When an individual files for bankruptcy protection, he/she is entitled to certain wonderful benefits. For example, a Chapter 13 bankruptcy filing will stop (at least temporarily) a home foreclosure or car repossession and provide the individual with an opportunity to resolve financial difficulties, including time to cure arrearages.
However, with these wonderful benefits, also come duties that the individual must fulfill to the Bankruptcy Court and its creditors. Bankruptcy cases are frequently dismissed because these same individuals that sought the protection and benefits of bankruptcy, fail to live up to their end of the bargain!
One of the requirements to stay in bankruptcy under Section 521 of the Bankruptcy Code requires bankruptcy filers (“Debtors”) to file a schedule of his/her assets and liabilities, current income and current expenditures, and statement of the debtor’s financial affairs – all under penalties of perjury. Bankruptcy cases are frequently dismissed because the Debtor fails to properly complete and timely file these schedules and statement of financial affairs.
By example, former Miami Marlin and World Series Pitcher, Livan Hernandez recently had his Chapter 13 bankruptcy case dismissed after he failed to file his required schedules and statement of financial affairs after his initial deadline (Strike One!), his first request for extension (Strike Two!) and his second request for extension (Strike 3) and the Bankruptcy Court said – You’re Outta Here! – by entering it Order dismissing Hernandez’s Chapter 13 case, with prejudice for 180 days!
What happens when a bankruptcy case is dismissed under these circumstances? The Debtor loses all those wonderful benefits of bankruptcy and is barred from filing bankruptcy again for 180 days (with a few exceptions). The automatic stay is terminated and the Debtor returns to his pre-bankruptcy status with all of his creditors. This means that creditors may legally pursue all collection efforts against him, including foreclosure, repossession, and lawsuits.