Most people know that bankruptcy eligibility rules only allow one to file a chapter 7 bankruptcy every 8 years from the date the action is commenced. However, voluntary or involuntary dismissal of your case also affects your ability to re-file despite not receiving a discharge. As explained below, a person is not eligible to file bankruptcy immediately after dismissing a prior bankruptcy case.
Bankruptcy Code Section 109(g)
An individual lacks bankruptcy eligibility if, within the preceding 180 days, (1) he or she was the debtor in a bankruptcy case dismissed for willful failure to abide by orders of the court or to appear before the court in proper prosecution of the case or (2) he or she requested and obtained voluntary dismissal of a bankruptcy case following the filing of a request for relief from the automatic stay provided by section 362, 11 U.S.C. §109.
In the case of an involuntary dismissal, it is not improper to re-file a petition within the 180 day period unless the dismissal was for failure to abide by a court order and it was willful. Normally a re-filing within 180 days will not be challenged unless some party in interest files a motion to dismiss. Failing to pay filing fees or plan payments in a chapter 13 case should not be considered willful so as to preclude a filing within 180 days of involuntary dismissal, In re Howard, 134 B.R. 225 (Bankr. E.D. Ky. 1991).
The provision of § 109(g) relating to voluntary dismissals in designed to prevent debtors from repeatedly filing new bankruptcy cases and obtaining new automatic stays after relief was requested or granted in previous cases. Thus, this provision does not apply when there is a voluntary dismissal and a new case after a request for relief from the stay is denied.
Under rare circumstances, courts will enter dismissal orders not based on § 109(g) that prohibit the debtor for filing another case for 180 days. In extremely rare cases, courts may dismiss a bankruptcy case with prejudice, precluding the debtor from ever discharging the debts in that case.
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The Kepple Law Group is highly knowledgeable in bankruptcy matters and can advise clients in all aspects of bankruptcy proceedings.