Often, when in a Chapter 13 Bankruptcy case, debtors will receive notice from the court and their attorney that there has been a “motion to dismiss” filed in their case. A motion to dismiss can be filed by a number of individuals, including your trustee, the Department of Revenue and/or IRS, and various creditors; even individuals can file a motion to dismiss in their own case if they decide they no longer wish to proceed with their bankruptcy case. When filed by your trustee or a creditor, this motion is basically the individual party asserting that the debtor(s) should not be allowed to continue with the bankruptcy case for some specified reason.
If your trustee files a motion to dismiss your Chapter 13 bankruptcy case, it is most often because you have fallen behind on your monthly plan payments. While there is no set rule stating how far you can be behind on your payments before the trustee will file a motion to dismiss your case, typically, the further you fall behind the more likely it is that a motion to dismiss will be filed. Most often, we see these filed when you become two or more months behind on your payments. If a motion to dismiss is filed for failure to make plan payments, your attorney will receive notice of a date that a response needs to be filed by. If you intend on remaining in your Chapter 13 bankruptcy case, your attorney will need to file a response, which is a statement to the court, by the specified date. The response can state a variety of things; however, typically, it will state that you are intending on becoming current with your plan payments. Once this response is filed with the court, the motion to dismiss your case will be set for hearing, at which time you would have to be 100% current on your plan payments. It is important to remember that because payments must be made by money order in the mail, if you are sending your payment close to the deadline you may need to appear at a hearing in person to make the payment to the trustee, or ensure that your attorney has the payment with enough time to bring with them to the hearing for you. If you do not become current on your plan payments by the court date, though, your case can be dismissed at the hearing.
If your case is dismissed at the hearing, you do still have the option to reinstate your case. You will have 14 days after the date of dismissal to become reinstate; however, reinstating your case will mean that you will need to become current with your plan payments and any plan payments that become due during the 14 day window. You may also incur an attorney fee. Because of how large of a hassle this can become, the best course of action is to avoid a motion to dismiss whenever possible. You can do this by making timely monthly payments, or by entering into a wage order. By entering into a wage order, your employer will send your monthly plan payment to the trustee. This can be split in equal parts between however many paycheck you receive monthly, and will ensure that your plan payments will be made on time and in full.
Another party that often files a Motion to Dismiss your case is the Department of Revenue and/or the Internal Revenue Service. Due to the party that is filing this motion, it is easy to guess that this motion is likely filed in regard to tax issues. Your State’s Department of Revenue and the IRS typically file motions to dismiss cases due to tax returns from a particular year not being filed. Due to the way the bankruptcy code is written, it is a requirement that you file your taxes for the four years leading up to when your case is filed. This is because any taxes owed during this time-span are considered “priority” debts, which means they are entitled to receive payments before your general unsecured debts (credit cards, medical bills, etc). As an example, if you file for bankruptcy in 2013, you must have filed your taxes for the years 2009, 2010, 2011 and 2012. If you have not filed taxes for these years, the IRS and/or the Department of Revenue will move to dismiss your case. Similar to the trustee’s motion to dismiss your case, when there is a motion to dismiss filed regarding taxes, there is a response that your attorney has to file with the court to allow you more time to file your taxes for the specified years. This would then set the motion for a hearing, at which time you would have to have your taxes filed, or your case can be dismissed.
Overall, it is important to avoid motions to dismiss your Chapter 13 case altogether. You can do this by listening to your St. Louis Bankruptcy attorney’s advice, making your plan payments on time and in the full amount, and by ensuring your taxes are filed.