Why Consider Voluntary Dismissal in Bankruptcy?

After filing for bankruptcy and having the automatic stay stop a wage garnishment, car repossession, or foreclosure, why would you want to get out of bankruptcy by filing a voluntary dismissal? Well, there might be situations when it’s to your advantage to voluntarily dismiss your case. Let’s review some of those situations.

Filing for Voluntary Dismissal in Chapter 7 Bankruptcy

To file a voluntary dismissal, a motion is filed with the clerk’s office. The bankruptcy judge will decide whether to approve your request, but it depends on the specific facts of your case.

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For example, with Chapter 7 bankruptcy, a dismissal is not likely to be granted if there are non-exempt assets. Remember, the role of the trustee is to protect the bankruptcy estate, meaning protecting the interests of creditors. So it’s likely the bankruptcy trustee would object to a dismissal.

But if your assets are exempt, then the creditors are not harmed by approving a dismissal. A good example is a debtor who owns a home where the equity is protected. For example, a debtor residing in my home state of Florida, which offers unlimited homestead exemption.

If the debtor filed Chapter 7 bankruptcy to eliminate credit card debt and upon filing has a buyer interested in their home, the debtor can ask the court to dismiss the bankruptcy case and could use the funds from the sale of the home to pay off the creditors. The debtor could even fail to appear at the 341 meeting of creditors, and that would result in a dismissal as well.

• What Happens at the 341 Meeting of Creditors? Here’s What You Need to Know

Chapter 13 Bankruptcy

Filing for a voluntary dismissal in Chapter 13 bankruptcy is more common and usually granted. A common tactic is in cases where Chapter 13 was filed to catch up on the arrears of secured debt, such as a home mortgage or car loan. Once the debtor is paying the unsecured portion of the plan, the case can be dismissed, and a payment plan can be arranged with creditors, sometimes for less than what is owed.

• Dismissed with Prejudice and the Prejudice Period

Sometimes, the debtor is selling their home and needs to get the case dismissed so that the sale can proceed. In those situations, the debtor could agree to use the net proceeds from the sale of the home to pay off their remaining debt.

• Use Bankruptcy as a Tool to Sell Your Home

Before filing for voluntary dismissal, make sure to consult with a local bankruptcy attorney to determine which options are best for you.

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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.

Updated on April 25, 2025.