptcy case could be dismissed, with the main reason being the loss of your job. The purpose of Chapter 13 bankruptcy is to come up with a repayment plan and pay back your creditors what you are able to pay. If you consistently make those payments, then the remaining debt will be discharged. However, losing your job during the bankruptcy process means that your payment plan will not work for you, and the case could be dismissed immediately as a result.

It's also possible that you suffered an unexpected financial hardship. This could include being injured and taking on some big medical bills. The injury can leave you out of work, with more debt, and the potential inability to work in the future. 

If you do move forward with the Chapter 13 bankruptcy and are given a repayment plan, you need to make every payment per the agreement. If you are unable to make those payments, it's possible that your bankruptcy will be dismissed and you will lose any protections that the bankruptcy provided to you.

What To Do After A Chapter 13 Bankruptcy Is Dismissed

Your first option will be to re-file your bankruptcy under a Chapter 7 bankruptcy. This is a different type of bankruptcy that will completely discharge your debts but will have a bigger impact on your credit score. This may be the only option if you lost your job due to circumstances out of your control and the debt is continuing to build up.

If you still wanted to use Chapter 13 bankruptcy, then you would have to go through a mandatory waiting period before you can file again. This is necessary so that you cannot simply keep filing for bankruptcy and receive the benefits like the automatic stay and never have to pay back your debts.

What The Potential Consequences Are Of A Chapter 13 Bankruptcy That's Dismissed

Be aware that your creditors will give you credit for any payments you made to them with the bankruptcy repayment plan. However, you are then responsible for paying the remainder of the debt that you owe. The automatic stay will be lifted, so creditors will be able to take action against you to receive their debt, such as repossessing property. You will also be charged interest on your debts once again as it continues to build. 

Reach out to a Chapter 13 bankruptcy lawyer to find out more.