Withdrawing a Bankruptcy Petition

Making the decision to seek the bankruptcy court’s protections from creditors should not be entered into without consulting with an experienced attorney. Your Montgomery, Selma, and Central Alabama bankruptcy attorneys at The Sellers Law Firm can help guide you through the bankruptcy process for deciding to file or not to file for bankruptcy. One of the most important things to consider is if you should file or not. Once a bankruptcy is filed there are limits in your ability to end the bankruptcy, and ultimately the Court may make the decision about permitting a bankruptcy to be ended, especially under a Chapter 7 liquidation bankruptcy.

Under a Chapter 7 bankruptcy you are required to turn over assets to the bankruptcy trustee unless those assets are exempt. Exempt property are items that debtors are allowed to protect from the trustee up to certain values for different categories of property. The most often used category is the personal property exemption. In Alabama, this exemption protects up to $7,750.00 worth of personal property for a single bankruptcy filer and $15,500 for joint filers. The personal property group includes, furniture, clothing, bank accounts, and cars. It is important to understand that the values of items are limited by any loans against those items. For example, your vehicle may be valued at $10,000.00, however, if your loan is only for $8,000.00 then the value of the exemption is only $2,000.00. If you owe more on a vehicle than it is worth, then there is no exemption needed to be taken to keep the bankruptcy trustee from using the car to pay off debts. So, once you file for a Chapter 7 bankruptcy the trustee is assigned to handle your property. This can impact your ability to ask that your Chapter 7 bankruptcy be voluntarily dismissed.

Ultimately, a judge must determine if your request for a bankruptcy dismissal can be granted. The judge must consider your reasons for asking for the dismissal. First and foremost, the debtor must explain a compelling reason for the dismissal request which will lead to the debtor being able to have a fresh start. This compelling reason must be in the debtor’s best interest without having a negative impact on creditors. If the Court determines that the debtor has filed the bankruptcy as a simple stalling tactic to prevent creditor collections actions then the Court may deny a request for dismissal. This is where the issue of the trustee and debtor’s property comes in to play. If the debtor has non-exempt property that the trustee could sell and use to pay creditors, then the creditors may have a better chance of getting paid by asking the judge to deny a dismissal. The debtor can overcome this issue if they are able to show to the court that a dismissal will still allow the creditors to be paid without depending on the trustee to sell properties. The Sellers Law Firm’s attorneys will be able to guide you through these often-difficult issues when considering a Chapter 7 dismissal. If you have questions on about the bankruptcy process, then call or text us now at 334-LAWYERS (529-9377) or use the Contact Form on our website! Our phone lines are answered 24 hours a day, and we can usually schedule a free consultation to meet with you within 24 hours.

Chapter 13 repayment bankruptcies do not have dismissal issues like the Chapter 7 does with one exception. Chapter 13 bankruptcies can be voluntarily dismissed at any time by the debtor for any reason. The exception to this is if your case was originally filed as a Chapter 7. Then if you were denied a dismissal under the Chapter 7 so you converted your case to a Chapter 13. This conversion is usually to protect property that the Chapter 7 trustee was going to sell to pay your creditors. If you are in this situation then when you try to dismiss the Chapter 13, then the court will order you back to a Chapter 7 with the trustee again being able to access non-exempt property to pay creditors.

Requesting a dismissal of a bankruptcy petition can also have continuing impacts on the debtor’s credit. Since a bankruptcy petition can be reported on a credit report for 10 years then the dismissed petition can also be shown on a credit report. But since the petition was dismissed and the debtor was unable to get the “fresh start” that bankruptcies are intended to provide then not only will the bankruptcy petition be on the credit report but also the debt that the petitioner owes will also appear on the credit report. When dealing with these issues it is important to have the guidance and counsel of experienced attorneys such as those at The Sellers Law Firm, your Montgomery, Selma, and Central Alabama bankruptcy attorneys.

At The Sellers Law Firm, our priority is to protect the interests of our clients against their creditors. We have offices in Montgomery, Selma, Greenville, and Troy. All consultations are free, and we can usually meet with you within 24 hours of contacting us. You can call or text us at 334-LAWYERS (529-9377) or use the Contact Form on our website. Our phone lines are answered 24 hours a day. You may even email us at bsellers@sellerslawfirm.com! Remember that doing nothing changes nothing so act now!