Most Chapter 13 dismissals come down to one thing: the debtor stopped making plan payments. Everything else is a distant second.
Dismissal means the case ends without a discharge. The automatic stay lifts, creditors resume, interest and penalties that were paused come back, and the foreclosure that was on hold starts moving again. It's the outcome worth working hardest to avoid.
The actual causes, in rough order
- Missed plan payments. One is fixable. Three starts a motion to dismiss.
- Missed post-petition mortgage payments, which produce a stay relief motion and often a dismissal behind it.
- Unfiled tax returns during the case. Trustees check every year.
- Failing to turn over tax refunds the plan requires.
- Lapsed auto insurance on a vehicle being paid through the plan.
- Not showing up to the 341 meeting, which in this district means not joining the Zoom.
- Failing to provide documents the trustee requested.
Six of those seven are administrative. They're avoidable with a calendar and a habit of opening mail.
The payment problem is a budget problem
Plans usually fail because the payment was too high the day it was confirmed. Someone wanted to save a house badly enough to agree to a number that left nothing for a car repair, and then the alternator went.
A plan needs slack. If your proposed payment consumes every dollar of margin, it's a plan built to fail in month nine. I would rather tell you that in the consultation than watch it happen.
Call before you miss, not after
There is a lot we can do with one missed payment and a written explanation. There is much less we can do after a motion to dismiss has been granted and the case is closed.
What happens when a dismissal motion is filed
The trustee files it, sets a hearing, and serves you. Usually there's an opportunity to cure the default before the hearing or to enter into a stipulated order with a strict payment schedule. Miss a term of that stipulation and dismissal is often automatic, without another hearing.
Respond to these. Ignoring a dismissal motion converts a survivable problem into a closed case.
“I've had clients who went silent for two months out of embarrassment and lost cases they could have saved with one phone call. Nothing you tell me about your finances is going to surprise me. I've heard it.”
Naomi Reyes-AshfordLife after a dismissal
You can generally refile, though a case dismissed within the past year limits the automatic stay in the new case to 30 days unless the court extends it. That motion requires showing the new case was filed in good faith and that something changed. A second dismissal in a year is worse still, because the stay may not arise at all without a court order.
There's also the possibility of a hardship discharge if you've paid enough into the plan and the failure was caused by circumstances outside your control. It's narrow, but it exists.
Questions we get asked
Can I get my case reinstated after dismissal?
Motions to vacate a dismissal are possible, particularly where there was a clear error or an unusual circumstance. They are not routine and they need a real explanation.
What happens to the money I already paid?
Funds already disbursed to creditors stay applied to those debts. Undisbursed funds usually return to you after allowed fees.
Will my creditors know immediately?
Yes. They get notice from the court and collection resumes quickly, often within days.
Is dismissal ever the right choice?
Sometimes. A voluntary dismissal can make sense when your circumstances have changed enough that a new case with different numbers would work better.
What to do next
Set a standing calendar reminder for your plan payment and your tax filing deadline, and put your trustee's payment portal in your bookmarks. If you've already missed one, email your attorney this week with what happened and when you can resume.