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Bankruptcy Law/Dismissal or Discharge

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Expert: - 9/26/2007


Question
I recently had my chapter 13 plan approved but my wife and I have concluded that we won’t be able to afford the payments and have decided to sell our home. We have a significant amount of equity and would be able to satisfy all of our debt from the bankruptcy with money left over. Our real estate agent suggested that we should have our bankruptcy dismissed to help improve our credit, but my lawyer suggested paying off the bankruptcy to prevent anyone coming back at us with claims; Other than our mortgage we don’t have a lot of outstanding debt, probably no more than 6-7,000 dollars. My question is should we get a voluntary dismissal or get the discharge? Please help
Thank You  

Answer
Dismissing the bankruptcy will not improve your credit, in my opinion. You already have it on your credit and it's not going to come off for many years, even if you dismiss the case. Frankly I think your credit will be better if you have the Chapter 13 discharge. That way the rest of the world knoWs your debts have been conclusively handled.

There are other factors that no one has considered. Foremost, is for you to talk to your own attorney. The lawyer got you this far, and your lawyer just might be a better source of guidance than your broker is.

My own thoughts are that because you have so little unsecured debt, I assume you filed a 13 to catch up on house payments? In any event, you filed bankruptcy to gain protection from the arbitrary actions of your creditors. Maybe your home was in foreclosure? Maybe you were threatened with legal action?

If you dismiss, then you give up the court protection. Once you have lost that protection, what are you going to do if you get into a sales transaction, and the buyer flakes out? If your property is in foreclosure maybe you you won't have enough time left to find another buyer? Another consideration is that maybe some of the creditors did not file claims. If so, then maybe you won't have to pay them, even though you may have a 13 Plan to pay 100% to all creditors.

Brokers like to negotiate and make deals. Maybe you should give your broker an offer: He needs to stop giving you legal advice, and you won't tell him how to sell houses!

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Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

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