Considerations

• Bankruptcy courts dismiss Chapter 7 cases for a variety of reasons. Procedural errors in the filing of the application are one reason, or the court may suspect the application is fraudulent because the debtor appears to be hiding assets.
  
  

Effects

• A debtor filing for Chapter 7 bankruptcy gains protection by way of a powerful provision in bankruptcy called "the automatic stay." That's a legal order signed by the judge. It forces an end to all debt collection against the debtor, including efforts by a creditor to collect on a monetary judgment after a debt lawsuit. Judgments are a reason some people file for bankruptcy. Judgments can lead to a bank levy or wage garnishment, making it impossible for a debtor to meet daily living expenses. The automatic stay stops debt collection in its tracks, but after a lifting of the stay, the statuses of the debtor's credit accounts are the same as they were before the bankruptcy filing. That means a judge can resume hearings on the lawsuit or proceed with garnishment discussions.
  
  

Notification

• Creditors listed in the bankruptcy will receive notification from the court after the dismissal. Most are likely to resume debt collection efforts immediately. A debtor in this position should consult with a bankruptcy attorney about options for reinstating the bankruptcy petition. The court may allow that if the dismissal was because of an innocent procedural error. Mistakes in filing the paperwork are possible, especially when people elect to represent themselves. The United States Courts website acknowledges that debtors have the right to represent themselves in bankruptcy, but recommends against it because of the complexity of the process.
  
  

Solutions

• A person who cannot refile for bankruptcy should contact the creditor filing the lawsuit and seek a settlement. Settlements are possible before the court date and even after. Settlements are usually for less than the full balance, but a creditor filing a lawsuit and holding or expecting a judgment may ask for the entire balance in a lump sum or installments.